A long-anticipated effort to set federal rules for crypto stalled last week after the Senate Banking Committee abruptly canceled a planned meeting to begin drafting the legislation. The session was expected to mark a key moment for a bill that has been fought over for years by lawmakers, industry leaders, and financial institutions.
Senator Cynthia Lummis, who has been one of Capitol Hill’s strongest champions of crypto, described the delay as a major setback. The Senate, she suggested, was attempting to move cautiously through a rapidly evolving sector, but the effort quickly unraveled.
Industry reaction was swift. Coinbase chief executive Brian Armstrong criticized the draft proposal, arguing that poorly written rules would do more harm than good. He later went to Capitol Hill to explain his position after the committee pulled the meeting.
Armstrong said he believed the language under consideration would disadvantage users and undermine the interests of millions of Americans who hold or use crypto. While he emphasized respect for the Senate’s procedural decisions, he said he felt compelled to raise concerns on behalf of customers.
At the center of the dispute is a growing clash between crypto advocates and traditional banks, particularly over stablecoins. Congress passed the GENIUS Act last year, which created a regulatory structure for stablecoins and was signed into law by President Donald Trump. One provision allows some holders to earn rewards based on their performance, a feature critics say functions similarly to interest.
Banking groups have warned that those returns could exceed rates offered by conventional savings or checking accounts, potentially drawing customers away from traditional institutions. Some pushed lawmakers to roll back that section of the law, even though it had already been enacted.
The move frustrated several members of the Banking Committee, including Senator Bernie Moreno, who argued that legacy banking rules are failing to keep pace with technological change.
For now, the bill remains on hold. One person familiar with the talks described the situation as disorganized. Senator Thom Tillis said he expects the committee to revisit the measure later this year, possibly in the first quarter. Lummis, who plans to leave the Senate next year, acknowledged that time is becoming a factor.
She said the delay effectively restarts the clock, leaving her with limited months to improve and pass a bill she considers central to her legacy. With midterm elections already looming, advocates fear that failure to act soon could push meaningful legislation back by years.
Industry leaders warn that continued inaction risks ceding global leadership. Blockchain Association chief executive Peter Smith said delays could leave the U.S. trailing other countries in shaping the future of digital finance, with consequences for consumers, economic growth, and national security.
Supporters argue that a clear framework could attract investment and keep innovation domestic. Critics, including Representative Brad Sherman, contend that crypto facilitates crime and tax evasion and offers little public benefit. Others disagree, noting that blockchain technology can improve transparency and that cash remains the preferred tool for many criminal activities.
While Wall Street experiments with round-the-clock, near-instant trading, Congress continues to debate its next steps. The gap between lawmakers and the financial system they oversee appears to be widening, raising questions about whether Washington can keep up with an increasingly digital economy.
Leading crypto companies like Riot Blockchain Inc. (NASDAQ: RIOT) will be hoping that lawmakers get their act together and pass progressive regulations that support innovation while ensuring adequate consumer protection.
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