A DeFi advocacy group has warned about a list of proposed amendments to the long-awaited crypto market structure bill that threaten the sector’s developers and hinder innovation in the US. Related Reading: Bitcoin Rally At Risk: This Critical Resistance Could End BTC’s Bullish Run CLARITY Act Amendments Could Harm The DeFi Sector On Wednesday, the DeFi Education Fund (DEF) shared a list of 16 “anti-DeFi amendments” to the Senate Banking Committee’s crypto market structure bill, known as the CLARITY Act, ahead of its highly anticipated Thursday markup session. In an X post, the advocacy group warned that some of the recent amendments submitted for consideration could harm DeFi technology, users, and developers if they are implemented in the final text of the legislation. These amendments came from Democratic Senators Catherine Cortez Masto, Andy Kim, Chris Van Hollen, Elizabeth Warren, and Jack Reed, who collectively targeted core DeFi protections in the bill. Some of the most notable “anti-DeFi” proposals include amendments by Senators Cortez Masto and Reed targeting the Blockchain Regulatory Certainty Act (BRCA), which exempts non-controlling developers and providers from federal money transfer requirements. According to DEF’s assessment of the text, Cortez Masto’s amendments “re-write the BRCA to turn it from a shield to a sword against developers,” and “strike protections for non-controlling developers” in Sections 301 and 302. Meanwhile, Reed’s amendments reportedly include a “direct attack on Van Loon – 5th Circuit federal court decision by subjecting smart contracts to sanctions ‘without regard to whether such contracts operate autonomously, can be modified, or are owned.’” In addition, he proposed eliminating the BRCS from the CLARITY Act. Other related amendments also target DeFi front ends, tokenization provisions, and expand BSA/AML obligations for developers and digital asset businesses. DEF Urges Community Action The DeFi Advocacy group called for action against the potential changes, urging X users to contact Senators’ offices to oppose them. However, it noted that Thursday’s markup will not consider every amendment. This gives the community a timely opportunity to press Senators to dismiss the proposals that would affect the industry. Responding to DEF’s post, Tornado Cash co-founder Roman Semenov also slammed the Senators for targeting the DeFi sector, affirming that they “are trying to push last-minute amendments into Clarity Act that would defeat its entire purpose” and urging community members to act. Moreover, Justin Slaughter, VP of Regulatory Affairs at Paradigm, highlighted DEF’s “anti-DeFi” list, affirming that they are “basically the key amendments to watch,” alongside those affecting stablecoin rewards, the use of digital assets for tax payments, the Securities and Exchange Commission’s (SEC) crypto guidelines and rules, and DeFi ability to operate. Related Reading: Crypto Funds Extend Six-Week Streak With $858M Inflows On CLARITY Act Progress It’s worth noting that Senators submitted over 100 amendments to the CLARITY Act’s text ahead of the markup vote, with roughly 40 of them coming from anti-crypto Senator Elizabeth Warren. As journalist Eleanor Terret reported on X, one of these proposals would prevent the Federal Reserve from issuing master accounts to crypto firms, resulting in heavy criticism from the crypto community and White House Crypto Advisor Patrick Witt. Featured Image from Unsplash.com, Chart from TradingView.com
A bipartisan housing bill was approved in the Senate, carrying an unrelated ban on U.S. central bank digital currencies, but its future remains uncertain.
The chairman of the U.S. Federal Deposit Insurance Corp. made clear that even pass-through deposit insurance won't be allowed from third-party firms.
Crypto bank Anchorage Digital is launching U.S.-compliant stablecoin rails for international banks, offering faster movement of assets across borders.
The bank trimmed its Coinbase revenue and earnings forecasts amid a brutal risk-off environment for crypto and delays around U.S. market structure legislation.
The Senate Agriculture Committee is holding a markup hearing on crypto market structure legislation.
The Senate Agriculture Committee pushed its planned markup hearing, where lawmakers would debate and vote on its market structure bill, to Thursday morning.
We have a new draft and fresh questions.
The momentum for new crypto rules in Washington has slowed to a crawl and and it is not expected to resume for at least several weeks.
The industry's great legislative hope is shifting to the U.S. Senate's Agriculture Committee, which released its own draft of the contentious oversight effort.
The U.S. Senate Agriculture Committee's next draft is expected to shield developers from liability, insiders have been advised, but it may without Democrat backing.
Provisions addressing decentralized finance, SEC jurisdiction and authorities and — of course — stablecoin yield all alarmed industry participants.
The crypto market structure bill isn't dead, but it took a blow.
