Bitcoin approaches $100,000; U.S. cryptocurrency regulation faces key vote as Wall Street and the crypto community engage in intense competition.

Bitcoin has recently staged a strong rebound to a two-month high of $97,500, just a step away from breaking the $100,000 mark. This surge coincides with the U.S. Senate Banking Committee preparing for a key vote on the cryptocurrency market structure bill, but the fate of the bill remains uncertain due to fierce battles between Wall Street banks and the cryptocurrency industry over stablecoin yield rights. On the eve of the Senate Banking Committee's scheduled Thursday morning review of the bill, Brian Armstrong, CEO of the largest U.S. cryptocurrency exchange Coinbase, suddenly announced the withdrawal of support for the bill on social media. Armstrong stated, “We would rather have no bill than a bad bill,” and listed several key issues including restrictions on stablecoin rewards, tokenized stocks, and decentralized finance. This stance dealt a significant blow to the outlook of the bill. The bill was originally intended to clarify the regulatory division of the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission over the crypto sector and has been seen as a key piece of legislation for the industry to gain legitimacy. However, the divide between banking lobby groups and crypto companies over stablecoin yield payments, as well as conflict-of-interest clauses requested by Democrats for government officials, could stall the bill during the committee vote. An anonymous crypto lobbyist told Fortune magazine, “This bill could really collapse at the committee stage. People in the industry are very emotional right now.” **Stablecoin yield rights become the core dispute** The issue of stablecoin yield payments has become the biggest point of contention in the bill. Banking lobby groups argue that although last summer’s Genius Act banned stablecoin issuers from directly offering yields to users, it left a loophole for rewards offered via partners and third parties. Rebeca Romero Rainey, chair and CEO of the Independent Community Bankers of America, said in an interview that the association is seeking a "comprehensive ban" that would not only cover stablecoin issuers but also exchanges, third parties, and affiliated institutions. The American Bankers Association organized a petition with over 3,200 bankers urging the Senate Banking Committee to “strengthen the existing ban and extend the interest restriction to digital asset exchanges, brokers, dealers, and other affiliates.” The banking industry’s core argument is that allowing crypto companies to pay rewards on stablecoin reserves similar to yields will lead to deposits flowing out of the banking system, forcing banks to slash lending and damaging local economies. The ICBA has even launched advertising campaigns targeting members of the Senate Banking Committee. The current market structure bill draft includes provisions prohibiting crypto companies from offering rewards related to stablecoin holdings, but exempts certain rewards from membership or incentive programs. A bipartisan group of senators proposed a compromise under the “Clarity Act,” which would allow crypto firms to pay yields for transactions involving stablecoins, similar to credit card rewards programs. But this compromise has clearly failed to meet Coinbase’s requirements. The company reported $355 million in stablecoin-related revenue in Q3 2025 and offers rewards for holding its stablecoin USDC. Armstrong criticized the bill's amendment in his statement, saying, “It will kill stablecoin rewards and allow banks to shut out competitors.” **Scope of the bill raises multiple concerns** In addition to the stablecoin yield issue, Armstrong has also voiced strong opposition to other provisions in the bill. He warned that the proposal includes a “de facto ban” on tokenized stocks, and that decentralized finance restrictions may allow the government “unlimited access” to users’ financial records. Armstrong further criticized the bill for weakening the power of the Commodity Futures Trading Commission, making it “subordinate” to the SEC, which would stifle innovation. Cosmos Labs CEO and co-founder Maghnus Mareneck told The Defiant, “If Congress closes the current loophole, stablecoins that pay interest could be eliminated. In legislation, crypto exchanges may not be as favored as banks, and privacy protocols will face greater pressure.” An anonymous crypto lobbyist told Fortune magazine that in pursuit of bipartisan support, the bill has already “veered to the left,” including provisions to regulate DeFi, rules for listing crypto tokens, and oversight delegated to the SEC. “They’ve lost their North Star,” the lobbyist said. Wintermute’s policy director Ron Hammond said, “This is still under negotiation. But it’s crypto – there’s always last-minute drama, and this seems to be one of the sticking points.” **Conflict-of-interest clause adds political uncertainty** Another contentious issue pushed by Democrats is the inclusion of clauses to prevent politicians from profiting from crypto holdings or interests. This has become a focal point due to the Trump family’s close ties with the crypto industry, including their digital asset platform World Liberty Financial’s recent application for a federal banking license. But Republicans have strongly opposed this possibility. Senate Banking Committee chairman, South Carolina Republican Tim Scott, told CoinDesk on Wednesday that ethical clauses are outside the scope of the Clarity Act. Several nonprofit watchdog organizations wrote to Scott and senior Massachusetts Democrat Senator Elizabeth Warren, describing the lack of provisions addressing government conflicts of interest in the proposed bill as “deeply concerning.” The letter was obtained by Fortune magazine. If Democrats like Arizona Senator Ruben Gallego, who see the ethics clause as a “red line,” withdraw their support, the bill could be blocked at the committee stage. The committee needs a simple majority to pass the bill, though Republicans hold an advantage. **Uncertainty surrounds bill’s outlook** According to sources, more than 100 amendments are expected to be reviewed on Thursday, and the number continues to grow this week. North Carolina Republican Senator Thom Tillis and Maryland Democratic Senator Angela Alsobrooks have been active on the stablecoin yield issue and are expected to propose related amendments. Jaret Seiberg, Managing Director at TD Cowen, said in a research report, “We think the agreement is that platforms can’t pay rewards for holding stablecoins but can pay rewards when stablecoins are used. This is similar to banks offering rewards for debit card usage before the Durbin amendment, even though checking accounts don’t pay interest.” Gabe Rosenberg, a partner at Davis Polk’s Financial Institutions Group, said, “The bill is no longer just an opening offer, but definitely an anchor. But there are still many opportunities. Tomorrow is critical for understanding the overall direction.” The Senate Agriculture Committee announced on January 13th that its crypto market structure bill review would be postponed, with the text to be released on January 21st and hearings on January 27th. However, the Senate Banking Committee is expected to proceed with Thursday's review as scheduled. Peter Dugas, Managing Director at Regulatory Intelligence Group, commented, “The real question will be whether digital asset companies, not the banks, are satisfied. I think over time, this is the biggest overall concern.” For the crypto industry, after last summer's successful passage of the Genius Act that focused on stablecoins, comprehensive market structure legislation is seen as key to legitimizing the emerging sector. But after years of fierce debate, the Senate’s forthcoming product may be worse than no bill at all. Coinbase’s withdrawal of support has undoubtedly cast a shadow over the bill’s prospects, and there's still a long way to go before winning the strong bipartisan support necessary. Risk Warning and Disclaimer The market has risks, investment should be cautious. This article does not constitute personal investment advice, nor does it consider the individual investment goals, financial situation, or needs of any specific user. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular situation. Investing accordingly is at your own risk.