Washington’s long-running effort to write clear rules for crypto is moving forward, but not cleanly.

 

The U.S. Senate has released updated language for a long-anticipated crypto market structure bill, yet deep disagreements remain between lawmakers, committees, and the industry itself. Two separate Senate committees are now pushing different versions of the legislation, and the gaps between them are proving harder to close than many expected.

 

At stake is nothing less than who regulates crypto in the United States, how stablecoins are allowed to operate, and whether decentralized finance can exist without being squeezed into a framework built for Wall Street.

 

A Bill That Is Really Two Bills

The market structure effort is split between the Senate Agriculture Committee and the Senate Banking Committee, each advancing its own vision of how digital assets should be governed.

 

The Agriculture Committee’s draft leans heavily toward expanding the authority of the Commodity Futures Trading Commission. Under this approach, most major cryptocurrencies would be treated as digital commodities, placing them largely outside the Securities and Exchange Commission’s reach.

 

The Banking Committee’s version, often referred to as the CLARITY Act, takes a more cautious and detailed approach. It attempts to draw clearer legal lines between what counts as a security and what does not, while preserving a significant role for the SEC in overseeing parts of the crypto market.

 

Both sides say they want regulatory certainty. The problem is they disagree on what that certainty should look like.

 

The CFTC Versus SEC Fight Is Still the Core Issue

At the heart of the debate is a familiar Washington turf war.

 

Supporters of the Agriculture Committee draft argue that the CFTC is better suited to oversee crypto markets, particularly spot trading for assets like Bitcoin and Ethereum. They point to the agency’s lighter touch, its experience with commodities, and its closer alignment with how crypto markets actually function.

 

The Banking Committee sees things differently. Its members are more focused on investor protection and worry that shifting too much power to the CFTC could weaken oversight. Their draft tries to preserve the SEC’s role, especially when tokens are issued in ways that resemble traditional securities offerings.

 

Neither side appears ready to fully back down, which is why the Senate still has not settled on a single unified bill.

 

Stablecoins Become a Flashpoint

Stablecoins, once seen as the least controversial corner of crypto, are now one of the most contentious parts of the bill.

 

One major sticking point is a proposed restriction on stablecoin rewards or yield. Under the Banking Committee’s draft, issuers would face limits on paying users simply for holding stablecoins.

 

Crypto companies argue this would kneecap a core feature of digital dollars and make them less competitive with traditional financial products. Some in the industry say the provision feels less like consumer protection and more like an attempt to shield banks from competition.

 

Lawmakers defending the restriction say they are trying to prevent stablecoins from morphing into unregulated interest-bearing products that could pose risks to consumers and the broader financial system.

 

The disagreement has become symbolic of a larger divide over how much freedom crypto should have to innovate inside a regulated framework.

 

DeFi Still Does Not Fit Neatly Anywhere

Decentralized finance remains one of the hardest issues for lawmakers to solve.

 

Both Senate drafts struggle with how to treat protocols that do not have a central company, executive team, or traditional governance structure. Some lawmakers want stronger rules to prevent DeFi platforms from being used for illicit activity. Others worry that applying centralized compliance models to decentralized systems will effectively ban them.

 

For now, DeFi remains an unresolved problem in the bill, with language that critics say is either too vague or too aggressive, depending on who you ask.

 

Coinbase Draws a Line in the Sand

Industry frustration boiled over when Coinbase publicly withdrew its support for the Banking Committee’s draft.

 

The exchange called the proposal worse than the status quo, pointing to its treatment of DeFi, stablecoin yield restrictions, and limits on tokenized equities. Coinbase’s criticism carried weight in Washington and contributed to the Banking Committee delaying its planned markup hearing.

 

That delay rippled through the market, briefly weighing on crypto prices before sentiment stabilized.

 

Timing Gets Complicated

The Agriculture Committee is moving ahead more quickly, scheduling a markup hearing to debate amendments and advance its version of the bill.

 

The Banking Committee, meanwhile, has pushed its timeline back as lawmakers juggle other priorities, including housing legislation. That has pushed any meaningful progress into late winter or early spring at the earliest.

 

The longer the process drags on, the more uncertain the path becomes. Election season is approaching, and legislative calendars tend to tighten as political pressure increases.

 

A Broader Regulatory Backdrop Is Already in Place

The market structure debate is happening against a backdrop of recent regulatory action.

 

Congress has already passed stablecoin legislation that sets rules around reserves, disclosures, and audits. Earlier House efforts, including last year’s market structure bill, also laid groundwork by outlining how digital assets might be classified under federal law.

 

What the Senate is trying to do now is connect those pieces into a comprehensive framework. That has proven easier said than done.

 

The Next Test

The next major test will be whether the Agriculture and Banking Committees can reconcile their differences or whether one version gains enough momentum to dominate the process.

