A contentious bill that would reshape the U.S. crypto market structure now faces a crucial committee markup — and DeFi regulation could be the wedge issue that determines its fate. Why it matters Galaxy Research’s Alex Thorn said after a recent bipartisan Senate meeting that there’s still a “decent 60%” chance the bill advances, but those odds hinge on the Senate Banking Committee’s markup scheduled for January 15. Republicans are pushing for the markup, Thorn said, but many issues remain unresolved and could scuttle bipartisan agreement. The DeFi sticking points Democrats have pressed for stronger DeFi guardrails, setting three central conditions requested by Republicans: - Front-end DeFi platforms must comply with U.S. sanctions (i.e., block sanctioned actors such as North Korea or face liability). - DeFi exchanges must provide the Treasury with “special measures” authority. - U.S. regulators should create rulemaking for DeFi that is “non-decentralized.” These conditions — together with calls for a $200 million cap on issuer raises and extra investor protections — were enough to delay a prior markup in September 2025. Whether they will derail the January 15 session remains uncertain, but moderate Democrat Senator Catherine Cortez Masto said she “definitely” expects a markup next week and described negotiations as “very productive.” Unresolved issues and political headwinds Several high-profile flashpoints are still unresolved: how to treat stablecoin yield; expanded ethics rules that could affect the Trump family; and protections for software developers. Some in crypto see parts of the Democrats’ demands as reasonable — venture capitalist Nic Carter called them “pretty reasonable” — while others warn against conceding on stablecoin yield, framing it as a national-security issue as China pushes to challenge U.S. leadership in the sector. Political timing complicates matters. TD Cowen’s Washington research team argues Democrats may lack urgency to rush the bill before the 2026 elections, expecting they could reclaim legislative leverage. Jaret Seiberg of TD Cowen suggested debate over conflicts of interest tied to Trump could push portions of the bill out by three years unless Democrats accept a longer phased timetable. Market odds Prediction market Kalshi placed the overall odds of passage at 79% before 2027 and 49% before May — a reminder that while passage is plausible, timing and scope remain in flux. Bottom line The crypto market-structure bill could move forward, but DeFi-specific mandates and broader political calculations make the January 15 markup a pivotal moment. Stakeholders on all sides will be watching closely — and the outcome will shape regulatory expectations for DeFi, stablecoins, and market participants for years to come. Disclaimer: This article is for informational purposes and not investment advice. Cryptocurrency trading involves significant risk; do your own research before making financial decisions. Read more AI-generated news on: undefined/news

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