Cryptocurrency exchange Coinbase (COIN) recently retracted its support for the latest iteration of the crypto market structure bill, known as the CLARITY Act, just 24 hours before a crucial markup was scheduled. This signals significant concerns about the bill’s alignment with the interests of cryptocurrency firms compared to traditional banking institutions, not only for the exchange but also for broader market participants. Coinbase CEO’s Concerns Over Fair Competition On Friday, Coinbase CEO Brian Armstrong elaborated on the rationale behind the exchange’s withdrawal in an appearance on FOX Business, expressing his frustration with the notion that banks could use regulatory means to stifle competition in their favor. “It just felt deeply unfair to me that one industry [banks] would come in and get to do regulatory capture to ban their competition,” Armstrong stated. He also underscored the importance of a level playing field, asserting that competition should thrive without undue interference from powerful financial entities. Related Reading: Crypto Market Bill Draft Criticized For Allowing Continued Developer Prosecution Coinbase CEO emphasized that his concerns resonate with “much of the industry,” highlighting his obligation to advocate for customers who he believes are being shortchanged by the provisions of the proposed market legislation. “I declined to opine on the exact—whether the hearing, the markup should happen or not… But I did feel like I had to speak up on behalf of our customers and all Americans here,” he articulated. Debate Heats Over CLARITY Act Central to the ongoing debate surrounding the CLARITY Act is a critical disagreement between banks and crypto firms regarding the fate of stablecoin holders and whether they should be entitled to receive reward payments. Armstrong has previously raised alarms that the bill might prohibit tokenized equities, impose restrictions on decentralized finance (DeFi), and expand governmental access to financial data, thereby compromising individual privacy. Furthermore, he warned that the legislation could shift regulatory authority away from the Commodity Futures Trading Commission (CFTC) and towards the Securities and Exchange Commission (SEC), sidelining competition within the crypto space. Armstrong Critiques Banking Lobbying Tactics Armstrong noted the irony in the current situation, pointing out that while banks are indeed leveraging the advantages of cryptocurrency, their lobbying efforts seem aimed at restricting competing firms. “Many of these banks are actually very smart,” he acknowledged, referencing the commercial side of banking that is increasingly engaging with crypto. “They’re actually doing deals with Coinbase. We’re powering a lot of crypto and stablecoin infrastructure for them on the commercial side.” Related Reading: Bitcoin And Crypto ETFs Set To Attract $130 Billion-Plus Inflows This Year, JPMorgan Predicts Despite his criticisms of the banking sector’s lobbying tactics, Armstrong expressed optimism that legislators could ultimately resolve the outstanding issues within the crypto market structure bill: And then their lobbying arm comes to D.C. and thinks of it as very zero-sum and is trying to kill the competition. So, I suspect, like many things, if we get the principles in the room, we can actually get this figured out and make a good deal. Featured image from DALL-E, chart from TradingView.com
Legislative language which would grant some legal protections to crypto software developers, falls under the Senate Judiciary Committee, its leaders said.
While Coinbase said that the crypto market structure bill would essentially ban tokenized securities, companies in that sector say that's not the case.
A list of amendments — some of them far afield — is circulating for the planned markup hearing of the crypto market structure bill.
The Senate Agriculture Committee said Tuesday its postponed crypto market structure bill would drop on Jan. 21 and be debated six days later.
Government-ethics questions still hang over the U.S. Senate's plans to vote on the crypto market structure bill, and Warren is raising a related argument.
The crypto industry contends that Wall Street giants stood behind community banks to undercut digital competitors before they could get a major legislative win.
As the January 15 markup of the crypto market structure bill—known as the CLARITY Act—draws closer, reports indicate that Coinbase (COIN) is reconsidering its support for the legislation. A Monday report from Bloomberg suggests this shift in position is contingent on whether the anticipated bill includes provisions beyond enhanced disclosure requirements tied to stablecoin rewards. High Stakes For Coinbase The CLARITY Act is expected to be marked up in at least one Senate committee this Thursday, and Coinbase’s potential withdrawal could have significant implications for the bill. A source familiar with Coinbase’s stance told Bloomberg that the exchange would re-evaluate its support if the legislation veers too far from its interests, particularly regarding stablecoin incentives. Some insiders suggest the bill might restrict the ability to provide rewards to regulated financial institutions, a move that aligns with the banking sector’s concerns about losing deposits to crypto platforms. Related Reading: Dogecoin Breaks Its ‘Lower-Band Prison’ As Daily Trend Flips Coinbase currently holds applications for a national trust charter that could permit it to offer those kinds of rewards under regulatory rules. However, many crypto-native firms are pushing back against potential restrictions, arguing that such measures could disrupt competition in the market. The stakes for Coinbase are high, as rewards programs play a crucial role in its business model. The exchange allows users to earn 3.5% rewards on Circle’s USDC holdings. Should the market-structure bill include bans on these incentives, fewer users might choose to hold stablecoins on the platform. This could jeopardize an anticipated