The unbridled optimism that swept through the cryptocurrency industry during Donald Trump’s first year back in the White House is giving way to anxiety, after a long-anticipated digital-asset market structure bill was delayed in the US Senate amid a growing political and industry backlash over how stablecoins should be regulated.
The Senate Banking Committee on Wednesday postponed its scheduled discussion of the bill, just hours after Coinbase Global Inc. withdrew its support for the latest draft. At the centre of the dispute are provisions that would restrict crypto companies’ ability to offer yield or rewards on stablecoin holdings held by customers — a business line many firms see as critical to their competitiveness.
Stablecoins, digital tokens typically pegged one-to-one with the US dollar, are a foundational pillar of the crypto ecosystem. Their use has surged since Congress passed landmark legislation governing stablecoins in July, giving legal clarity to an asset class long viewed with scepticism by regulators. That law, known as the Genius Act, allows banks to issue their own stablecoins but bans issuers from offering interest, reflecting concerns from the banking sector about deposit flight.
After helping bankroll pro-crypto candidates and playing an outsized role in Trump’s re-election, industry executives had expected momentum in Washington to translate into a comprehensive regulatory framework for broader digital-asset markets. Instead, they now fear that the Senate impasse could leave the US trailing behind Europe and parts of Asia in establishing clear capital-markets rules for crypto.
“This delay is concerning as it creates a probability for the US to be one of the only major digital-assets hubs without a clear capital markets rulebook in 2026,” said Dea Markova, director of policy at Fireblocks, a crypto custody and infrastructure provider.
The fight over stablecoin rewards illustrates how technical policy questions can quickly become political flashpoints. Ari Redbord, global head of policy and government affairs at TRM Labs, said rewards sit “at the intersection of payments, savings-like behavior, and market incentives,” explaining why what began as a narrow drafting issue has turned into a central battle as the bill moves through committee markup.
Crypto executives argue that banning or severely limiting rewards would put US-regulated firms at a disadvantage against offshore competitors that face looser rules. “Whenever things are unclear, it is then again subject to interpretation,” said Murugesan, a senior industry executive. “If there are any restrictions, the theory is that’s only going to disadvantage US companies as opposed to offshore companies who are going to continue to give rewards out.”
Banks, however, have lobbied hard against yield-bearing stablecoins, warning that they could siphon deposits away from traditional lenders and undermine financial stability. Several large crypto firms have already applied for bank charters under the Genius Act, hoping to bridge the gap between digital assets and traditional finance while operating under a clearer regulatory umbrella.
Coinbase’s swift withdrawal of support underscored the industry’s growing willingness to openly challenge lawmakers. Chief executive Brian Armstrong, a vocal Trump supporter, said on X that the company could not back the bill in its current form due to “too many issues.” His stance drew a sharp response from Senator Cynthia Lummis, a member of the Banking Committee and a longtime crypto advocate, who said such reactions from crypto firms “prove they just are not ready.”
Despite the setback, investors and policy analysts caution against reading the delay as a fatal blow. Michael Bucella, managing partner at Neoclassic Capital, said he remains confident legislation will pass before the end of Trump’s term. “The bigger question,” he said, “is not whether a bill gets done, but what form it ultimately takes — and who it ends up favouring.”
For an industry that once believed Washington had finally embraced it, the episode is a reminder that regulatory certainty remains elusive, even with political winds seemingly at its back.
