Crypto market structure bill nears May push as ethics disputes and Trump ties cloud path forward

Crypto market structure legislation is gaining momentum, with lawmakers eyeing a potential mid-May markup — even as key disputes remain unresolved, including how to address President Donald Trump’s crypto ties.

On Wednesday, Sen. Thom Tillis, R-N.C., a key negotiator in talks about the broad crypto bill, told FOX Business that he had asked Senate Banking Committee Chair Tim Scott, R-S.C., to “move forward with scheduling” a hearing to amend and vote on the legislation. Tillis also said he hoped to have fresh legislative text a few days ahead of the markup.

Still, he drew a line on ethics last week. Tillis told Politico that he would oppose the crypto bill if it did not include ethics language before it leaves the Senate. 

“Momentum is building for a markup,” a crypto industry source told The Block. “Sen. Tillis is making these points to get these final issues resolved and get this bill done.”

That markup could happen in mid-May, the source said. 

The hurdles

The bill has been stuck over the past few months in the Senate Banking Committee amid clashes over how to treat stablecoin rewards, which has been the main blocker alongside other ethics and DeFi concerns. A bill would broadly regulate the crypto industry, in part through designating regulatory jurisdictions between the Commodity Futures Trading Commission and the Securities and Exchange Commission. The House passed a similar version, called Clarity, last year. 

In a statement sent to The Block this week, another key negotiator, Sen. Angela Alsobrooks, D-Md., said if lawmakers want to have a bipartisan vote in the Senate Banking Committee, other issues need to be resolved.  

“Senator Alsobrooks remains focused on the substance,” said Meredith Happy, a spokesperson for the senator. “If we want a bipartisan vote, we have to resolve illicit finance and ethics.”

However, Chair Scott has said he doesn’t believe ethics provisions go through his committee. It’s unclear where it would go next, if it belongs in another committee, but it will likely have to be addressed before going to a full floor Senate vote. 

Entering the ‘red zone’

On Thursday, in an interview with Fox Business, Chair Scott said lawmakers were in the “red zone” to get a bill passed, adding that Tillis and other Republican senators are “on board.”

“I just want to have 13 of 13 Republicans,” he said. “That makes it easier for us to have a bipartisan markup in May is my hope. Then we’ll get this thing to the floor of the Senate in June or July.”

However, later on Thursday, one of those Republicans, Sen. John Kennedy, R-La., said he would withhold support for crypto legislation, in part because of “deep frustrations with the House and White House over a stalled Senate housing bill,” Punchbowl News reported. 

In the Senate, 60 votes are needed to pass a bill. That is likely to prove difficult as all Republicans and some Democrats would need to be on board.

The Senate Banking Committee has also been trying to iron out how to address stablecoin rewards, with public spats evolving between a key White House crypto advisor and the banks. 

Decentralized finance has also come into focus amid concerns that language could weaken prosecutors’ ability to go after financial crimes. 

The ethics issue

Ethics has also come more into the picture as midterm elections inch closer, with Democrats expected to bring up the crypto industry’s lobbying and the Trump family’s crypto connections in their campaigns. It was also an issue when the Senate Agriculture Committee advanced its version of the crypto bill earlier this year. No Democrats in that committee voted yes for the bill, citing Trump’s crypto interests as a major obstacle. 

Bloomberg estimated that Trump has raked in at least $1.4 billion from his crypto ventures, including from DeFi and stablecoin project World Liberty Financial. The Trump family also holds a 20% stake in the mining firm American Bitcoin. Last weekend, Trump hosted a gala luncheon at his Mar-a-Lago estate in Florida for holders of the TRUMP memecoin, raising concerns from Democrats. 

Taken together — stablecoin rewards, ethics, DeFi and dwindling floor time to vote — these issues cast doubt on the bill’s prospects. One crypto industry source estimated its chances of passage at just 15% to 25%. Galaxy last week estimated the chance of passing market structure legislation this year at 50%.

The House’s version of crypto market structure, nicknamed Clarity, could serve as a “barometer,” the source said, but said the red line for the White House is restricting federal officials’ family members. The House version includes a line around prohibiting “any member of Congress or senior executive branch official from issuing a digital commodity during their time in public service.”

And conflicts of interest have been discussed numerous times in Senate Banking Committee hearings. Most recently, the top Democrat of that committee, Sen. Elizabeth Warren, seemingly called Federal Reserve Chair pick Kevin Warsh a “sock puppet” for Trump. Warsh has notable crypto holdings. 

“Having a sock puppet in charge of the Fed would also give the president access to the Fed’s powerful authorities to enrich himself, his family and his Wall Street buddies,” Warren said at the hearing last week. “It could mean granting special accounts to his family’s crypto company or bailouts to his friends on Wall Street if they get into trouble.”

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