U.S. Senator Tim Scott, Chairman of the Senate Banking Committee, announced that behind-the-scenes negotiations on the long-stalled crypto market structure bill are advancing, with a potential breakthrough on the contentious stablecoin yield provision expected as soon as this week. Speaking at The Digital Chamber's DC Blockchain Summit in Washington, D.C., Scott stated, "I believe that this week we will have the first proposal in my hands to take a look at." He added that if this occurs, "we'll at least know that the sketch looks like the person. If that's the case, I think we're gonna be in much better shape."
The most publicly debated issue has been a provision that would ban third parties from offering yield payments on stablecoins. Banking groups argue such yields, offered by platforms like crypto exchanges, create a loophole in existing law (the GENIUS Act) and could threaten banking system stability by encouraging deposit flight. Crypto lobbyists have countered, defending the popular customer incentive and accusing banks of anti-competitive behavior.
Scott acknowledged stablecoin yield as the "largest publicly celebrated challenge" but noted other key issues are also being negotiated. These include provisions around ethics, anti-money laundering (AML) rules for decentralized finance (DeFi), regulatory agency quorum, and the scope of which entities are "carved in and who is carved out" of the rules. He indicated significant progress has been made on ethics and quorum issues over the past 30 days.
The Senate's version of the market structure bill, which outlines how regulators like the SEC and CFTC will approach crypto, has been stalled since the House passed its similar CLARITY Act in July. Procedural rules require involvement from both the Senate Banking Committee (overseeing the SEC) and the Senate Agriculture Committee (overseeing the CFTC). The Banking Committee indefinitely postponed a markup of the bill in January, while the Agriculture Committee sent its markup to the Senate floor.
