Prepared by Josh Burton

This edition of Crypto Current is a little different. If you’ve been following this series, you know the pattern: a new rule, a staff statement, a signal from Washington we can dissect and translate into action. This time, the signal is the opposite. What matters most at this moment is the growing gap between momentum and action. Comprehensive digital asset market structure legislation has stalled in the Senate, and the window to pass it before midterm campaigns consume Washington is narrowing fast. What’s driving the delay points to where the regulatory framework is headed – and the outcome will determine whether the clarity we’ve been tracking rests on durable statutory ground or remains subject to the next change in administration. Agency guidance is useful. Statutes are harder to undo.

Two Chambers, Two Speeds

The Digital Asset Market Clarity Act of 2025 – known informally as the CLARITY Act – passed the House on July 17, 2025 with a bipartisan vote of 294 to 134[1], establishing a framework that would give the Commody Futures Trading Commission (CFTC) primary jurisdiction over digital commodity spot markets while preserving Securities and Exchange Commission (SEC) oversight over digital asset securities and fundraising transactions. It was the first time a comprehensive crypto market structure bill had cleared either chamber.

But momentum in the House has not made it across the Capitol.

Jurisdiction in the Senate splits across two committees – Banking (SEC side) and Agriculture (CFTC side) – meaning any Senate bill requires parallel markups that must be reconciled with each other and with the House product. The Senate Banking Committee, chaired by Sen. Tim Scott, released its version – the Responsible Financial Innovation Act of 2025 – in September 2025and issued a revised amendment in January 2026[2]. The Senate Agriculture Committee, under Chairman John Boozman, released a bipartisan discussion draft with ranking member Sen. Cory Booker in November 2025 and updated legislative text (“Digital Commodity Intermediaries Act”) in January 2026[3].

Both committees scheduled simultaneous markups for January 15, 2026. The Banking Committee postponed its markup the night before the vote – reportedly after Coinbase withdrew support for the latest version – and no new date has been publicly set. The Agriculture Committee advanced its own updated text to a markup on January 29. As of today, reconciliation between the two Senate drafts has not been completed, and a combined bill has not reached the floor.

The Sticking Points

Three substantive sticking points are primarily responsible, with a fourth structural problem layered on top.

1. Stablecoin Yield: Banks vs. Crypto

The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) – enacted in July 2025[4] – prohibits stablecoin issuers from paying “interest or yield” on their tokens. But it is silent on whether crypto exchanges and other intermediaries can pay returns to stablecoin holders. Banks have lobbied hard to close what they view as a loophole, arguing yield-bearing stablecoins will pull deposits and reduce loanable funds. Crypto firms counter that this is competitive protectionism dressed as prudential concern.

A bipartisan compromise has been circulating – Sen. Angela Alsobrooks (D-MD) proposed language that would allow exchanges to pay rewards on transactions made with stablecoins but bar programs that pay rewards on tokens sitting in a wallet, drawing a line between activity-based rewards and passive yield. Whether that distinction survives final negotiations remains contested.

Adding fuel to this debate, the White House Council of Economic Advisers (CEA) published a report on April 8, 2026 (“Effects of Stablecoin Yield Prohibition on Bank Lending”) directly challenging the banks’ economic premise. The CEA concluded that a yield ban would increase bank lending by roughly $2.1 billion – just 0.02% – while imposing a net welfare cost of $800 million on consumers. The report characterized the conditions required for a meaningful lending impact as “implausible” and argued that stablecoin growth largely reshuffles deposits within the banking system rather than shrinking the overall pool.

The CEA findings are significant because they push back from within the administration on the banks’ core argument. Whether that shifts Senate dynamics remains to be seen, but it is a meaningful data point heading into what could be the final round of negotiations.

2. DeFi: Who Registers, Who Is Responsible

The Senate Banking Committee’s amendment includes a section on “responsible innovation in decentralized finance” that would direct the SEC and Department of the Treasury to issue rules clarifying how a person or group “in control of” a trading protocol must register, including disclosure, recordkeeping, and AML/Bank Secrecy Act compliance standards. It also explicitly requires that these obligations “protect the rights of software developers” consistent with the First Amendment.

That last phrase reflects a tension the Tornado Cash prosecution[5] and other crypto court cases have made vivid: at what point does publishing open-source code make you legally responsible for what others do with it? The bill acknowledges the tension without fully resolving it – the hard work gets delegated to a rulemaking process that will take years and likely attract litigation from multiple directions. The definition of who is “in control” of a protocol will be one of the most consequential interpretive questions to come out of this legislation.

3. Ethics, Conflicts, and the Trump Factor

Democrats in both chambers have been consistent: they will not provide bipartisan support for a market structure bill without language restricting public officials from personally profiting from the digital asset industry. The Trump family’s increasingly high-profile crypto ventures have made this a political rather than merely procedural condition. Sen. Ruben Gallego (D-AZ) described this as a “red line” for his support, telling reporters that lawmakers “need to get it right, or they’re not going to have enough votes to pass this thing.”[6]

This is a genuinely uncertain variable. Without ethics language Democrats can defend to their constituents, it is hard to see how they provide the votes necessary to reach 60 in the Senate – and without that support, a floor vote is unlikely.

