The U.S. Senate Banking Committee has indefinitely postponed the highly anticipated markup of the Digital Asset Market Clarity Act, dealing a severe blow to the industry's hopes for comprehensive regulation in early 2026. The abrupt delay, announced Thursday morning by Committee Chairman Tim Scott (R-S.C.), follows a high-profile revolt by Coinbase CEO Brian Armstrong, who publicly withdrew support for the legislation just hours before the scheduled session.

Chairman Scott confirmed the postponement in a brief statement, citing the need for continued bipartisan negotiations. "I've spoken with leaders across the crypto industry, the financial sector, and my Democratic and Republican colleagues, and everyone remains at the table working in good faith," Scott said. However, the breakdown in consensus highlights a widening rift between lawmakers, the banking lobby, and major crypto incumbents over the future of US crypto regulation 2026.

Coinbase Pulls the Plug: "Worse Than the Status Quo"

The catalyst for the delay appears to be a late-night pivot by Coinbase, the largest cryptocurrency exchange in the United States. In a statement released late Wednesday, CEO Brian Armstrong declared that the company could not support the bill in its current form, arguing that recent revisions had rendered the legislation harmful to American innovation.

"After reviewing the Senate Banking draft text over the last 48 hours, Coinbase unfortunately can't support the bill as written," Armstrong wrote on X (formerly Twitter). He explicitly criticized provisions that would enact a de facto ban on tokenized equities and impose unworkable surveillance requirements on decentralized finance (DeFi) protocols.

Armstrong's opposition is significant. For months, Coinbase had been a vocal proponent of the Digital Asset Market Clarity Act, viewing it as a necessary framework to resolve the jurisdictional turf war between the SEC vs CFTC. His sudden reversal signals that the industry's patience with compromise has run out. "We'd rather have no bill than a bad bill," Armstrong added, warning that the proposed rules would be "materially worse than the current status quo."

The Stablecoin Rewards Ban Controversy

At the heart of the dispute is a contentious provision regarding stablecoins. The draft bill reportedly includes a strict stablecoin rewards ban, prohibiting issuers and exchanges from offering yield or interest solely for holding payment stablecoins. This measure has been aggressively lobbied for by the American Bankers Association (ABA), which argues that interest-bearing stablecoins pose a direct threat to traditional bank deposits.

Closing the "Genius Act" Loophole

The controversy stems from the "Genius Act," passed by Congress in 2025, which established a federal regulatory floor for payment stablecoins but left ambiguity regarding third-party rewards. Banks have urged the Senate Banking Committee to use the new market structure bill to close this perceived loophole. For Coinbase, which generates approximately $1.3 billion annually from stablecoin-related revenue and rewards programs involving USDC, such a ban represents an existential threat to its business model.

"Regulatory clarity that shrinks investor upside isn't progress," noted one industry analyst. "The banking lobby is trying to ringfence deposits by crippling the competitive advantage of digital dollars."

Deepening Divides in the Senate Banking Committee

While industry opposition grabbed the headlines, internal legislative friction also contributed to the delay. Senate Democrats have raised renewed concerns regarding consumer protections, echoing warnings from consumer advocacy groups that the bill might preempt stricter state-level regulations.

The postponement of the Banking Committee's markup has had a domino effect. The Senate Agriculture Committee, which was set to mark up a companion portion of the crypto market structure legislation, has also delayed its session until late January. This dual delay leaves the timeline for US crypto regulation 2026 in limbo.

Senator Cynthia Lummis (R-WY), a long-time advocate for the industry, expressed optimism that the pause would allow for necessary technical corrections. However, the path forward is narrowing. With the 2026 midterms approaching later this year, the window for passing complex financial legislation is closing rapidly.

What This Means for the Crypto Market

The market reaction was swift, with crypto assets seeing a minor sell-off following the news. Investors are now grappling with the reality that the regulatory clarity promised for years may be further off than anticipated. The Digital Asset Market Clarity Act was supposed to be the crowning achievement of this Congress, finally categorizing digital assets and setting clear rules of the road.

For now, the industry remains in a regulatory gray zone. The SEC vs CFTC jurisdiction battle will continue to play out in the courts rather than through statute. As negotiations resume behind closed doors, all eyes are on Chairman Scott and Brian Armstrong to see if a compromise can be salvaged from the wreckage of this week's scheduled markup.