‘I’m not betting on a markup this month’: Lawyer outlines three issues still holding up the crypto market structure bill

The U.S. Senate’s push to advance landmark crypto market structure legislation has hit a late-year snag as negotiators work through three complex disputes, according to Variant Fund Chief Legal Officer Jake Chervinsky. 

In a post late Thursday, he said senators are working “very hard to get this done, but the closer they get, the more complex it becomes,” adding, “I’m not betting on a markup this month.”

Chervinsky described market structure legislation as “the most important crypto policy objective period,” noting that the House already passed its version — the Clarity Act — in July, clarifying which tokens are non-securities, and how centralized platforms are regulated. In the Senate, the Banking Committee is responsible for the securities-law half of the bill while the Agriculture Committee works on the commodities-law half, with both publishing drafts this fall.

Before the legislation can advance, both committees must hold a markup — a formal session where lawmakers vote on amendments and decide whether to send the bill for a full Senate vote. Chervinsky said neither committee wants to move to markup until they are confident both drafts can secure a passing vote.

Three obstacles remain

The first major obstacle involves stablecoin yield. Chervinsky said banks are seeking to expand the “prohibition on interest” they negotiated into the stablecoin-focused GENIUS Act, signed into law by President Trump earlier this year. That legislation bars issuers from paying holders any form of interest or yield. However, the provision is narrowly written, Chervinsky noted, and does not address non-yield rewards or yield paid by third parties — an interpretation banks now label a “loophole.” Their push to broaden the restriction, he warned, could sway enough senators to jeopardize the bill entirely.

A second point of contention concerns conflicts of interest. Chervinsky said some Democrats have signaled they won’t support market structure legislation unless it includes language restricting the president’s family from involvement in crypto-related businesses. The politics behind the demand are “simple and obvious,” he wrote, but negotiators have yet to find a solution that would allow the bill to proceed.

The third and most consequential dispute, in Chervinsky’s view, is DeFi. He argued the bill should only regulate centralized platforms that hold user funds, and that its sole purpose regarding decentralized finance should be to protect it — particularly by ensuring software developers are shielded from being treated as intermediaries.

Some traditional finance firms like Citadel, he noted, are pushing Congress to classify developers, validators, and other DeFi parties as regulated intermediaries — a stance he sees as an attempt to preserve their “regulatory moat.” Without strong developer protections, Chervinsky said, there is no market structure bill, recalling past actions involving Tornado Cash developers and decentralized exchange builders.

Given the lingering disputes and the limited number of legislative days remaining, Chervinsky cautioned that the process is likely to continue into January. “There’s nothing more important than getting this right,” he said. “We won’t have a second chance.”

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