Senate scrambles to rescue crypto bill as Coinbase walks away from key compromise

Lawmakers in Washington are rushing to salvage a contested crypto bill after Coinbase stunned the market by pulling its backing for the measure.

Market sentiment shifts as regulation talks stall

The Crypto Fear & Greed Index dropped 12 points to 49 on Friday, sliding from “greed” to “neutral” in less than 24 hours as debate over the crypto bill intensified. Moreover, traders grew cautious while lawmakers struggled to keep their legislative calendar on track.

The index had stood at 61 on Thursday, its highest reading since October 10. That same day in October, the broader crypto market saw liquidations of about $19 billion, underscoring how quickly sentiment can reverse when leverage unwinds.

During Thursday’s rally, Bitcoin climbed roughly 5% to $97,870. Analytics firm Santiment argued the price move aligned with “smart money” accumulation while retail traders were selling, suggesting larger players were positioning for further volatility.

Industry backlash over market structure provisions

The policy rift emerged around a Senate version of US crypto market structure bill legislation designed to split oversight between federal market watchdogs. However, industry leaders quickly criticized several technical sections, arguing they could discourage innovation and capital formation.

One flashpoint involved stablecoin yield restrictions, which would sharply limit rewards programs tied to dollar-pegged tokens. Several executives warned that curbing returns on popular stablecoin products could push activity offshore instead of keeping it under US supervision.

Brian Armstrong, CEO of Coinbase, escalated tensions on social media, confirming the exchange would no longer support the legislation. He said the bill “would be materially worse than the current status quo” and stressed that Coinbase prefers “no bill than a bad bill,” a stance that hardened opposition in the sector.

Following the public backlash, the powerful Senate Banking Committee cancelled its planned Thursday markup. Committee leaders said they needed more time to build backing for the text, acknowledging that support had weakened rather than strengthened in recent days.

The panel gave no new date for a rescheduled session. At the same time, the Senate Agriculture Committee postponed its own Thursday markup, pushing it to late January and signaling that consensus on digital asset rules remains elusive.

Democrats seek alignment with industry

In response, Senate Democrats scheduled a Friday conference call with crypto industry representatives to discuss the stalled framework. The outreach comes less than two days after the markup delay and reflects mounting concern that the process could fracture further without direct dialogue.

Lawmakers from both the Senate Banking Committee and Senate Agriculture Committee are set to join the call, alongside several crypto policy advocacy groups. Moreover, the conversation is expected to focus on restoring trust after Coinbase’s decision to coinbase withdraw support for the package.

Participants say a potential stablecoin rewards compromise will likely top the agenda. For weeks, Democrats, Republicans, bank lobbyists and crypto representatives have tried to design a structure that preserves consumer protections without eliminating yield products that many users consider core to the ecosystem.

Legislative calendar and political risks

Some lawmakers from both parties had already expressed skepticism about the draft even before Coinbase changed course. That said, the high-profile break removed a key source of industry legitimacy for negotiators hoping to present the initiative as a business-friendly update to existing rules.

Despite the turbulence, the Senate Agriculture Committee is still officially targeting a January 27 markup date. The hearing remains on the calendar, suggesting leaders are not yet ready to abandon the effort, even as they confront growing doubts about whether the current text can pass.

As political maneuvering continued, Bitcoin changed hands at $95,480 at the time of publication, down 0.83% over the previous 24 hours, according to CoinMarketCap. However, the modest decline hinted that traders may see the delays as a temporary setback rather than a structural shift in policy risk.

Market reaction and outlook

Certain venture investors framed the postponements as a constructive pause. Crypto venture capitalist Kyle Chasse described the pushback as “a BULLISH signal,” noting that markets held firm despite widespread predictions of a deeper drawdown after the legislative surprise.

Chasse emphasized that the market “didn’t” suffer the damage many analysts anticipated, reinforcing the view that regulatory uncertainty is already priced into many digital assets. Moreover, the combination of steady prices and renewed talks in Congress may give negotiators space to rework the most controversial sections.

Whether this round of talks can transform a deeply contested proposal into a big beautiful bill crypto advocates can accept remains uncertain. Yet the scramble in the US Senate highlights how central digital asset rules have become to both market sentiment and long-term investment decisions heading into the coming months.

In summary, the sudden retreat of Coinbase, the cancelled markups and the renewed outreach to industry show how fragile the current consensus around US crypto regulation remains, even as traders continue to weigh policy risk against on-chain fundamentals and macro conditions.