BEARISH 📉 : Senate Division Stalls Crypto Regulation Amid Market Volatility

US Treasury Secretary Scott Bessent emphasized the need for Congress to quickly pass the Clarity Act to establish clear rules in crypto markets, aiming to stabilize market fluctuations and restore investor confidence.

Stablecoin Regulations Stalled

The bill has caused division within Senate committees. The Agriculture Committee advanced part of it, while the Banking Committee halted progress due to opposition on stablecoin yield restrictions.
This division led to reduced industry support, complicating the legislation's advancement.

Urgency For Legislative Action

Some lawmakers aim for the bill to be signed by spring, stressing the importance of timely regulation.
There is debate over whether quick passage could inadvertently harm legitimate crypto services.

The White House attempted to mediate discussions with bank and crypto executives but reached no consensus. Key disagreements include limits on stablecoin interest and rewards.

Market Impact

Bitcoin and other cryptocurrencies have experienced increased volatility amid regulatory discussions.
Coinbase's withdrawal from supporting the bill influenced both equity and crypto markets.

Stakeholders' Positions

Banks favor strict stablecoin yield limits to prevent deposit shifts to crypto platforms.
Exchanges argue that such rewards promote user benefits and innovation.

Lawmakers face the challenge of balancing consumer protection, risk management, and market freedom. The final legislation may differ significantly from current proposals.