Navigating the 2026 Winter of U.S. Crypto Legislation

The start of 2026 was expected to be a "hot" season for digital asset regulation in Washington. Before the holidays, leaders in the Senate Banking committee were confident that they would swiftly pass legislation. Instead, the first month of the year has been defined by a series of delays, industry rifts, and quite literally a deep freeze that pushed the legislative calendar into February 2026.

For market participants and policy observers, the opening weeks of this year have thus far provided a deep insight into the complexities of federal lawmaking, as two major Senate committees struggled to move their respective market structure bills forward.

The Senate Banking Draft: Back to the Drawing Board

The year began with activity from the Senate Banking Committee. Building on the momentum of 2025’s legislative efforts, Chairman Tim Scott (R-SC) released a bipartisan discussion draft on January 12. Over nearly 300 pages, the draft aimed to provide a comprehensive market structure framework, attempting to set concrete guardrails for the crypto industry.

However, the draft drew criticism from some players in the industry. The primary point of contention centered on a provision that would prohibit digital asset service providers from offering yield or interest to users for simply holding stablecoin balances. While the draft allowed for "activity-linked" incentives, such as rewards for using a stablecoin in a specific transaction, the ban on passive yield was seen as a major win for traditional banking groups, who feared that "yield-bearing" stablecoins would drain deposits from the legacy financial system.

Among these industry complaints, plus over 130 amendments filed and support from key Democrats fracturing, the scheduled January 15 markup was pulled just hours before it was set to begin.

The Shift to Senate Agriculture: A Party-Line Advance

With the Banking Committee’s efforts halted, focus shifted to the Senate Agriculture Committee. On January 21, Chairman John Boozman released an updated version of the Digital Commodity Intermediaries Act (DCIA). Unlike the Banking draft, the Ag draft focused heavily on protecting non-custodial software developers and blockchain infrastructure providers, narrowly targeting intermediaries rather than the underlying protocols.

The road to a vote was icy, literal as well as political. A "once-in-a-decade" winter storm swept across the East Coast during the final weekend of January, grounding flights and essentially shutting down the nation's capital. The markup, originally scheduled for Tuesday, January 27, was postponed until Thursday, January 29.

In an important moment for the industry, the Senate Agriculture Committee successfully advanced the DCIA, but the victory was bittersweet. The bill passed strictly along party lines with a 12-11 vote. Every Democrat on the committee voted against the measure, citing concerns over consumer protection safeguards and a controversial lack of ethics restrictions that would prevent federal officials from profiting from the assets they regulate. While the bill is officially headed to the Senate floor, the lack of bipartisan support signals a difficult path ahead for final passage.

The White House Intervention: The Yield Question

As of February 2, the center of gravity has shifted from Capitol Hill to the Executive Branch. Recognizing that the "yield/rewards" debate has halted the Banking Committee’s progress, the White House has summoned representatives from both the crypto industry and the traditional banking sector for a high-stakes summit today.

This meeting aims to broker a compromise on the stablecoin yield issue that has pitted Wall Street against crypto. Banking leaders, including representatives from the Bank Policy Institute, continue to argue that interest-bearing stablecoins represent an existential threat to the $17 trillion deposit base of the U.S. banking system. On the other side, crypto advocates argue that prohibiting yield stifles American innovation and drives users toward offshore, unregulated products.

Other Major Legislation Developments: The Broader Federal Context

While the committee markups dominated the headlines surrounding U.S. crypto legislation in January, other significant federal developments have occurred since the beginning of the year:

• The GENIUS Act Implementation: Federal regulators began the "fine-tuning" phase of the 2025 stablecoin law. New guidance now allows FDIC-supervised banks to treat "permitted stablecoins" as tokenized cash equivalents, provided they meet strict licensing and reserve disclosures.
• The SEC "Task Force" Transition: The SEC's newly formed "Crypto Task Force" has spent the first three weeks of 2026 issuing a series of no-action letters. Most notably, the agency has effectively dropped dozens of enforcement actions from the previous era that were based solely on "unregistered exchange" allegations without accompanying fraud claims.

The Path Forward

The successful, albeit partisan, vote in the Agriculture Committee has kept market structure legislation moving forward, but the true test lies in the ongoing problems with the Banking Committee’s draft. It will be up to lawmakers to create legislation within the U.S. Senate’s Banking Committee that can gain bipartisan support once a comprehensive bill finally is put up to a floor vote. With the approaching midterm election season, time to enact major legislation is getting shorter.