The delay by US lawmakers in passing legislation on crypto market structure limits the expansion of the valuation of crypto companies with exposure to the US market, CoinDesk reported Monday (January 26), citing Benchmark analyst Mark Palmer.
This delay has the greatest impact on crypto exchanges, decentralized finance (DeFi), and altcoins, as these businesses are particularly sensitive to regulation, according to the report. Bitcoin and infrastructure companies were less affected, according to the report.
If Congress fails to pass the legislation this year, the U.S. crypto market will remain constrained at a time when the digital asset ecosystem is increasingly being adopted globally and by institutions, according to the report.
Palmer said he believed it was more likely than not that a crypto market structure bill would pass, although it could be changed from its current form, and that passing any form of legislation would reduce regulatory risk and encourage broader institutional participation, according to the report.
It was reported on Wednesday (January 21) that the crypto bill could be delayed for several weeks in the US Senate because lawmakers on the Senate Banking Committee had focused on housing affordability legislation.
The Senate Banking Committee postponed the planned crypto bill markup on January 15 after cryptocurrency exchange Coinbase withdrew its support for the project.
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Coinbase CEO Brian Armstrong said in a Jan. 15 article on
Senate Banking Committee Chairman Tim Scott announced the pause hours later, saying in a news release that bipartisan negotiations would continue.
PYMNTS reported at the time that legislative momentum in the crypto industry had lost steam due to a variety of unresolved issues raised by both financial services industry groups and crypto groups.
Banks are increasingly lobbying against crypto offerings that resemble deposit products, particularly stablecoin rewards that they say compete with regulated interest accounts. This banking pushback has seeped into the legislative text, giving rise to provisions aimed at limiting crypto incentives, which have been a key flashpoint for Coinbase and other developers of stablecoin-based products.
