US Senate suspends crypto market structure bill after Coinbase

US lawmakers have put a major crypto market structure bill on hold after strong opposition from Coinbase. Further criticism from the exchange's chief executive has raised doubts about whether the proposal can move forward without changes. As a result, members of the Senate Banking Committee delayed a planned review session while reassessing industry and regulatory concerns related to the project.

Coinbase Reports Major Hurdles as Senate Delays Key Crypto Project

Plans to move forward with the project were halted after public criticism from Brian Armstrong, who said the project could not gain support from Coinbase in its current form. Lawmakers on the US Senate Banking Committee aimed to begin discussions on the overhaul on Thursday (January 15). Following Armstrong's comments, committee members chose to pause progress and re-evaluate the proposal.

Armstrong argued that accepting an imperfect framework would be worse than delaying legislation altogether. Coinbase's position carried significant weight given its long-standing role in policy discussions and its influence among regulators and lawmakers in Washington.

The concerns raised by Coinbase focused on several provisions seen as major obstacles:

• A formulation of the project which could effectively prohibit tokenized actions.
• Limits on decentralized finance that could expand government access to user data.
• Proposed changes removing reward mechanisms from stablecoins.
• A shift in the regulatory balance away from commodity oversight.
• Broader risks to innovation in US-based crypto markets.

The debate over regulatory authority has also attracted strong criticism. Armstrong warned that the changes in the draft would reduce the role of the Commodity Futures Trading Commission while increasing the power of the Securities and Exchange Commission. Industry executives have long opposed such a move, arguing that it could subject many crypto assets to stricter rules designed for traditional securities.

Disagreements over stablecoins complicate path to committee vote

Lawmakers' decision to delay the review reflected uncertainty over whether there would be enough votes to move the bill out of committee. Rules on stablecoins have emerged as a key fault line, with disagreements emerging between parties.

Some Republicans apparently questioned the impact on innovation. At the same time, several Democrats have expressed concerns about consumer protections and potential conflicts of interest.

The points of contention surrounding stablecoins have become central to the debate:

• The current text prevents crypto companies from paying interest on stablecoin holdings.
• Banks argue that rewards could trigger deposit withdrawals.
• Crypto companies say a ban would favor traditional institutions.
• Lawmakers remain divided on competitive effects.
• Consumer protection issues remain unresolved.

Despite the pause, committee chairman Tim Scott said that discussions remain active. He described the delay as part of an ongoing bipartisan effort involving lawmakers, regulators and industry representatives.

Uncertainty now surrounds the next stages of the project. While revisions could bring the proposal back for review, this episode illustrates how industry feedback can reshape legislative momentum at critical stages. For now, the crypto market structure bill remains on hold as negotiations continue.