U.S. digital asset market structure talks continue to show more division than consensus, torn apart by stablecoins, decentralized finance (DeFi), and President Trump’s pumped-up crypto bags.
Over 50 crypto execs descended on Capitol Hill on Thursday to impress on senators their strong belief that (a) digital asset market structure legislation needs to happen ASAP, and (b) messing with digital asset exchanges’ ability to offer customers ‘rewards’ for holding stablecoins on their platforms will cause them to strike down upon these pols with great vengeance and furious anger.
If you’re just joining us, the U.S. banking sector wants senators to include language in market structure legislation that applies the GENIUS Act’s prohibition on stablecoin issuers offering token holders ‘yield’ or interest to non-issuing platforms like Coinbase (NASDAQ: COIN) that currently offer users ‘rewards’ for holding those same stablecoins.
If this prohibition isn’t extended to exchanges, the banks believe their customers will mass-withdraw deposits to seek greater returns on their cash. This will allegedly negatively impact the ability of banks—particularly smaller community banks—to offer loans to their customers.
Crypto execs claim this argument is hogwash and are ratcheting up pressure on senators on the Banking and Agriculture committees, both of which have scheduled markup sessions on their respective market structure bills for January 15. The sessions are proceeding despite a consensus between the committee’s Republican and Democratic members on stablecoins and a range of other elements.
On Wednesday, Politico reported that the new draft of the Ag committee’s bill “does not currently have buy-in from Democrats on the panel.” A spokesperson for committee chair John Boozman (R-AR) said the revised bill “includes several provisions championed by Democrats” but also includes “input from stakeholders.”
Ag committee member Cory Booker (D-NJ) struck a neutral tone in a statement on the process, saying he’s been “working in good faith to come to a bipartisan agreement on market structure legislation that can get broad support in the Senate.” Booker claimed the committee’s Dems are “ready to get something done,” but a bipartisan bill is “the only way that we can get a bill signed into law.”
Over at the Banking committee, Angela Alsobrooks (D-MD) has floated a possible Solomonic solution to the stablecoin problem. Politico reported that Alsobrooks proposed a compromise in which exchanges could pay rewards to customers on their stablecoin transactions but not on stablecoins sitting idle in the customers’ exchange accounts.
This plan was rubbished by Coinbase’s chief legal officer, Paul Grewal, who asked, “How does it benefit consumers to pay rewards on ‘activity’ but not a balance? Answer: It doesn’t. Because that’s not whose benefit this is about.”
On Wednesday, Patrick Witt, exec director of the President’s Council of Advisors for Digital Assets, tweeted a warning to “the anti-rewards/yield crowd currently threatening to withhold their support for [market structure legislation], I would would [sic] remind you that tanking the bill over this issue preserves the status quo which you allege is intolerable. You will have achieved nothing.”
If you don’t allow stablecoin rewards, the terrorists win
Coinbase recently began floating a new argument for why Congress shouldn’t interfere with exchanges’ ability to offer stablecoin rewards, and it focuses on China’s central bank digital currency (CBDC), the digital yuan. China recently said it will allow commercial banks to pay interest to digital yuan holders as part of the “transition from the era of digital cash to the era of digital deposit money.”
The crypto sector is treating this development like a gauntlet thrown at their feet (or a slap at Uncle Sam’s face). Coinbase’s chief policy officer, Faryar Shirzad, tweeted that “China understands the opportunity the bank lobby is poised to give them.” Since China’s longstanding goal is “undermining the supremacy of the USD … the Senate banning rewards would be a big assist to China’s efforts.”
Coinbase CEO Brian Armstrong, who recently warned Congress that curbing stablecoin rewards was a “red line issue” for his company, tweeted that China was paying stablecoin interest “because it benefits ordinary people, and they recognize it as a competitive advantage … Rewards on stablecoins will not change lending one bit—but it does have a big impact on whether U.S. stablecoins are competitive.”
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Defying DeFi
One of market structure’s other major stumbling blocks is DeFi, including the issue of how much legal liability developers should face when their platforms are used for illicit purposes. True to form, the Dems want stronger guardrails while the GOP wants a more laissez-faire approach.
So while lobby group The Digital Chamber was squiring stakeholders around Capitol Hill on Thursday to meet with lawmakers and press the industry’s priorities/demands, Decrypt reported that a private meeting featured direct dialogue between some DeFi heavy hitters and representatives of the Securities Industry and Financial Markets Association (SIFMA), a Wall Street trade group.
SIFMA representatives met with Sen. Scott last month to discuss market structure issues. SIFMA has lobbied against issues dear to the crypto sector’s heart, opposing DeFi platforms trading tokenized equities unless they comply with all regulations imposed on tradfi platforms.
Among those advocating on DeFi’s behalf at Thursday’s meeting was a representative from the Andreessen Horowitz (a16z) private equity group. Decrypt’s sources claimed the discussion was “constructive” and “productive” on DeFi issues, but whether sufficient progress was made to turn SIFMA from foe to ally remains to be seen.
Republicans hold majorities on both Senate committees, and while there’s some disharmony among the GOP members—particularly on the stablecoin issue—they could ram through both bills without any Dem support. However, when a harmonized bill reaches the Senate floor, it will require 60 votes for passage, meaning at least seven Democrats will need to cast a ‘yes’ vote. Hence, all the frantic huddles, but the clock is ticking.