revenue stream projected at $1.3 billion in 2025, according to Bloomberg. Banking Vs. Crypto The GENIUS Act, passed into law in July of last year, prohibits stablecoin issuers from offering interest on token holdings, and does not prevent third-party partners like Coinbase from providing rewards tied to customer balances. The banking industry, however, argues that allowing exchanges to pay such rewards could negatively impact bank deposits and, consequently, community lending. As reported by Bitcoinist over the past month, the American Bankers Association (ABA) has voiced concerns that this situation could displace “billions” from local lending, allegedly harming small businesses and households. In contrast, Faryar Shirzad, Coinbase’s chief policy officer, has argued that maintaining rewards tied to stablecoins is crucial for preserving the dollar’s dominance, especially in light of China’s announcement to start offering interest on its digital yuan. Banking Lobby Fights Back A potential compromise being discussed would permit only licensed banking entities or financial institutions to provide rewards on stablecoin balances. Related Reading: Why The $2.9 Billion Bitcoin Whale Buy Could Spell Doom For The Market Recently, five crypto firms, including Ripple, Circle, and Paxos, received conditional approvals from the US Office of the Comptroller of the Currency (OCC) to become national trust banks, a move met with opposition from the banking lobby. If restrictions are indeed imposed, the report suggests that this could lead to creative workarounds as crypto firms seek alternative ways to reward customers. Featured image from DALL-E, chart from TradingView.com
In a major new development for the crypto industry, Senators Ron Wyden and Cynthia Lummis announced on Monday evening the introduction of a bipartisan, standalone version of the Blockchain Regulatory Certainty Act (BRCA). This legislation aims to provide much-needed clarity for software developers and infrastructure providers in the blockchain space, particularly concerning their classification under federal law. New Crypto Bill To Protect Blockchain Developers According to the detailed press release regarding the matter, the BRCA specifies that developers and providers who do not have control over user funds will not be classified as money transmitters. Senator Lummis highlighted the ongoing challenges faced by blockchain developers, stating: Blockchain developers who have simply written code and maintain open-source infrastructure have lived under threat of being classified as money transmitters for far too long. This designation makes no sense when they never touch, control, or have access to user funds, and unnecessarily limits innovation. Related Reading: Crucial Role Of The CLARITY Act In Avoiding A New October 10 Crypto Crash, Expert Explains Lummis emphasized that the bill provides developers with the clarity needed to advance digital finance without the fear of legal repercussions for activities that do not pose a money laundering risk. Lummis added, “It’s time to stop treating software developers like banks simply because they write code.” Senator Wyden echoed these concerns, arguing that imposing the same regulatory requirements on developers as those applied to exchanges or brokers is fundamentally flawed. Main Highlights Of The BRCA The Blockchain Regulatory Certainty Act aims to set clear federal standards defining when blockchain developers and service providers can be exempt from money transmitter regulations. Under current legislation toward crypto, the Senators assert blockchain developers face regulatory ambiguities that have not only stifled innovation but also driven many projects offshore, as they navigate conflicting regulations across different states. Related Reading: Dogecoin Breaks Its ‘Lower-Band Prison’ As Daily Trend Flips The bill specifically establishes that a “non-controlling developer or provider” refers to any entity that develops or maintains distributed ledger technology but does not possess the unilateral authority to initiate or execute transactions involving users’ digital assets without third-party consent. In addition, the crypto bill clarifies protected activities, including the development or publication of software for distributed ledgers, maintenance services for blockchain networks, offering customer self-custody solutions, and providing necessary infrastructure to support distributed ledger services. Importantly, while the bill allows states to enforce their laws consistent with federal regulations, it also prevents them from imposing money transmitter requirements on developers engaged solely in the specified protected activities. Featured image from DALL-E, chart from TradingView.com
There are red-line demands from decentralized finance — and backed by the rest of crypto — that remain unknowns as senators finish the draft they'll vote on.
The organization established by Coinbase to mobilize crypto enthusiasts has built up a 2.6-million-member base across 50 state chapters as U.S. elections loom.
Though consequential Senate committee votes may be coming, the talks over the bill's language haven't yet satisfied fundamental requests from Democrats.
The Senate is approaching a potential markup that may advance crypto legislation to a vote, and industry insiders are amassing for a lobbying push this week.
Senators met to restart the high-stakes negotiation over the crypto market structure bill, and one of them reportedly said a markup is planned next week.
After holiday leadership shifts, the two U.S. markets regulators — the SEC and CFTC — are now run only by pro-crypto Republicans, with Congress still debating.
The most tireless advocate of digital assets issues in the U.S. Senate said she's grown too tired to keep at it, leaving her Republican seat in play next year.
Guessing the direction of Congress is akin to long-range weather prediction, with so many variables in play, and the industry's fate depends on a break in the storm.