The U.S. Senate Banking Committee has indefinitely shelved the Digital Asset Market Clarity Act, the landmark legislation intended to overhaul the nation's cryptocurrency market structure. This abrupt pause comes less than a week after Coinbase, a pivotal industry backer, publicly withdrew its support, citing critical flaws in the latest draft. With the crypto agenda stalled, committee Chairman Tim Scott (R-SC) has signaled an immediate pivot to President Trump’s aggressive housing affordability agenda, effectively putting digital asset regulation on ice until late spring 2026.
Coinbase Pulls the Plug: Why Support Collapsed
The legislative effort, which had been gaining bipartisan momentum throughout late 2025, hit a wall on January 14 when Coinbase CEO Brian Armstrong announced his company could no longer support the bill. In a decisive statement, Armstrong declared that the industry would "rather have no bill than a bad bill," arguing that recent amendments had rendered the legislation "materially worse than the status quo."
Coinbase’s withdrawal was triggered by last-minute changes that the exchange viewed as existential threats to the U.S. digital asset economy. Key among these grievances was a provision effectively banning tokenized equities and severe restrictions on DeFi protocols that would have mandated impossible compliance standards for decentralized systems. However, the deal-breaker appears to have been a "poison pill" amendment regarding stablecoins.
The Banking Lobby vs. Stablecoin Yields
At the heart of the collapse is a fierce turf war between the traditional banking sector and the crypto industry. The shelved draft included language—heavily lobbied for by traditional banks—that would have prohibited stablecoin issuers and exchanges from offering yield or rewards on stablecoin balances.
Banks have long argued that interest-bearing stablecoins present an unfair competitive advantage over regulated bank deposits, potentially risking capital flight from the traditional financial system. For Coinbase and other major crypto platforms, however, eliminating these rewards would destroy a core utility of stablecoins and stifle innovation. "The goal was to create clear rules of the road," one industry insider noted. "Instead, the drafted language looked more like a roadmap to irrelevance for American crypto companies."
Focus Shifts: The Trump Housing Agenda Takes Center Stage
With the crypto bill in limbo, the Senate Banking Committee is pivoting rapidly to address a different kind of market crisis. Chairman Scott confirmed on Thursday that the committee’s immediate focus will shift to housing affordability, aligning with President Trump’s recent executive order restricting institutional investors from purchasing single-family homes.
The administration has made housing costs a central pillar of its 2026 policy platform ahead of the November midterms. "We cannot afford to spend months debating digital asset definitions while American families are priced out of the housing market," a committee aide stated. This pivot suggests that crypto legislation will take a backseat to hearings on mortgage rates, institutional ownership caps, and construction incentives for the foreseeable future.
What This Means for Crypto Regulation in 2026
The delay effectively pushes any potential markup of the crypto market structure bill to late February or March at the earliest. However, with the 2026 midterm election cycle heating up, the window for passing complex financial legislation is narrowing. If a consensus cannot be reached before the summer recess, the U.S. risks going another full year without a comprehensive federal framework for digital assets.
While the Senate Agriculture Committee, led by Senator John Boozman, continues to work on a competing version of the bill, the loss of support from the industry's largest U.S. exchange makes the path forward treacherous. For now, the crypto industry remains in a regulatory gray zone, waiting to see if a compromise can be salvaged from the wreckage of the January negotiations.