There’s a palpable sense of urgency among crypto execs that the looming specter of November’s midterm elections could derail efforts to pass market structure legislation. Given historical trends, if a floor vote doesn’t happen before March, it might not happen this year, as politicians switch their focus from lobbyists to voters.
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Ethics issue not going away
Meanwhile, Banking’s ranking member Elizabeth Warren (D-MA) is ringing the alarm bell over Wednesday’s news that the World Liberty Financial (WLF) entity linked to President Trump and his sons is seeking a national trust charter to boost its USD1 stablecoin business.
On Wednesday, Warren issued a statement noting that WLF’s application “will be reviewed, and presumably approved, by a regulator that serves at the pleasure of the President. We have never seen financial conflicts or corruption of this magnitude—and the Senate must address this in its consideration of crypto market structure legislation in the coming days.”
Dems have pushed for market structure to include ‘ethics’ language that would limit elected officials’ ability to profit off crypto projects while those same officials simultaneously ease regulatory guardrails. However, the ‘closing offer’ Banking GOP leaders made to Dems doesn’t address this issue, and previous efforts by Sen. Cynthia Lummis (R-WY) to get White House buy-in on ethics language were rejected.
On Thursday, Sen. Adam Schiff (D-CA) said this type of prohibition “needs to be applied to everyone.” Banking committee member Ruben Gallego (D-AZ) called the ethics issue “a red line” for Democrats, and said GOP leaders “need to get it right or they’re not going to have enough votes to pass this.”
On Thursday, the New York Times printed highlights of a Wednesday interview with Trump in which he dismissed concerns that his family’s business interests are influencing his decisions as leader of the country. Trump said he’d “prohibited [his family] from doing business in my first term, and I got absolutely no credit for it. I didn’t have to do that … I found out that nobody cared, and I’m allowed to.”
Last October, Reuters reported that the Trump Organization earned $802 million from its crypto ventures in the first half of 2025, nearly 93% of its H1 total. Trump told the Times that “I got a lot of votes because I backed crypto, and I got to like it.” Trump defended his crypto support by claiming a desire to beat out China for the role of chief crypto nation. “China wanted it, and one of us was going to get it.”
(Incidentally, Trump also told the Times that he has no intention of issuing a pardon to Sam Bankman-Fried, founder of the defunct FTX ;exchange, who’s currently serving a 25-year sentence after being convicted of fraud for his role in FTX’s 2022 demise. Trump offered no reason behind his decision.)
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Crypto ATM fraud on the rise
Shifting gears, CoinDesk reported that Polygon Labs, the entity behind the Ethereum layer-2 network, was “close to acquiring” Coinme, a major provider of U.S. BTC-based ATMs, for a price between $100-$125 million. Coinme also offers ‘cash to crypto’ (and vice versa) services at thousands of retail locations across the U.S.
Coinme is coming off a run-in with authorities in Washington State, which issued a cease-and-desist order against the company last November. The state’s Department of Financial Institutions (DFI) ordered CoinMe to return nearly $8.4 million to state residents that the company had claimed as its own revenue after customers allegedly waited too long to redeem vouchers obtained via Coinme kiosks.
On December 23, the DFI updated its original press release to say Coinme had entered a Consent Order requiring it to “cease and desist from all violations of the [Uniform Money Services] Act, take remedial action including to safeguard Washington customer assets in secure and segregated accounts, and to safeguard assets deposited at Washington kiosks that were not redeemed by customers.”
On December 30, Coinme said it had been cleared to resume operations after it submitted “detailed financial records and operational information that clarified key facts about the company’s business practices.”
Retail points of sale for converting cash to crypto and back again have become highly controversial for their role in facilitating scams. A report last November by the International Consortium of Investigative Journalists (ICIJ) on crypto’s role in pig butchering scams found that these types of conversion services are popular with scammers due to their often lackadaisical approach to ‘know your customer’ and anti-money laundering rules.
The U.S. Federal Bureau of Investigation (FBI) recently revealed that it received “over 12,000 complaints and over $333.5 million in monetary losses” from BTC ATM-related fraud in the first 11 months of 2025. That’s an increase over 2024’s full-year totals, which saw nearly 11,000 complaints and $246.7 million in losses during the full 12 months.
This upward trend is accelerating rapidly, with 2025’s 11-month total dwarfing annual losses in 2023 ($114 million) and 2022 ($78 million). Last August, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) warned financial institutions to be “vigilant in identifying and reporting suspicious activity” involving crypto ATMs.
As if on cue, this week saw the Maine Bureau of Consumer Credit Protection announce that it had reached a consent agreement with Bitcoin Depot, an ATM operator with over 15,000 locations in the U.S., Canada, and Australia.
The settlement, reached with assistance from Maine’s Attorney General, will see Bitcoin Depot surrender $1.9 million “taken by third-party scammers who defrauded Maine consumers” via Bitcoin Depot kiosks. Bitcoin Depot also agreed to “fully comply with Maine’s consumer protection laws to operate as a licensed money transmitter in the state.”
Most of the victims of these types of scams are elderly, with 2024’s FBI data showing individuals aged 60 or older accounting for two-thirds of the total number of victims. Keep in mind that these statistics only reflect the number of victims who reported the crimes.
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Source: https://coingeek.com/us-crypto-market-structure-talks-find-harmony-in-short-supply/
