There were no markup hearings in the past week on market structure legislation. Legislators still hold their firm positions close to the West. The question changes from “will we get a market structure bill this year” to “will Congress have enough time to push this bill across the finish line?”
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The narrative
The Senate Banking Committee revealed this week that it would not hold a markup hearing on its draft market structure legislation, confirming what many suspected — that lawmakers just didn’t have enough time to get this bill across the finish line this year.
Why it matters
The market structure bill, which moves forward to 2026, makes it much more likely that it might not pass at all. For it to become law, lawmakers will have to hit the ground running after the holiday break and try to get through the entire process before heading off to the 2026 midterm elections. During that time, they will have to navigate another potential government shutdown, the complication that the market structure bill has two parts coming from two different committees and deal with the fact that the different sides are entrenching themselves further, according to several people tracking the process.
To break it down
The Senate Banking Committee had hoped to hold a hearing of some sort — if not an actual markup — by the end of last week, but this past Monday, Chairman Tim Scott’s office issued a statement confirming that would not happen, saying he looked forward to further cooperation in 2026.
“From the beginning, Chairman Scott has been clear that this effort must be bipartisan,” a committee spokesman said in a statement. “He has consistently and patiently engaged in good faith discussions to produce a strong bipartisan product that provides clarity for the digital asset industry and also makes America the crypto capital of the world. The committee continues to negotiate and looks forward to a markup in early 2026.”
There are a few big issues, as detailed to CoinDesk by four people following the process: how decentralized finance (DeFi) can be defined and regulated; how the stablecoin dividend should be treated; whether major regulatory agencies such as the Securities and Exchange Commission or the Commodity Futures Trading Commission will be staffed by a bipartisan slate of commissioners; and whether lawmakers can bind President Donald Trump to any sort of ethics agreement. These are not just policy issues that lawmakers can hash out alone; some of them, like how DeFi is regulated, have technical implications for parts of the broader crypto industry, and a poor definition of “decentralization” may be difficult to change in a future law.
These are not new problems either. As CoinDesk has reported, repeatedly, these points have been at the heart of negotiations for months, even as lawmakers had been trying to get to a place where they could hold a crucial markup hearing before Congress breaks for the holidays. A markup is a formal hearing where lawmakers offer changes to tweak legislation before voting on whether to bring it to the rest of the chamber for a broader vote.
Being off the table could end up being a blessing in disguise, two of the people said. Holding a check mark would leave the bill open to attack from its opponents in the coming weeks, or force a more partisan bill than could survive the full Senate.
“It’s better that there was no markup because there just wasn’t enough time, given the shutdown and other factors, to get both sides to a compromise where the markup would have been bipartisan,” one of the people said. “If there were to be a markup this year, I think it almost certainly would have been along party lines, which would have really hurt the potential for the bill to get enough support on the floor.”
Clearly, there is an appetite for bipartisan cooperation on this legislation. The House has already voted through its own market structure bill with an overwhelming bipartisan majority, though the Senate largely ignored the bill’s existence and has spent the past five months cobbling together its own version — albeit with a significant echo of the House’s Digital Market Clarity Act.
Decentralized economy
Although the crypto industry is pushing for overly restrictive DeFi rules in the bill, this is not a realistic outcome, two of the people said. Senators like Mark Warner, who is the top Democrat on the Senate Intelligence Committee and has national security concerns, would like to see some sort of DeFi safeguards before voting for the bill. Specifically, Warner wants anti-money laundering concerns to be strongly addressed.
“There are some real questions about what the capacity of the federal government is to blacklist protocols and wallets or whatever and kind of put a regulatory perimeter around DeFi,” one of the people said. “We’re looking at both, what do we want to do and what can we do? If there’s nothing, then at least you won’t have Democratic support.”
There are also concerns about regulatory arbitrage from traditional finance firms, though one of the people said those concerns may stem more from an anti-competitive stance (in that these firms don’t want to compete with DeFi) than actual consumer protection considerations. Still, traditional firms are lobbying lawmakers for this legislation, and their concerns may be addressed in any final bill.
