By Joe Light and Callum Keown
A crypto bill that would have established clear rules for the industry appears to be at death's door after the exchange platform Coinbase pulled its support and Sen. Tim Scott delayed a committee vote scheduled for Thursday. But the fight isn't over.
The Senate Banking Committee had been due to consider the Digital Asset Market Clarity Act on Thursday after publishing a draft proposal of the market-structure legislation earlier this week. That was until Coinbase withdrew its support for the bill Wednesday in a dramatic turnabout tied in part to the bill's prohibition on most stablecoin rewards, or interest payments.
The roadblock had little effect on digital asset prices.
Bitcoin traded near $95,663 late Thursday, down 1.3% over the past 24 hours, according to CoinDesk. It hit highs of $97,700 late Wednesday. Ethereum, the second-biggest crypto, was down about 1.4% to $3,303, while popular altcoin XRP was down 2.9% to $2.07.
Coinbase stock dropped 6.5% to $239.28.
Scott, the South Carolina Republican who chairs the Senate Banking Committee, said "everyone remains at the table working in good faith," in a post on X. He described the delay as a "brief pause."
Despite saying Coinbase wasn't able to support the bill, CEO Brian Armstrong said he's "actually quite optimistic that we will get to the right outcome with continued effort."
In a post on X, Armstrong cited several issues, including a "de facto ban" on tokenized stocks and prohibitions on decentralized finance as reasons for withdrawing support. But the centerpiece of the conflict is widely seen to be the bill's prohibition on most "stablecoin rewards."
Coinbase and other firms want to be able to pay customers a yield for keeping stablecoin holdings at their firms. That is a direct threat to banks that pay low rates of interest on consumers' accounts and argue the move could cause them to lose deposits.
The concerns are especially acute at community banks, which unlike large banks are unlikely to have the critical mass needed to launch their own stablecoins. Last month, the Independent Community Bankers of America released an analysis estimating that permitting interest on stablecoin holdings would reduce community bank deposits by $1.3 trillion and lending by $850 billion.
The Banking Committee's draft had proposed banning interest payments on stablecoins that are merely held on a trading platform, but would allow rewards to be paid when the stablecoins are used . Crypto holders could potentially still earn rewards for activities like selling the stablecoins, staking them to a blockchain network, or posting the coins as collateral.
With the Senate on recess beginning this week, the snag will delay a potential vote in the Banking Committee until at least February, wrote TD Cowen analyst Jaret Seiberg in a research note. That is a win for banks in more ways than one because a crypto bill is one potential vehicle that lawmakers could have used to impose the 10% interest credit-card cap that Trump recently endorsed.
Progress toward a new crypto regime is still possible elsewhere in Congress. The Senate Agriculture Committee is working on complementary legislation that would govern how dealings in crypto "commodities" like Bitcoin are regulated. A committee vote on that bill is still scheduled for this month.
Wholesale institutional adoption of cryptocurrencies, however, could depend on the Banking Committee's legislation, which would include rules on when digital-asset activities trigger the jurisdiction and oversight of the Securities and Exchange Commission. Without that clarity, the SEC under a new administration could take an expansive view of its authority, as it did under President Joe Biden.
"We view full enactment of the bill as an important prerequisite for institutional adoption of digital assets, as it represents the green light that many asset managers and fiduciaries have been waiting for to deploy capital into crypto markets in earnest," wrote StoneX analyst Mark Palmer in a note on Thursday.
Though some analysts believe that lawmakers could still approve a combined legislative package as soon as the second quarter, if that deadline is missed, it could become extremely difficult for them to move a bill this year. That is because Democrats see a high chance of taking control of the House of Representatives in the November midterm elections and could want to wait until they take control of the chamber to push for a better deal in 2027.
Time is running out for the effort to enact sweeping crypto legislation.
Write to Joe Light at joe.light@barrons.com and Callum Keown at callum.keown@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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January 15, 2026 17:09 ET (22:09 GMT)
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