- Key insight: The Senate Banking Committee is set to mark up crypto market structure legislation that would restrict stablecoin yield offerings, though it falls short of banks' wishes.
- What's at stake: The American Bankers Association is urging members to contact lawmakers, warning that allowing yield-like rewards on stablecoins could drain deposits from the banking system and threaten financial stability.
- Forward look: Banks face an uphill fight against a crypto lobby that outspent the banking industry in the last election cycle and is already gearing up to do the same again ahead of the 2026 midterms.
WASHINGTON — A planned markup in the Senate Banking Committee on crypto market structure legislation has bank groups mobilizing their members to lobby lawmakers against the legislation.
The Senate Banking Committee announced Friday evening that it would hold a markup on hotly debated market structure legislation that includes language curbing crypto firms'
Banks have
Crypto companies, meanwhile, applauded the language and urged that the panel schedule a markup.
The American Bankers Association, in a letter to its members, urged bankers, including members of the powerful community banking bloc, to contact their lawmakers.
"We want Congress to put in place digital asset rules and establish responsible guardrails for the crypto industry," ABA CEO Rob Nichols said in the letter to members. "The current version of the legislation, although improved from an earlier version, still does not adequately prevent crypto companies from offering interest-like rewards on payment stablecoins. Without additional changes, we believe the current proposal would unnecessarily incentivize the flight of bank deposits into payment stablecoins, putting both economic growth and financial stability at risk."
The bid might be too
"To address these concerns, the banking trade groups want to change the 'economically or functionally equivalent' to 'substantially similar to the manner in which banking organizations pay interest or yield,'" said Ed Groshans, an analyst at Compass Point, in a note. "This is an interesting last minute audible, in our view, given that banks have worked towards and supported the economically equivalent for months."
The market structure bill still has a number of hurdles to clear before becoming law. The bill will have to pass the committee, then the full Senate, where it will require 60 votes to pass. After passage from the full Senate, the bill will then be considered by the House Financial Services Committee and the full House. If it clears those hurdles, any differences between the House and Senate versions will have to be reconciled through a conference committee or through a new vote in the lower chamber.
"We expect the bill will pass committee if there is a vote," TD Cowen analyst Jaret Seiberg said in a note. "That will simply punt to the full Senate the need to find compromise language that can secure the 60 votes needed for the measure to advance to a vote."
The conflict has pitted bank lobbying groups — a longtime powerful force in Washington — against the cash-rich and ambitious crypto lobby, which
They are also planning on spending more in the 2026 midterm elections, a compelling incentive for Senate Banking Committee Chairman Tim Scott, R-S.C. — who also chairs the National Republican Senatorial Committee, a fundraising body for Republican Senate candidates — to pass the bill as Democrats look to ride a wave of discontent over the Trump administration to retake the Senate in 2026.
