US Cryptocurrency Regulation, Trump Veto vs. Filibuster at a Crossroads

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The U.S. cryptocurrency market structure bill has reached a critical juncture at the threshold of the Senate Banking Committee, stalled by a three-way clash over ethics clauses, stablecoin reward regulations, and the merging of bills within the Senate, which will determine its fate for 2026.

According to the cryptocurrency YouTube channel Coin Bureau on May 14 (local time), the Senate Banking Committee began the markup of the U.S. cryptocurrency market structure bill at 10:30 AM that day. Over 100 amendments were attached to this process, with Senator Elizabeth Warren alone submitting more than 40. The White House aims for a July 4 signing, but Polymarket's probability of passage dropped from 82% in February to 45% by the end of April, then moved within the 59-73% range. Coin Bureau explained that this markup is not a final vote, but a process to decide whether to send the bill to the full Senate after discussions and votes on individual amendments.

The biggest point of contention is the ethics clause. The original bill included language prohibiting high-ranking public officials, including the President, from owning, promoting, or affiliating with digital asset businesses while in office, but this clause has been removed from the current 309-page draft. Senate Banking Committee Chairman Tim Scott stated that ethics legislation falls outside the committee's jurisdiction, while Senator Chris Van Hollen submitted an amendment to reinstate the ethics clause. Senator Kirsten Gillibrand said, "Without an ethics clause, no one will vote for this bill." Conversely, Senator Cynthia Lummis warned that if an ethics clause is added, U.S. President Donald Trump would immediately veto the bill.

Stablecoin reward regulation has also emerged as the bill's second flashpoint. Article 404, brokered by Senators Thom Tillis and Angela Alsobrooks, is a compromise that prohibits passive interest received from simply holding stablecoins in a wallet but allows activity-based rewards such as payments, governance, and liquidity provision. Coin Bureau explained that while simple USDC holding yield products would be prohibited, rewards from trading, staking, and liquidity provision could survive. The American Bankers Association, Bank Policy Institute, and Independent Community Bankers of America opposed this compromise, with the American Bankers Association mobilizing over 8,000 letters to Senate offices. Senators Jack Reed and Tina Smith introduced an amendment to prohibit even "things substantially similar to interest," and it was explained that if this amendment passes, profitable stablecoin products in the U.S., such as USDC rewards, PYUSD programs, and Coinbase reward programs, could effectively disappear.

The merger process within the Senate has also been identified as a variable that could sway the bill's direction. The Senate Banking Committee bill must be reconciled with the Digital Commodities Broker Act, which passed the Senate Agriculture Committee in January. Coin Bureau pointed out that because the merger process largely takes place in private negotiations, even provisions that passed committee votes could quietly be dropped from the final text. Risky provisions mentioned include the decentralized finance developer immunity clause, Article 105 which protects tokens that have become underlying assets for spot ETFs, such as Bitcoin (BTC) and Ethereum (ETH), from securities classification, the Tillis-Alsobrooks stablecoin compromise, and the housing pilot agreement linked to securing Senator John Kennedy's affirmative vote.

The timeline is also tight. White House crypto advisor Patrick Witt aims for a signing ceremony on July 4, and the video essentially set the Memorial Day recess on May 21 as the first deadline. Subsequently, merger negotiations in June, passage by 60 votes in the full Senate, coordination with the House if the Senate amends the bill, and presidential signing must all be completed before the August recess. If it extends past August, the country will enter a midterm election phase, and if a new Congress convenes in January 2027, an unfinished bill would have to start from scratch. Coin Bureau reported that with Bitcoin spot ETF assets under management exceeding $100 billion, XRP spot ETFs attracting $81 million in April, and Solana (SOL) ETFs seeing over $26 million in inflows on May 11 alone, the regulatory vacuum in the U.S. is pressuring market competitiveness.

Key signals to watch in this markup include the vote on the Van Hollen ethics amendment, whether the Reed-Smith stablecoin amendment passes, opening remarks from Warren and Gillibrand, changes in probabilities on Polymarket and Kalshi, and whether industry support is maintained. Coin Bureau believes that if the bill passes cleanly through the committee, the chances of passage could rise back to the 80s, but if the process gets complicated, it could drop to the 40s. The U.S. cryptocurrency market structure bill must simultaneously navigate ethics controversies, banking industry pressure, and the Senate merger process to move towards achieving regulatory clarity within 2026.

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