Senate's upcoming draft on market structure is expected to favor crypto, though some in the industry are concerned that Democrats might not support it

Senate Prepares for Key Vote on Crypto Legislation

According to sources close to the discussions, advocates for the cryptocurrency industry are preparing for the possibility that the newest U.S. crypto market regulation will be a Republican-led, partisan initiative. This comes as the Senate Agriculture Committee readies for a pivotal hearing next week, which will mark the first major vote on the proposal.

While negotiations among lawmakers are ongoing and the final outcome remains uncertain, the expectation is that the bill will largely reflect language favorable to the crypto sector. For example, it is anticipated that crypto developers will not be classified as regulated financial entities under the new legislation, though the official text is expected to be released on Wednesday.

However, if the bill moves forward without support from both parties, it could complicate the years-long lobbying efforts and significant financial investments made by crypto advocates. A bill backed solely by Republicans may struggle to secure enough votes in the full Senate, where at least seven Democratic votes are typically required to advance legislation.

Upcoming Committee Actions and Political Pressure

The Agriculture Committee is scheduled to hold a markup session on Tuesday, during which lawmakers will debate amendments and decide whether to send the bill to the full Senate. This step is crucial in the legislative process and could set the stage for the bill's final passage. Adding to the urgency, President Donald Trump recently stated in Switzerland that he intends to sign the bill into law soon.

Patrick Witt, the White House’s adviser on cryptocurrency, late Tuesday that approval of a crypto bill is inevitable, emphasizing, “It’s a matter of when, not if. Believing a multi-trillion-dollar industry can operate indefinitely without comprehensive regulation is unrealistic.”

Challenges in Committee Approval

Regardless of industry sentiment, the bill must gain approval from at least two Senate committees before advancing. Last week, the Senate Banking Committee attempted to address the legislation, but efforts stalled due to resistance from both parties, opposition from the White House, lobbying from the banking sector, and the withdrawal of support from Coinbase, a leading U.S. crypto exchange.

The two committees have distinct areas of focus: the Banking Committee addresses securities, while the Agriculture Committee oversees commodities. Since cryptocurrencies span both domains, approval from both panels is necessary. Notably, the Agriculture Committee’s version does not address issues such as illicit finance or stablecoin yields, which proved contentious in the banking committee’s negotiations.

Ongoing Negotiations and Bipartisan Hurdles

Although talks resumed on the banking draft after last week’s delay, the Agriculture Committee now leads the process. Known for its history of bipartisan cooperation, the committee—led by Chairman John Boozman—recently outlined a timeline for the bill’s progress, highlighting collaboration with Democratic Senator Cory Booker. The draft was expected by Wednesday, with markup and voting scheduled for Tuesday, January 27.

Boozman stated, “This schedule promotes transparency and allows for a thorough review as we advance legislation to bring clarity and certainty to crypto markets.”

If concerns from crypto lobbyists prove true and Democrats withhold support, negotiations will likely continue between the parties, especially if both committee versions must be reconciled into a single bill. Democrats have pressed for stronger consumer protections and ethics measures, and have called for the White House to fill bipartisan seats at regulatory agencies like the Commodity Futures Trading Commission.

Industry insiders also recognize that not all Republicans on Boozman’s committee are fully supportive. For instance, Senator Chuck Grassley has insisted that the Senate Judiciary Committee, which he chairs, should have input on liability protections for crypto developers.

Meanwhile, Senate Banking Committee Chairman Tim Scott recently told CoinDesk that a key Democratic demand—anti-corruption provisions preventing senior officials from profiting from the industry—should be handled by the Senate’s ethics panel. Lawmakers are reportedly working on a separate bill to address this issue.

Legislative Hurdles Remain

The Digital Asset Market Clarity Act, a previous version of which passed the House last year, still faces numerous obstacles. Issues such as stablecoin yields, preventing illicit finance, and safeguarding decentralized finance (DeFi) all involve competing interests and unresolved debates.

The release of the new draft this week will kick off further debate over necessary changes. If the banking committee’s experience is any indication, the bill is likely to contain numerous contentious points for negotiators. However, the Agriculture Committee has allowed itself additional time to address these complexities before the upcoming hearing.