The banking industry has launched an aggressive campaign to influence key provisions of the crypto market structure bill, highlighting the growing tension between traditional finance and digital asset innovators. The Senate Banking Committee recently postponed its markup of this crucial legislation after months of negotiations broke down amid intense lobbying from both sectors.
The battle centers primarily on whether stablecoin holders can receive reward payments, an issue that has become the focal point of a larger struggle for financial dominance. Despite previously addressing this matter in the GENIUS Act signed into law last year, the rewards debate continues to plague negotiations as both industries compete for customer assets.
We're going to keep fighting for our customer's rights, and the 52 million Americans that have used crypto. pic.twitter.com/0Ile4qFuiH
— Coinbase 🛡️ (@coinbase) January 15, 2026
Banking Industry’s Opposition Strategy
Banking associations have mounted a coordinated effort to restrict crypto firms’ ability to offer rewards on stablecoins. In their lobbying campaign, they argue that allowing such rewards creates a “loophole” that threatens traditional banking deposits. The American Bankers Association and other trade groups warned senators that “without clear statutory language extending this prohibition in market structure legislation now being advanced, trillions will be displaced from community lending, and the financial fabric of towns and neighborhoods nationwide will be weakened.”
This opposition stems from banks’ concerns about potential deposit outflows, particularly from community banks, which could impact their lending capabilities. The financial industry presents this as a community protection issue, though crypto advocates view it differently. Blockchain Association CEO Summer Mersinger directly accused “Big Banks” of conducting a “relentless pressure campaign” designed to “rewrite this bill to protect their own incumbency.”
The banking sector has successfully convinced several lawmakers from both parties that traditional banking faces existential threats from crypto innovation. This lobbying effort reportedly left Senate Banking Committee Chairman Tim Scott unable to count on full Republican support for the bill.
Crypto Industry Response
The cryptocurrency sector has pushed back against banking industry claims, accusing banks of trying to “relitigate” issues already settled in previous legislation. Crypto firms maintain that rewards programs remain necessary for stablecoins to effectively compete in the payments landscape.
Coinbase CEO Brian Armstrong publicly withdrew support for the bill, citing concerns with stablecoin rewards restrictions among other issues. “We appreciate all the hard work by members of the Senate to reach a bipartisan outcome, but this version would be materially worse than the current status quo,” Armstrong stated on social media. “We’d rather have no bill than a bad bill.”
The delay in the markup represents what Summer Mersinger called “a moment of recalibration, not an end point.” She added that on complex issues like digital asset market structure, such pauses allow “time for additional deliberation and refinement” in the policymaking process.
🚨NEW: We asked @coinbase Head of U.S. Policy @karacalvert whether talks had resumed with Banking Committee members after the company’s surprise withdrawal of support for the market structure bill forced the committee to delay its Thursday markup.
— Eleanor Terrett (@EleanorTerrett) January 16, 2026
“It was definitely a shock to… pic.twitter.com/kdyqoAnCZe
Other Legislative Hurdles
Beyond the stablecoin rewards debate, several other contentious issues have complicated negotiations. Democratic lawmakers pushed for ethics provisions that would restrict government officials from personally profiting from the crypto industry, targeting potential conflicts of interest. However, these provisions faced resistance from the White House, with reports indicating opposition to anything perceived as targeting the president’s family’s crypto interests.
The legislation also faces challenges regarding decentralized finance (DeFi) restrictions and questions about the appropriate regulatory authority between the Securities and Exchange Commission and the Commodity Futures Trading Commission. These points of contention highlight the complexity of creating a comprehensive regulatory framework for digital assets.
Senator Mark Warner (D-Va.) acknowledged the difficulty of the negotiations, telling reporters, “I can’t think of a bill that’s more complicated and potentially more far-reaching.” He noted that despite recent progress, “We’ve still got a half dozen issues that both sides are trying to work in good faith to get through.”
Moving Forward: The Future of Crypto Regulation
Despite the current setback, the process may still advance. The Senate Agriculture Committee had already delayed its related markup until the end of January, giving lawmakers additional time to resolve differences. White House AI and crypto czar David Sacks urged the crypto industry to use “this pause to resolve any remaining differences,” emphasizing that “now is the time to set the rules of the road and secure the future of this industry.”
The struggle over this legislation reveals the broader tensions between established financial institutions and innovative digital asset firms. For the crypto industry, clear regulations represent the path to mainstream legitimacy and growth. For the banking sector, these same regulations may determine how much market share they stand to lose to digital competitors.
As negotiations continue, the outcome will likely shape the future relationship between traditional finance and digital assets for years to come, determining whether these sectors will develop as competitors or collaborators in the evolving financial landscape.
Disclaimer: News content provided by Genfinity is intended solely for informational purposes. While we strive to deliver accurate and up-to-date information, we do not offer financial or legal advice of any kind. Readers are encouraged to conduct their own research and consult with qualified professionals before making any financial or legal decisions. Genfinity disclaims any responsibility for actions taken based on the information presented in our articles. Our commitment is to share knowledge, foster discussion, and contribute to a better understanding of the topics covered in our articles. We advise our readers to exercise caution and diligence when seeking information or making decisions based on the content we provide.
