Tim Scott postpones Senate Banking crypto vote

Senate Banking Chair Tim Scott is abandoning plans to hold a vote Thursday on landmark cryptocurrency legislation amid surprise new opposition from a leading crypto firm and uncertainty about the whip counts on both sides of the aisle.

The South Carolina Republican’s move to punt a scheduled markup comes after the largest U.S. crypto exchange, Coinbase, came out against the latest draft of the bill Wednesday afternoon, thrusting the effort into chaos less than 24 hours ahead of a scheduled markup.

“I’ve spoken with leaders across the crypto industry, the financial sector, and my Democratic and Republican colleagues, and everyone remains at the table working in good faith,” Scott said in a statement. “This bill reflects months of serious bipartisan negotiations and real input from innovators, investors, and law enforcement. The goal is to deliver clear rules of the road that protect consumers, strengthen our national security, and ensure the future of finance is built in the United States.”

Scott has been working for months negotiate with a bloc of crypto-friendly Senate Democrats on Senate Banking, but they remained opposed to the bill as of late Wednesday, meaning it was unlikely to draw bipartisan support if he forged ahead with a markup. Some Republicans also had outstanding concerns with the bill.

Coinbase CEO Brian Armstrong wrote on X Wednesday afternoon that the bill as written “would be materially worse than the current status quo.”

“We’d rather have no bill than a bad bill,” he said. “Hopefully we can all get to a better draft.”

Coinbase has led the crypto industry’s Washington influence efforts in recent years, but other digital asset firms pushed back on social media after Armstrong’s post on Wednesday, saying the bill remained workable and pushing for it to advance.

Armstrong said the bill would erode the Commodity Futures Trading Commission’s authority, “stifling innovation and making it subservient to the” Securities and Exchange Commission.

He also raised concerns about potential “amendments that would kill rewards on stablecoins, allowing banks to ban their competition.” Coinbase offers a rewards program that pays an annual percentage yield to premium subscribers who hold so-called stablecoins — an arrangement that banks are pushing to ban as part of the bill.

The banking lobby’s position gained steam from lawmakers on both sides of the aisle in recent days, and it looked increasingly likely that provisions cracking down on stablecoin rewards programs would make it into the bill during a markup. Sens. Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) were preparing a slate of amendments aimed at addressing concerns raised by banks, which have said that allowing stablecoin holders to earn yield risks sparking deposit flight.

It is unclear when Scott will try again to hold a markup.

Sen. Cynthia Lummis (R-Wyo.), who chairs a Senate Banking subcommittee on crypto, said in a statement that lawmakers “have spent thousands of hours working in good faith to deliver a bill that offers the digital asset industry the clarity it needs to thrive on U.S. soil and solidify America's leadership in financial innovation for generations to come.”

“Today's response from some in the industry proves they just are not ready, and while I am deeply disappointed, I am committed to taking this feedback and partnering with the industry to deliver a product that helps them thrive,” she said.