Senate Agriculture Committee Chairman John Boozman postponed a planned markup of bipartisan crypto legislation to late January, citing the need for additional time to finalize remaining policy details and ensure broad congressional support.
The delay follows weekend negotiations with Democratic lead Senator Cory Booker on the Digital Asset Market Clarity Act, which divides regulatory authority between the SEC and CFTC while establishing frameworks for stablecoin yields, DeFi protections, and digital asset classifications.
The postponement adds uncertainty to legislation already facing political headwinds as the 2026 midterm elections approach, with some analysts warning passage could slip to 2027 despite strong backing from the Trump administration and newly appointed SEC Chair Paul Atkins, who called this “a big week for crypto” while urging Congress to bring digital asset markets “out of the regulatory gray zone.“
Banks Challenge Stablecoin Yield Provisions in Final Negotiations
Traditional banking groups intensified lobbying efforts to restrict stablecoin rewards beyond the GENIUS Act’s framework, which permits third-party platforms to offer incentives while barring direct interest payments from issuers.
The latest Senate Banking Committee draft, released late Monday after what sources described as a “doozy” of a day, prohibits companies from paying interest solely for holding balances but allows rewards tied to account opening, transaction activity, staking, liquidity provision, collateral deposits, or governance participation.
The American Bankers Association warned in a recent letter that “if billions are displaced from community bank lending, small businesses, farmers, students, and home buyers in towns like ours will suffer,” arguing that crypto exchanges cannot replicate FDIC-insured products or fill lending gaps from deposit outflows.
As a result, Coinbase threatened to withdraw support if Senate negotiators insert restrictions beyond enhanced disclosure requirements, with Chief Policy Officer Faryar Shirzad contending that “undermining the supremacy of the USD has been a longstanding goal of the PRC—the Senate banning rewards would be a big assist to China’s efforts,” noting Beijing announced plans to pay interest on its digital yuan starting January 1, 2026.
Stablecoin rewards represent critical revenue for Coinbase, which shares interest income from USDC reserves with Circle Internet Group and offers 3.5% yields on Coinbase One balances, with Bloomberg projecting the exchange’s total stablecoin revenue reached $1.3 billion in 2025.
Jake Chervinsky of Variant Fund questioned the yield restrictions, stating, “there are a few things left that could blow up the market structure bill, and stablecoin yield is one of them,” adding, “what does stablecoin yield have to do with market structure, you ask? Good question! NOTHING. Except the banks have influence and they want their regulatory moat back.“
Legislative Timeline Faces Midterm Election Pressure
Three Democratic senators, Chris Van Hollen, Tina Smith, and Jack Reed, sent a letter to Banking Committee leadership demanding a full hearing before Thursday’s markup, criticizing the lack of text “just two days before the markup, calling the timeline inadequate for voting on ‘the most significant law considered by the committee this century.’“
The lawmakers noted that neither the full committee nor the public had seen any text resembling the legislation affecting 68 million American crypto owners and the $3 trillion digital asset market by 6 p.m. Monday, ahead of the 10 a.m. Thursday vote.
Due to growing bipartisan opposition and pressure from bankers, TD Cowen warned that the 2026 midterms could delay passage until 2027, with Senate Democrats potentially withholding support as lawmakers position for the next cycle.
Bloomberg Intelligence analyst Nathan Dean even suggested the markup’s lack of bipartisan support may push odds of first-half passage below 70%, while full implementation could extend to 2029 depending on election outcomes that reshape congressional control.
Notably, the new legislation includes an “ETF safe harbor” automatically classifying tokens as non-securities if they were principal assets of exchange-traded products listed on national securities exchanges as of January 1, treating major altcoins identically to BTC and ETH from day one.
Bill Hughes of Consensys also noted the bill “really does protect non-custodial trading interfaces” by creating regulatory perimeters based on custody and control rather than interface popularity, stating “if users trade through their own keys, you’re software” versus “if users trade through their own keys, you’re software.“
SEC Chair Paul Atkins expressed full support for congressional action, writing, “passing bipartisan market structure legislation will help us future-proof against rogue regulators, ensuring that we achieve President Trump’s goal to make the U.S. the crypto capital of the world,” while anticipating the president would sign legislation “in the coming months.“
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