4. The Inter-Chamber Problem

Even if the Senate resolves its internal disagreements, the Senate’s product diverges structurally from the House bill. The Senate Banking Committee draft uses an “ancillary asset” concept – a category of fungible assets sold as part of securities transactions – to delineate the SEC’s role, a term that does not appear in the CLARITY Act. House Financial Services Committee members have signaled they are not inclined to simply defer to whatever the Senate produces. Even after the two Senate committees reconcile, the resulting product will likely need to go back through the House – adding another step and another opportunity for delay.

The Clock Isn’t Legislative. It’s Political

The midterm election cycle begins consuming the legislative calendar earlier than most people realize. By late spring, Members shift focus to campaigns and districts, and leadership’s bandwidth for complex legislation narrows sharply. We are in April 2026. If comprehensive market structure legislation does not clear both chambers soon, expect the calendar to be dominated by midterm dynamics through November, with any renewed push deferred to a lame-duck session or the next Congress. It is also worth noting that Sen. Cynthia Lummis (R-WY) – one of the Senate’s most vocal crypto champions – announced in December 2025 that she will not seek reelection, which could reduce the legislative energy behind this effort if it carries into 2027.

Why This Matters: The Durability Gap

Everything we’ve tracked over the past year – the March 2026 SEC-CFTC joint Commission Interpretation on token taxonomy[7], the no-action letter on state trust company custodians[8], the CFTC’s spot crypto trading authorization[9] and tokenized collateral pilot[10] – is administrative action. The agencies have moved quickly and constructively, but staff statements are not statutes and no-action letters are not permanent. A future administration could revise or reverse these positions without congressional action.

That risk is sharpened by the Supreme Court’s 2024 decision in Loper Bright Enterprises v. Raimondo[11], which weakened the deference courts previously gave to agencies interpreting ambiguous statutes. Without a clear congressional mandate, novel agency interpretations are more exposed to legal challenge. The President’s Working Group on Digital Assets made exactly this point in its July 2025 report: agencies should use existing authority, but statutory clarity is the more durable solution.

How to Position While This Plays Out

For RIAs and investment advisers, both the CLARITY Act and Senate drafts contemplate new registration regimes for digital commodity exchanges, brokers, dealers, and custodians – build flexibility into compliance frameworks now.

For stablecoin-adjacent strategies, the yield dispute directly affects which stablecoin structures will be viable for portfolio management, liquidity, and collateral.

For DeFi-exposed managers, how the eventual bill defines “in control” of a protocol will determine whether on-chain strategies require engagement with newly registered intermediaries.

And for everyone: the compliance programs that will age best are the ones built to be adaptable, not the ones that assume today’s agency posture is permanent.

Key Takeaways

• The CLARITY Act passed the House in July 2025, but comprehensive market structure legislation has not reached a Senate floor vote. Both Senate committees advanced drafts through January 2026, but the Banking Committee’s markup was postponed and a combined bill has not been finalized.

• The stablecoin yield dispute is the most active sticking point. A White House CEA report (April 8, 2026) challenged the economic case for a yield ban, but a workable legislative compromise has not been finalized.

• DeFi developer obligations, AML standards for protocol operators, and ethics provisions restricting public officials’ crypto profits are the other primary unresolved issues – each with significant political weight.

• The midterm calendar creates a narrow window. If a bill does not clear both chambers in the near term, the legislative push likely defers to late 2026 at the earliest.

• In the meantime, the SEC and CFTC’s existing guidance remains operative – but it is administrative, not statutory, and more vulnerable to legal challenge and administration change. Investment advisers should build compliance programs with that in mind.

As always, let us know if you’d like to discuss how any of this might affect your fund strategy, compliance framework, or product offerings by emailing us at [email protected]. There’s a lot of moving pieces right now, and the next few weeks will tell us a lot about how this year’s legislative story ends.

Citations

[1] Actions – H.R.3633 – 119th Congress (2025-2026): Digital Asset Market Clarity Act of 2025 | Congress.gov | Library of Congress

[2] Chairman Scott Releases Bipartisan Negotiated Market Structure Bill Text | United States Committee on Banking, Housing, and Urban Affairs

[3] Chairman Boozman Unveils Updated Market Structure Legislation, Schedules Business Meeting | United States Senate Committee on Agriculture, Nutrition, and Forestry.

[4] Text – S.1582 – 119th Congress (2025-2026): GENIUS Act | Congress.gov | Library of Congress

[5] The Tornado Cash Trial’s Mixed Verdict: Implications for Developer Liability | Insights | Mayer Brown

[6] Vault: Key Democrats draw ‘red line’ on crypto ethics | Punchbowl News

[7] SEC Clarifies the Application of Federal Securities Laws to Crypto Assets | SEC.gov

[8] No-Action Letter to Simpson Thacher & Bartlett LLP | SEC.gov

[9] Acting Chairman Pham Announces First-Ever Listed Spot Crypto Trading on U.S. Regulated Exchanges | CFTC

[10] Acting Chairman Pham Announces Launch of Digital Assets Pilot Program for Tokenized Collateral in Derivatives Markets | CFTC

[11] Loper Bright Enterprises v. Raimondo | Liberty Justice Center