The Stakes are High: Re-election and Campaign Finance
Ultimately, what's keeping the overall stakes high in the debate over the market structure bill is a simple thing - the re-election of Senators and Members of Congress coming up later this year. In 2024, the efforts of the crypto lobby - particularly Coinbase and Ripple - showed how their eye-popping large donations to President Trump's campaign resulted in huge benefits for President Trump and the Republican Party. This is a lesson the Senate Democrats will not soon forget.
Senate Democrats Engage the Crypto Lobby Amidst Ethical Concerns
In the latest news, Senate Democrats reached out today to have a meeting with the crypto lobby to show their commitment to continuing developing a market structure bill and moving it to completion. Many Senators, including Senator Ruben Gallego (D-NV), also benefitted from a Fairshake PAC, a bipartisan organization that gives money to both Republican and Democratic campaigns that are going to be pro-crypto. The Senators on the Democratic side keep talking about needing an ethics component in market structure. It will be hard for them to explain to their constituents, many of which have been protesting things like 'No Kings' in the U.S. as Trump offered cryptocurrency products such as his own meme coin, how they could allow a bill to become law that helps Trump's crypto businesses, but doesn't have any ethical obligations to hold him accountable.
The Trump Factor: An Ethical Impasse
That right there is perhaps the biggest challenge of moving forward on market structure - it's not necessarily issues like tokenized stocks, DeFi, or stablecoin rewards - as it is the reality that Trump would never sign a bill that would restrict his ability to continue to make money in the crypto industry. That, more than anything, should indicate to you why the Democrats can't give an inch on an ethics provision in the bill while Republicans can't give an inch either. That is the X factor as to why market structure may fail, and since it is in an election year, where it is already hard to get bills passed into law because of the midterms, this makes this situation the most difficult.
Senate Republicans Navigate Lobbying Interests: Crypto vs. Banking
Senate Republicans meanwhile are acutely aware of implications of the midterm election, and while more are predicting the House rather than the Senate could become Democratic, their primary concern is finding a way to balance both the crypto lobby and the banking lobby. While one is new and growing very powerful, the banking lobby is old and likely the most powerful on the Hill. The banking lobby has traditionally seen the Republicans as allies on their issues. However, this could change, as it seems evident from the stablecoin interest debate that the Democrats and Republicans are siding more with the banking lobby on this issue. These Senators have to now balance the interests of the crypto lobby with that of the banking lobby, putting them in a delicate situation. The decision by CEO Brian Armstrong to pull Coinbase's support of the latest market structure draft is not something that was likely easy to do, but ultimately had to be done to put pressure back on some of the Senators who may have been leaning back toward the banking lobby.
An Unavoidable Confrontation: Entrenched Interests and Crypto's Fight
In a sense, this was unavoidable. The Senate Democrats right now are laser-focused on the elections in 2026 - and they do not want their Achilles' heel in the upcoming election to be crypto this time, as that is what they already experienced in 2024. Meanwhile, the Senate Republicans are likely feeling pulled in a couple of different directions, because of the friction between crypto and banking. This is the fight - here and now - that was unavoidable and inevitable. The entrenched interests of banking were not going to just let crypto come in and steal their lunch money. And crypto has started to become established enough that they are going to put up a fight. After all, crypto companies have been fighting for so long, particularly in the last Administration with the SEC, that it's a bit of a role they've been used to.
In a sense, this was unavoidable. The Senate Democrats right now are laser-focused on the elections in 2026 - and they do not want their Achilles' heel in the upcoming election to be crypto this time, as that is what they already experienced in 2024. Meanwhile, the Senate Republicans are likely feeling pulled in a couple of different directions, because of the friction between crypto and banking. This is the fight - here and now - that was unavoidable and inevitable. The entrenched interests of banking were not going to just let crypto come in and steal their lunch money. And crypto has started to become established enough that they are going to put up a fight. After all, crypto companies have been fighting for so long, particularly in the last Administration with the SEC, that it's a bit of a role they've been used to.
The Outlook: A Difficult Path Forward
How does it end? I think there's a 35% chance of seeing market structure become law with the main wild card being the ethics issue and whether Senate Democrats feel they can point to something in the bill that stops Trump's business interests while Trump still feels he can sign the bill without impacting one of his major successes in business now, which is crypto. Interesting times in the U.S. - stay tuned!