Washington’s attempt to build a regulatory framework for the digital asset industry has been hit by a combination of snowstorms, political brinkmanship and a sudden outbreak of institutional cold feet.
Senate Crypto Markup Stalls As Washington Consensus Fractures
29 January 2026 - 11:30 CET
By Matt Neill
On 29 Jan at 10:30 am ET (2.30 pm UTC), the long-delayed Senate Agriculture Committee markup finally begins, but the legislation arrives in a significantly weakened state. The process has been repeatedly knocked off course by shutdown risks and weather delays, leaving the bill’s longer-term survival in doubt. What was once described as a converging consensus has splintered into a series of bitter disputes over who gets to hold the leash.
The banking lobby strikes back
At the heart of the gridlock is a classic turf war between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). Senate Agriculture Republicans are pushing a framework that treats digital assets as commodities, effectively handing control to the CFTC. This is a direct affront to the Banking Committee version, where Democrats and banking lobbyists insist the SEC should retain primary authority.
The most toxic issue remains the treatment of yield-bearing stablecoins. Banking groups are terrified that allowing exchanges to offer rewards on stablecoin balances will accelerate the flight of deposits from the traditional banking system. For the banks, this is about protecting their access to cheap capital. We are essentially watching a lobbying firefight between Coinbase and the legacy financial institutions. Crypto firms argue that banning yield simply entrenches the legacy institutions at the expense of onchain finance. It is a fundamental disagreement that no amount of legislative window dressing can hide.
Wall Street's backdoor diplomacy
While Congress bickers over unrelated issues, such as a shelved amendment regarding credit card swipe fees, the SEC is busy making its own arrangements. The agency’s Crypto Task Force met this week with representatives from SIFMA, JPMorgan and Citadel to discuss how existing securities laws should apply to tokenized assets. The message from the giants of finance is clear: they do not want exemptions for the newcomers. They want the old rules, which they already know how to use to their advantage, to be extended to the blockchain.
This "diplomatic" approach between regulators and the biggest banks suggests that the real rules of the road might be written in the halls of the SEC rather than on the floor of the Senate. The industry should be wary. While Republicans push for a CFTC-first model in statute, the reality is a move toward a shared framework that suits the incumbents, as hinted in recent SEC announcements.
Thursday’s markup might produce a committee-level victory, but with banking opposition unresolved and Democratic scepticism high, the bill remains a fragile coalition of interests. The destination is unclear. The risk remains that market structure reform emerges through bureaucratic piecemeal rather than a decisive act of Congress. For now, the suits are winning by simply ensuring that nothing happens without their permission.
