Senate Judiciary Rejects Key Blockchain Act Provisions

On January 17, the U.S. Senate Judiciary Committee urged rejection of a cryptocurrency provision that could weaken federal fund transfer regulations, impacting market legislation proceedings.

The opposition creates a legislative deadlock, affecting cryptocurrency regulatory frameworks and potentially shifting support among decentralized finance advocates.

Senate Committee Clash Over Crypto Regulation Intensifies

Key players in this matter include Senate Judiciary Committee Chairman Chuck Grassley and Ranking Member Dick Durbin, with Senate Banking Committee Chairman Tim Scott also playing a central role. The Banking Committee had intended to debate and vote on the bill, but strong opposition halted proceedings. Grassley and Durbin argued that the provision would dilute federal law regarding unlicensed money transmission, insisting on its removal.

The interruption of the legislative process poses challenges. DeFi advocates have warned that without protecting provisions for software developers, their support could dwindle, potentially resulting in a stalemate in the legislative effort. Grassley and Durbin's opposition reflects their commitment to preventing changes that might obstruct enforcement of existing laws.

Cynthia Lummis, U.S. Senator from Wyoming, stated, "Blockchain developers who have simply written code and maintain open-source infrastructure have lived under threat of being classified as money transmitters for far too long."

Blockchain Community Reacts to Potential Legislative Setback

Did you know? In the past, similar legislative hurdles have stymied attempts to formalize cryptocurrency regulation, demonstrating the difficulties of balancing innovation with oversight.

As of recent CoinMarketCap reporting, Ethereum (ETH) holds a market value of $3,288.91 and a list price of $396.95 billion. Ethereum represents 12.31% of the global crypto market. Its trading volume spans $20.65 billion within the last day, a decrease of 20.36%. Within the last 24 hours, Ethereum's price decreased by 0.59%, but it saw a growth of 6.68% over the past week. For the past 90 days, its price shifted by a negative 15.67%. The circulating supply is noted at 120.69 million ETH. All data from CoinMarketCap.

Ethereum(ETH), daily chart, screenshot on CoinMarketCap at 06:07 UTC on January 17, 2026. Source: CoinMarketCap

Coincu research indicates that the rejection of blockchain protections may affect developers' confidence, possibly stagnating innovation. Analysis suggests that maintaining accountability without stifling innovation is pivotal for U.S. crypto market leadership. Dangerous implications could arise if legislative efforts do not balance these concerns effectively.

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