US key cryptocurrency regulation plan derailed: Coinbase withdraws support, Senate committee postpones hearing.

After Coinbase Global (COIN.US) withdrew its support for the latest version of the cryptocurrency market structure bill, the U.S. Senate Banking Committee postponed discussions on the highly anticipated bill for hours. Committee Chairman Tim Scott released a statement on Wednesday evening stating that the consideration of the bill would be postponed due to ongoing negotiations between the two parties. He did not provide a new date. Scott said: "I have had discussions with leaders in the cryptocurrency industry, the financial sector, and my Democratic and Republican colleagues, all of whom are earnestly engaged in negotiations. Our goal is to establish clear rules, protect consumer rights, strengthen national security, and ensure the future of finance is built in the United States." The market structure bill, aimed at enhancing the legitimacy of digital assets, was originally scheduled for consideration on Thursday - a process that includes discussion and amendments. On Wednesday, Coinbase CEO Brian Armstrong stated on the social network X that he would withdraw support for the latest text of the bill due to "too many issues." This statement dealt a significant blow to the prospects of the bill. The bill was originally intended to clarify the regulatory responsibilities of the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission in the cryptocurrency industry, seen as crucial legislation for the industry's pursuit of legitimacy. Senator Cynthia Lummis, a member of the committee, posted on X website that such industry reactions "prove they are not yet prepared." Lummis said, "Although I am deeply disappointed, I commit to seriously consider this feedback and work with the industry to create a product that can help them thrive." This delay could hinder the legislative process, and with the upcoming midterm elections, passing the legislation may become even more challenging. The House passed its own market structure bill last year, and now the Senate Banking Committee and Senate Agriculture Committee need to review their respective versions of the bill. Afterwards, the texts of the two bills need to be merged and coordinated with the House version. For years, the cryptocurrency industry has been pushing for market structure legislation to protect itself from the unfriendly U.S. presidential administration. During President Biden's tenure, including Coinbase, many cryptocurrency exchanges have been sued by the Securities and Exchange Commission (SEC), accusing them of operating unregistered exchanges, clearinghouses, and brokerage dealers. Although most of these cases were settled during the more crypto-friendly Trump administration, the industry still hopes to obtain protection through legislation. While Coinbase has been one of the main supporters of market structure legislation, Armstrong pointed out some issues with the current draft, such as restrictions on stocks running on the blockchain and rewards that cryptocurrency exchanges pay to stablecoin holders. In recent weeks, reward mechanisms have become the biggest point of controversy. Banks argue that these reward mechanisms essentially amount to high-yield deposits without having to comply with the same regulatory requirements as banks face; however, limiting these reward mechanisms could affect Coinbase's revenue.