 

Expect heavy lobbying from crypto companies, financial institutions, and trade groups, particularly around stablecoin yield, DeFi protections, and agency jurisdiction.

 

For now, the Senate’s crypto market structure bill remains a work in progress, ambitious in scope, politically fragile, and still very much unsettled.

 

One thing is clear. The era of regulatory ambiguity is ending, even if the final shape of crypto regulation in the U.S. is still being fought over line by line.

New Bipartisan Senate Crypto Bill Targets Developer Liability

 

As the U.S. Senate pushes towards markup for the CLARITY Act, a new bipartisan push in the U.S. Senate is trying to answer another question that has come up again and again in crypto.

When does writing software turn into running a financial business?

At the center of the debate is a bill reintroduced by Senators Cynthia Lummis (R-WY) and Ron Wyden (D-OR) that aims to clarify when crypto developers, open-source maintainers, and infrastructure providers should, and should not, be treated as money transmitters under federal law. The proposal does not try to deregulate crypto wholesale. Instead, it tries to draw a hard line between publishing code and controlling user funds.

That distinction might sound obvious to engineers. To prosecutors, it has been anything but.

 

Why this suddenly matters so much

For years, the idea of “developer liability” lived mostly in white papers, legal panels, and late-night conference debates. That changed when U.S. authorities began testing aggressive theories that treat certain privacy tools and non-custodial software as unlicensed financial businesses.

Cases involving Tornado Cash and Samourai Wallet turned a theoretical concern into a real one. The message many developers heard was simple and chilling: if people use your software to move money, you might be responsible for how they use it, even if you never touched the funds yourself.

That fear has started to shape behavior. Some teams have shut down. Others have avoided building in the U.S. entirely. Many have quietly redesigned products to remove any feature that could be interpreted as “control.”

This Senate bill is a direct response to that climate.

 

The core idea: code is not custody

The proposal, often referred to as the Blockchain Regulatory Certainty Act, rests on a single principle. Developers and infrastructure providers should not be treated as money transmitters if they do not have custody of user assets and do not have the unilateral ability to move or control those assets.

In other words, liability should follow control, not authorship.

If you run an exchange, a broker, or a custodial wallet, this bill does nothing for you. You are still squarely in regulated territory. But if you publish open-source software, operate a node, maintain a wallet interface, or provide routing infrastructure without custody, the bill aims to put you outside money transmitter rules.

That matters because money transmitter classification is not a small thing. It can trigger state-by-state licensing, federal registration, AML obligations, and in some cases criminal exposure if regulators decide you crossed the line without permission.

Even if a developer ultimately wins in court, the cost and risk of getting there can be enough to stop innovation cold.

 

Why “control” is the battlefield

The word that does all the work in this bill is “control,” and that is exactly where the fight will be.

In clean cases, the distinction is easy. Exchanges custody funds. Non-custodial wallets do not. But crypto is full of gray areas.

Upgradeable smart contracts with admin keys. Front ends that can block addresses. Protocols with pause buttons. Governance structures that look decentralized on paper but concentrated in practice.

Regulators may argue that these forms of influence amount to control. Developers will argue they do not.

The Senate bill tries to anchor the definition to something narrow and concrete: the legal right or unilateral technical ability to move someone else’s assets. Whether that language survives negotiations intact is an open question.

 

How this fits into the broader crypto regulation fight

This developer liability push is happening alongside a much bigger legislative effort to overhaul U.S. crypto market structure more broadly. That larger framework aims to clarify which assets are securities, which are commodities, and which agencies oversee what.

What is becoming clear is that developer liability has become a quiet pressure point in those negotiations. Many lawmakers may be willing to compromise on market structure details, but fewer are comfortable backing a system that could criminalize software developers for publishing neutral tools.

In that sense, developer protections are no longer a niche issue. They are a prerequisite for passing broader crypto legislation at all.

 

What would change if this becomes law

If enacted, the bill would not end debates about crypto and compliance. But it would shift them.

First, it would give open-source developers and infrastructure providers a clearer legal lane, especially those building non-custodial systems.

Second, it would encourage business models that minimize custody by design. Expect more architectures that deliberately strip out admin powers, key control, and unilateral intervention.

Third, it would push regulators to focus enforcement elsewhere. Centralized onramps, custodians, stablecoin issuers, and brokers would remain the primary choke points for AML and sanctions policy.

That shift may frustrate some policymakers. It will reassure many builders.

 

The bigger question Congress is really answering

Strip away the legal language and the crypto politics, and this debate boils down to something fundamental.

Is publishing financial software more like writing code, or more like running a bank?

The Lummis-Wyden approach says it depends on whether you control the money. That principle is simple, intuitive, and easy to explain. The hard part will be writing it into law tightly enough to protect neutral builders without giving cover to businesses that function as intermediaries in everything but name.

 

That fight is just getting started.

 

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