The US crypto industry is pulling back support from a major digital asset regulation bill it previously championed, creating uncertainty around its passage before upcoming elections. The proposed legislation aimed to establish a comprehensive regulatory framework for crypto assets and clarify oversight between securities and commodities regulators.

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Internal divisions have emerged as large crypto firms, DeFi groups, banks, and market participants clash over key provisions. One major dispute centers on stablecoins, particularly whether issuers should be allowed to offer yield to holders. Banks argue this could trigger capital outflows from traditional deposits and reduce lending capacity, while crypto firms see it as essential for competitiveness and innovation.

Additional tensions involve tokenized stocks, where late-stage amendments could restrict approvals, and DeFi protocols, which oppose stricter compliance rules that they believe would undermine decentralized design and open-source development. These unresolved conflicts led to delays in Senate progress and exposed cracks in what was once a unified industry push.

The setback comes despite a generally more crypto-friendly political environment, highlighting that regulatory clarity remains difficult when industry interests diverge.