Senate cryptocurrency regulation faces partisan deadlock, and the prospects of the Market Structure Act remain uncertain

The U.S. Senate introduced a new version of the Cryptocurrency Market Structure Act last week, aiming to redefine the regulatory authority of agencies over the digital asset markets. However, this proposal, put forward by the Senate Agriculture Committee, has already revealed partisan divides, and whether it will pass committee votes and full chamber approval remains uncertain.

This move marks a critical stage in cryptocurrency policy legislation. The Senate is working to establish a unified regulatory framework, clarifying the division of powers between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) in the digital asset markets. However, policy disagreements between Democrats and Republicans threaten this process.

Two Committees, Two Approaches

Both the Senate Banking Committee and Agriculture Committee are advancing their respective versions of the Market Structure Act. The Agriculture Committee’s draft emphasizes the central role of the CFTC in regulating digital commodities, attempting to adopt a more bipartisan stance compared to the Banking Committee’s version.

Senate Agriculture Committee Chairman and Republican Senator John Boozman acknowledged “fundamental policy differences” earlier last week. He thanked Democratic leader Cory Booker for his negotiation efforts to advance the legislation but hinted that a full consensus was not reached. “While it’s unfortunate we didn’t reach a comprehensive agreement, I am pleased that this collaboration has improved the legislation,” Boozman stated.

These differences became more concrete on Friday. Democrats (and some Republicans) submitted a series of proposed amendments, scheduled for debate during the committee markup on Tuesday. Markup sessions are a crucial step in the legislative process, where lawmakers discuss bill provisions and vote on proposed amendments.

CFTC Power Structure Becomes a Focus

The new bill’s text shows some areas of compromise. For example, regarding whether the CFTC needs a bipartisan team of commissioners to lead the agency, lawmakers seem to have reached an agreement. The bill includes provisions stating that before the law takes effect, the CFTC must be “fully staffed,” including “at least 2 nominated commissioners, with consultation and coordination with senior members of the minority party prior to nomination.”

The inclusion of this clause indicates progress on the issue of checks and balances within the agency, which had sparked intense debate in earlier draft versions.

Developer Protection Issues Resurface

However, other sections still harbor potential disagreements. The bill inherits a clause from the Banking Committee version: providing legal protections for cryptocurrency developers. Senate Judiciary Committee Chairman and Republican Senator Chuck Grassley of Iowa wrote to the Banking Committee last week, explicitly stating that such provisions should fall under the jurisdiction of the Judiciary Committee, not the Market Structure Act. This controversy could resurface during the markup.

Industry Observations and Market Reactions

Following the bill’s release, the cryptocurrency industry has generally maintained a relatively moderate stance. As of writing, industry insiders have not expressed major concerns about this new version, instead observing the debate over amendments and the final committee vote.

Notably, industry opinions on certain provisions vary. Some observers note that while this proposal is more “pro-crypto” than the Banking Committee’s version, whether it can garner broad bipartisan support remains uncertain. This uncertainty could affect its likelihood of passing the full chamber.

Legislative Outlook Faces Multiple Variables

The fate of this bill depends on several factors. First, the markup itself is unpredictable. Amendments proposed by Democrats could alter key provisions, affecting its bipartisan appeal. Second, market observers suggest two possible scenarios:

Scenario 1: Bipartisan compromise passes. Although the current version lacks full agreement, Congress might reach bipartisan support for amendments that facilitate the bill’s smooth progress, enabling it to be brought to a full chamber vote with broader backing.

Scenario 2: Political interference. Challenges funded by crypto political action committees (e.g., Fairshake) could persuade enough Democratic lawmakers to support the bill, providing sufficient party-based backing. In this case, the bill could advance amid partisan divisions.

Scenario 3: Stalling or failure. The bill might fail to pass the markup entirely or be shelved before a full chamber vote — though this would not necessarily mean ultimate defeat, as the issue could be revisited in subsequent sessions.

Meanwhile, the Senate Banking Committee is unlikely to revisit market structure topics in the short term. Sources told media that the White House and committee members hope the crypto industry and banking sector will first resolve their disagreements over stablecoin yields before proceeding further.

Key Events This Week

The legislative outlook faces external disruptions. A major winter storm is expected to reach the U.S. East Coast on Saturday evening, extending storm conditions and extreme cold to the Midwest and Southeast, lasting into Monday morning. Severe weather could impact flight schedules, and if Senate Agriculture Committee members cannot return to Washington in time for Tuesday’s hearing, the meeting may be postponed.

Another urgent deadline is the imminent exhaustion of federal funds — the U.S. government is expected to run out of money by Friday. The House has quickly passed a funding package and sent it to the Senate, but the Senate still needs to vote on it. This emergency could divert lawmakers’ attention and delay progress on the market structure bill.

Key dates this week:

• Tuesday 3:00 PM UTC / 10:00 AM Eastern Time: SEC and CFTC chairs will hold a joint discussion on progress in crypto regulation — signaling current policy directions.
• Tuesday 8:00 PM UTC / 3:00 PM Eastern Time: The Senate Agriculture Committee’s markup session will officially take place, a critical vote stage for the Market Structure Act in committee.

Future Outlook

While the new bill reflects some consensus among lawmakers on certain technical issues, partisan divides could still be the main obstacle to its passage. Industry and policy observers will closely watch the outcome of Tuesday’s committee markup and the content of potential amendments — these will determine whether the bill can be pushed to the full chamber with strong support or faces further political hurdles. Throughout this process, the final positions on key issues such as stablecoin regulation, developer protections, and CFTC authority will directly influence the future regulatory environment for the crypto industry.