SKN | How a Late-Stage Banking Push Reshaped Crypto’s Market Structure Bill

Key Points

• Bank lobbying over stablecoin rewards forced last-minute changes to the Senate’s crypto market structure bill.

• Crypto firms argue banks are protecting payments dominance under the guise of defending deposits.

• The dispute introduces political risk as the bill nears key committee votes.

As the U.S. crypto industry approached what it hoped would be a decisive legislative win, the most disruptive force did not come from partisan gridlock in Congress, but from a late and forceful intervention by the banking lobby. What followed was an intense battle over stablecoin rewards that has altered the final stretch of negotiations for the Senate’s crypto market structure bill and left industry advocates frustrated just days before a potential committee vote.

The dispute underscores how deeply entrenched interests are shaping digital asset policy as crypto edges closer to formal integration into the U.S. financial system.

Stablecoins become the flashpoint

At the heart of the conflict is whether crypto platforms should be allowed to offer rewards tied to stablecoin usage. After the passage of the GENIUS Act last year, crypto firms moved ahead with plans that relied on a carefully negotiated distinction: stablecoin issuers themselves could not pay yield, but affiliates and third parties could offer rewards funded through lawful activity.

That framework opened the door for platforms such as Coinbase to share revenue derived from reserve assets backing stablecoins like USDC. Bankers, however, argue this structure amounts to interest by another name and poses a direct threat to bank deposits that underpin lending.

The American Bankers Association warned lawmakers that widespread adoption of reward-bearing stablecoins could drain trillions of dollars from the deposit base, destabilizing community banks and restricting credit to households and small businesses.

A lobbying surge reshapes the bill

That argument gained traction during negotiations over the Senate’s market structure proposal, formally titled the Digital Asset Market Clarity Act. A draft released this week included a compromise reflecting banking pressure: stablecoins cannot offer rewards for passive holding that resembles a savings account, while still allowing incentives tied to activity and transactions.

For crypto advocates, the change represents a step backward. Summer Mersinger said the shift was driven by “relentless pressure” from large banks seeking to protect entrenched advantages, rather than genuine consumer protection concerns.

Industry representatives contend that megabanks have framed the issue as a community banking crisis while quietly defending their dominance in payments and settlement. They argue stablecoins do not function like deposits, since customer funds are not rehypothecated for lending — a distinction that explains why banks pay interest and carry FDIC insurance.

Political risk near the finish line

The dispute has introduced uncertainty at a critical moment. The Senate Banking Committee is expected to consider amendments in a markup hearing this week, while the Senate Agriculture Committee has postponed its own hearing to later in the month to allow further negotiations.

Even if the bill advances out of committee, it still faces hurdles: reconciling competing versions, attracting enough Democratic support, and navigating continued resistance from Wall Street lobbyists. Crypto firms have warned that reopening settled issues from the GENIUS Act risks undermining regulatory clarity just as implementation is beginning.

Some policy analysts, however, downplay the practical impact of the new language, noting that staking, lending, and other yield-generating activities remain permitted. In that view, the fight may be more symbolic than structural — a signal of how fiercely incumbents will contest crypto’s encroachment on traditional finance.

What it means going forward

The episode highlights a central tension in U.S. crypto regulation: whether new rules will foster competition or reinforce existing power structures. As lawmakers weigh final amendments, the outcome will shape not only stablecoin economics, but also confidence in Congress’s ability to deliver durable, innovation-friendly oversight.

With committee votes looming and lobbying at full intensity, the final shape of the market structure bill remains uncertain — and the industry’s long-sought clarity is still within reach, but no longer assured.