Senate advances crypto market regulation as January markup date set and stablecoin yield faces tighter rules

Senate negotiations over digital assets are accelerating, with crypto market regulation moving to a key markup at the end of January amid rising political tension.

Senate Agriculture Committee sets January 27 crypto markup

Senate Agriculture Committee Chairman John Boozman confirmed that legislative text for a new crypto market structure bill will be released by close of business on Wednesday, January 21. Moreover, the committee has scheduled a formal markup for Tuesday, January 27, at 3 p.m., locking in the next major step for the proposal.

The timeline mirrors parallel work in the Senate Banking Committee, where senators have submitted 137 amendments to the CLARITY Act ahead of Thursday’s markup. According to sources who reviewed the submission list, the flood of proposed changes underlines how contentious the package has become.

Boozman said in a statement that 7this schedule ensures transparency and allows for thorough review as the committee moves forward with legislation to provide clarity and certainty for crypto markets. That said, the compressed calendar still concerns some lawmakers and outside groups.

The chairman also thanked Senator Cory Booker for his continued partnership on the legislation, which is designed to build clearer regulatory frameworks for digital asset markets. Furthermore, the Agriculture Committee’s effort is expected to intersect with other Senate work on oversight of trading platforms and stablecoins.

Banking lobby shapes stablecoin yield restrictions

In a parallel track, the latest Senate Banking Committee draft tightens rules on stablecoin income, marking a significant victory for traditional financial institutions. The text prohibits digital asset service providers from paying interest solely for holding payment stablecoin balances, a clause strongly backed by bank lobbyists.

However, the provision carves out room for rewards tied to specific activities, including transactions, wallet usage, loyalty programs, liquidity provision, collateral deposits, and participation in network governance. These exceptions create structured pathways for earning on stablecoin activity without treating basic balances like deposit accounts.

Banks may have won this round on stablecoin yield, Fox Business reporter Eleanor Terrett wrote, highlighting that the draft explicitly states companies cannot pay interest just for holding balances. The language followed intense pressure from banking associations, which warned that yield-bearing stablecoins could drain deposits from community institutions.

Crypto industry reactions are mixed. Coinbase privately urged the sector to stand down on opposing the stablecoin yield language for now, according to Decrypt Senior Writer Sander Lutz, citing a source with direct knowledge. Moreover, the exchange has portrayed the language as the least favorable it could still accept.

Lutz reported that Coinbase believes the loopholes are decent enough for yield on stablecoin activity/loyalty programs. However, critics argue that the approach could still tilt competition in favor of large banks and payment giants while constraining more open stablecoin products.

JPMorgan Chief Financial Officer Jeremy Barnum told analysts that creating a parallel banking system that includes something that looks a lot like a deposit that pays interest, without the associated safeguards, is an obviously dangerous and undesirable thing. The bank recently reported $25 billion in net interest income last quarter, a figure crypto advocates cite when arguing that banks are primarily defending profit margins rather than consumer protection.

Democratic demands on ethics cloud bipartisan path

Internal Democratic disputes now threaten the fragile coalition behind emerging bipartisan crypto legislation. Key Senate Democrats are demanding strict ethics guardrails that would bar public officials, including the president, from profiting from business ties to crypto firms.

Senator Adam Schiff said ethics controls covering the White House were essential, stressing that that needs to be applied to everyone. Moreover, Senator Ruben Gallego described the issue as a red line and warned, They need to get it right, or they’re not going to have enough votes to pass this.

Three Democratic senators also sent a letter demanding a full hearing before Thursday’s markup, criticizing the release of legislative text just two days before the markup. That said, committee leaders appear determined to keep the current schedule, despite calls for more time.

Industry sources told Lutz that current sentiment on the bill’s prospects is NGMI, reflecting deep pessimism over the ongoing fight about ethics language between Senate Democrats and the White House. The dispute now ranks among the most serious threats to the broader crypto senate bill package.

Bo Hines of the Bitcoin Policy Institute warned that if Democrats kill landmark legislation that would cement U.S. leadership in fintech simply to score political points, they’ll have to explain that choice to voters in November. However, some policy groups counter that robust ethics rules are necessary to preserve public trust in any new framework.

DeFi language, self-custody rights and industry divide

The Banking Committee has also inserted a sweeping new section on decentralized finance, catching many lobbyists by surprise. The added language has sparked concern among industry sources over how the bill defines DeFi activities and which entities bear compliance obligations.

Attorney Zack Shapiro published a detailed analysis noting that the bill appears to shield software developers while concentrating compliance pressure on web-based user interfaces. Moreover, the Senate Banking Committee GOP’s myth-versus-fact sheet emphasizes that the proposal seeks to protect core development work.

According to that GOP release, the bill explicitly protects software developers and preserves the right to self-custody digital assets for lawful purposes. Section 605 specifies that federal agencies may not prohibit, restrict, or otherwise impair a U.S. individual’s ability to hold their own digital assets when used lawfully.

For some policy experts, those decentralized finance protections represent a rare bright spot. Consensys attorney Bill Hughes called the current package potentially the best deal you could ever hope to get, urging skeptical advocates to hold your nose and accept the compromise.

Still, major disagreements remain over stablecoin design and incentives. Paradigm VP Alexander Grieve warned that Congress might squander progress by restricting stablecoin rewards largely to merchant transactions, describing the approach as a government-mandated windfall for financial intermediaries at the expense of individual Americans.

As it stands now, the bill continues to move forward, even as its final shape remains uncertain. Senator Cynthia Lummis has stressed the degree of cross-party work, saying every section includes bipartisan input and I look forward to working with my Democratic colleagues to deliver a bill that secures America’s financial future. For market observers, the outcome could determine how crypto market regulation evolves in the United States over the coming years.

Outlook for the Senate crypto process

With markup set for January 27 and negotiations intensifying around stablecoin yield, ethics rules, DeFi oversight and self-custody, the Senate crypto process has entered a decisive phase. Whether lawmakers can reconcile banking interests, ethics concerns and innovation goals will shape U.S. digital asset policy for years to come.