Crypto Bill Markup Unlikely This Month Amid DeFi, Stablecoin Yield and Conflict Disputes, Expert Says

Momentum behind a landmark Senate crypto bill has weakened as negotiators grapple with three unresolved disputes. Variant Fund Chief Legal Officer Jake Chervinsky outlined the problems in a post on X. He said senators are working hard, but the closer they get, the more complex it becomes. A committee markup this month is unlikely, he added.

Chervinsky highlighted that market structure legislation is the most important crypto policy objective. The House already passed its version in July. That bill is called the Clarity Act. It clarifies which tokens are non-securities and sets rules for centralized platforms.

Crypto Bill Markup Stalls Over Stablecoin Yield

The Banking Committee is drafting the securities-law section. The Agriculture Committee is drafting the commodities-law section. Drafts from both committees were published this fall, Chervinsky said.

Markups must happen before the crypto market bill can advance. A markup is a formal session where lawmakers vote on amendments. It also decides whether a draft moves to the full Senate. Chervinsky said neither committee wants to proceed until both drafts look passable.

Stablecoin yield is one major dispute, he said. Banks want to expand the “prohibition on interest” approach from the stablecoin focused GENIUS Act. That law bars issuers from paying any interest or yield to holders. Chervinsky said that language is narrow.

The current text does not cover non-yield rewards, Chervinsky said. It also does not cover yield paid by third parties. Banks describe that gap as a loophole, he wrote. A broader restriction could flip enough votes to sink the crypto bill, he warned.

Ethics Demands and DeFi Protections Clash

Chervinsky said conflict-of-interest demands are slowing the crypto bill. Some Democrats are signaling they will withhold support unless the text limits the president’s family from crypto-related business activity. The request focuses on explicit restrictions in the legislation. Negotiators have not found language that clears that hurdle.

DeFi is the third and most consequential issue in his view. Regulation should target centralized platforms that hold user funds, he argued. The bill should not treat software developers as intermediaries. Protection of decentralized finance should be the priority, he said.

Traditional finance groups are pushing the opposite approach, Chervinsky wrote. Some want developers, validators, and other DeFi protocols treated as regulated intermediaries. He cited Citadel as an example of a firm backing that stance. He argued the push is meant to preserve a “regulatory moat.”

Chervinsky said protections are needed for crypto developers. He used enforcement actions against Tornado Cash developers as a caution. According to him, cases related to decentralized exchange builders. Without clear legal guardrails, the market structure bill will not pass.