Another of the people said the DeFi concerns may well be what blows up the bill. While there are Democrats who want to support a crypto bill, their left flank doesn’t want them to and will pressure the more moderate lawmakers, they said. But on the other hand, any strict regulation of DeFi would lose the bill its industry support.
“People are going to get really mad about any deal because one side doesn’t want DeFi to exist, the other side wants DeFi completely unregulated,” this person said. “The middle is going to be some amount of regulation of what we call DeFi. To get an agreement, everybody has to be a little bit unhappy.”
The role of the President
Trump also remains a wild card in these negotiations. Asked at a White House event whether he would appoint Democrats to regulatory agencies like the Securities and Exchange Commission and the Commodity Futures Trading Commission, which are slated to have bipartisan commissioners, he suggested the answer might be no.
“Well, do you think they would appoint Republicans [if it] was up to them?” Trump said. “So, you know, we’ll look at it. We want to be fair, but typically they don’t appoint Republicans.”
Democratic presidents have traditionally appointed Republicans to the SEC and CFTC — Commissioner Hester Peirce, for example, was originally nominated by former President Barack Obama.
“There are certain areas that we look at and there are certain areas that we share and share power, and I’m open to that,” Trump said.
The broader issue may be Democrats’ ethical concerns. Democrats have made it clear for months now that they want to impose protections against Trump’s family ties to crypto. Although the White House maintains there are no conflicts of interest, Sen. Cynthia Lummis, who spoke at the Blockchain Association’s annual summit earlier this month, said she had been negotiating with the White House on behalf of Democrats to try to get the White House to agree to an ethics provision.
“The White House kicked it back and said, ‘You can do better than this,’ so that was unacceptable to the White House,” she said on stage.
Some kind of compromise will be needed. While there are Democrats who want to support this bill, they would have to be able to show voters that they were able to put some sort of limit on Trump and his family’s business interests or again risk being attacked by their left flank, two of the people said. This is a particularly acute concern heading into an election and as candidates for the 2028 presidential election prepare to formally announce their bids.
One of the people said that if Congress can resolve the other outstanding issues, they might be able to convince the White House to support some kind of ethics provision, presenting it as a chance to actually win on the bill rather than let the work slip away.
Timeline restrictions
Two of the people said there will be a markup next month, on at least one of the drafts. What is less clear is the bill’s path to the Senate floor. The Banking Committee and the Agriculture Committee must both mark up their own respective bills and then reconcile differences between the drafts. The Senate can vote on the overall bill, which will then go to the House, which is likely to pass it, and then to the White House for Trump’s signature.
If the bill doesn’t get some kind of markup by the end of January, “I think the chances go way down” for progress on overall passage, one of the people said. Another of the people said they were hesitant to put a firm timeline on when the markups could happen, but said the bill must be through the Senate in April or the chances of it becoming law in 2026 were very slim.
Complicating matters is the fact that Congress will be focused on funding the government when it returns from recess; the continuing resolution, which ended the last government shutdown, expires on January 30. If Congress fails to agree on a new resolution or budget, the government risks another shutdown, further delaying any progress on market structure legislation.
As CoinDesk’s Jesse Hamilton also points out, the further into 2026 and the congressional elections, the more likely it is that lawmakers may choose to just hold off on any legislation until they see the results of next November’s poll. If Democrats win control of the House of Representatives, any bill will have to adhere to their priorities.
The bill is by no means dead. A January markup may well happen — White House Crypto and AI Czar David Sacks said in a tweet late Thursday that Senators Scott and John Boozman “confirmed that a markup for Clarity is coming in January,” though one is not planned yet — and a Senate floor vote would follow soon after, especially if both committees mark up at the same time.
This week
If you have thoughts or questions about what I’ll be discussing next week or any feedback you’d like to share, feel free to email me at [email protected] or find me on Bluesky @nikhileshde.bsky.social.
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See you next week!
