"From 86% to 26% chance of passing"...US cryptocurrency market structure bill faces collapse

▲ Banks, US Congress, Bitcoin (BTC), Cryptocurrency Regulation/ChatGPT Generated Image

The US cryptocurrency market structure bill is facing legislative failure due to intense lobbying from the banking sector and intertwined political interests.

Guy Turner, host of the crypto-specialized YouTube channel Coin Bureau, pointed out in a video released on April 27 (local time) that the bill's chance of passing, which exceeded 80% at the beginning of the year, has recently plummeted to 26%. Turner diagnosed that if Congress fails to process the bill by the end of May, the next legislative opportunity might not come until 2030 due to changes in the political landscape after the November midterm elections. Currently, market participants are increasingly concerned that missing this golden opportunity could lead to the stagnation of the virtual asset industry in the US for several years.

The most significant legislative hurdle is the conflict of interest with traditional financial institutions regarding whether to allow interest payments on stablecoins. The banking sector is engaged in organized lobbying, fearing that if stablecoins offer returns similar to deposits, approximately $500 billion in funds could leave institutional banks by 2028. In particular, negotiations are facing difficulties as Senator Tom Tillis of North Carolina, where Bank of America's headquarters is located, and others are under strong pressure from the banking sector to demand revisions to the bill.

Political variables are also a factor hindering the bill. Controversy over preferential treatment for World Liberty Financial, a virtual asset project involving the family of US President Donald Trump, has made it even more difficult to secure cooperation from the Democratic Party. Furthermore, the problem of understaffing at the CFTC, which is supposed to regulate the virtual asset market, combined with demands for stronger security regulations due to Iran's attempts to evade sanctions using virtual assets, is rapidly weakening legislative momentum.

The responses from the virtual asset industry are also mixed. While over 120 companies, including Galaxy Digital, sent an urgent joint letter to the Senate Banking Committee demanding prompt finalization of the bill, skeptical views also exist. Mark Yusco, chairman of Morgan Creek Capital, criticized the bill as a "bad law" that undermines the core value of decentralization in virtual assets and only strengthens the power of existing large financial institutions, questioning its effectiveness.

If the legislation ultimately fails, US virtual asset companies will continue to face the chaos of operating without clear legal grounds, subject to individual enforcement actions by the SEC and varying regulations by state. Senator Cynthia Lummis emphasized that missing this opportunity would accelerate the outflow of virtual asset developers and capital from the US to countries with clear regulations. If Congress fails to find a compromise before the Memorial Day recess in mid-May, the bill will effectively be scrapped.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*