Crypto market structure bill clears key hurdle as ethics debate looms over floor vote

Latest developments: Senate Banking advanced the crypto market structure bill Thursday in what industry advocates described as a landmark moment for digital asset legislation.

• Blockchain Association Chief Policy Officer Lindsay Fraser said on CoinDesk's The Policy Protocol, that this was the first time a market structure bill had passed out of the Senate Banking Committee and moved toward a floor vote.
• The committee adopted seven amendments to the base text, including five last-minute bipartisan amendments negotiated during the markup session.
• Sens. Ruben Gallego and Angela Alsobrooks joined Republicans in voting for the bill, giving the legislation bipartisan backing after uncertainty earlier in the day over whether Democrats would support it.

Why it matters: Bipartisan support could improve the bill’s odds of reaching the Senate floor quickly and surviving broader negotiations.

• Fraser said a purely partisan committee vote likely would have increased Democratic leverage to demand more concessions before a floor vote.
• Industry advocates now expect lawmakers to focus on preserving compromises already reached on issues including staking rewards, tokenization and developer protections.
• Fraser said banks and traditional financial firms are expected to intensify lobbying efforts ahead of the floor vote to push for additional changes.

The complication: Key issues remain unresolved before the legislation can secure enough Democratic support in the full Senate.

• Ethics provisions are still the biggest outstanding issue, according to Fraser.
• Gallego and Alsobrooks both indicated their committee votes do not guarantee support on the Senate floor without additional ethics language.
• Developer protections also remain a major point of negotiation as lawmakers work to attract more Democratic votes.

Reading between the lines: Crypto advocates believe they could secure broader Democratic support than many expected.

• Fraser said the bill will likely need at least seven Democratic votes to clear the Senate floor.
• She pointed to last year’s Congressional Review Act vote overturning the IRS DeFi broker rule, which attracted support from 19 Democrats despite expectations that only a handful would back it.
• Sen. Kirsten Gillibrand has been working with Democrats off committee to educate lawmakers on the legislation and broader crypto policy issues, Fraser said.

What comes next: Senate negotiators now need to merge Banking Committee and Agriculture Committee versions of the legislation before a final floor vote.

• The Agriculture Committee advanced its own version earlier this year on partisan lines, and negotiators are still working through differences between the two drafts.