Senate Crypto Bill on Brink: Banks Target Stablecoin Yields Ahead of Jan 15 Showdown
Simultaneous Senate markups face a deadlock as the ABA demands a ban on exchange-based stablecoin yields, threatening to derail the $2T market structure bill.
The Senate’s push to overhaul crypto market structure has hit a lethal bottleneck just 48 hours before a critical vote. Two Senate committees are scheduled for simultaneous markups on January 15, a synchronized effort to unlock over $2 trillion in institutional capital. But the legislation, long pitched as a bipartisan slam dunk, is now teetering on collapse.
The friction point isn’t technical; it’s territorial. A coalition of banking groups, led by the American Bankers Association (ABA), effectively drew a line in the sand Monday, demanding strict closures to what they call the “stablecoin yield loophole.”
The “GENIUS” Loophole
The conflict stems from the GENIUS Act, passed in late 2025, which banned stablecoin issuers from paying interest. The ABA argues that crypto exchanges stepped into that void, offering “rewards” on balances that mimic banking yields. A product the banking lobby claims siphons billions from community lenders.
“If billions are displaced from community bank lending, small businesses and farmers in towns like ours will suffer,” the ABA’s Community Bankers Council wrote in a letter to the Senate Banking Committee.
Sources close to the negotiations confirm that major crypto firms have threatened to pull support for the bill if the new text extends the yield ban to third-party exchanges. Without industry backing, the bill’s chances of passing the House evaporate.
The Trump Factor: $620M in Complications
Political optics are further snarling the timeline. Democrats on the committee, including Senator Angela Alsobrooks, have flagged significant ethics concerns regarding President Trump’s crypto portfolio. Trump’s family-backed venture, World Liberty Financial (WLFI), has reportedly generated over $600 million in value, raising questions about conflict of interest if the administration pushes deregulation.
While SEC Chair Paul Atkins remains a vocal proponent, calling the bill “job one” for maintaining U.S. competitiveness, Democrat negotiators are demanding strict recusal provisions for executive branch officials. This ethics dispute has become a convenient stalling tactic for lawmakers hesitant to alienate the banking lobby.
Market Reaction
Markets remain tense but stable. Bitcoin held above $92,000 (-0.03%), while DeFi tokens associated with yield protocols saw muted volume, signaling traders are waiting for the markup text. Analysts now peg the odds of a first-half passage at just 70%, with a failure this week likely pushing comprehensive reform into the legislative graveyard of 2027.
