Tensions reached a boiling point in Washington this week as U.S. lawmakers and cryptocurrency industry executives met to discuss the future of the crypto market structure bill.
The meeting followed a leaked proposal from Democratic senators that would impose strict permissioned requirements on the decentralized finance (DeFi) sector, sparking outrage among crypto advocates.
According to journalist Eleanor Terrett, Democratic lawmakers accused industry representatives of aligning themselves with the Republican Party after the leak triggered a wave of public criticism.
Sources at the meeting said Democratic senators warned that continued public backlash could slow down the legislative process and jeopardize efforts to bring regulatory clarity to the digital asset industry.
Democrats Face Industry Pushback
The proposed legislation would introduce know-your-customer (KYC) and anti-money laundering (AML) mandates for DeFi protocols — requirements that many in the industry say are incompatible with decentralized systems.
Bo Hines, former director of President Donald Trump’s Working Group on Digital Assets, criticized the Democrats’ reaction, saying: “So let me get this straight: a Democratic Senator is upset the crypto community was able to review the policy proposals he wants to turn into law? How is this not satire?”
The tense exchange took place as the U.S. government entered its fourth week of a shutdown, further delaying legislative progress on the long-debated crypto market structure bill.
CLARITY Act Still Moving Forward
Despite the political gridlock, Wisconsin Representative Bryan Steil said the proposed legislation, known as the CLARITY Act, remains on course to become law by 2026.
“I’m hopeful that as we come on the other side of the shutdown that we have an opportunity to hit the ground running and have the Senate move forward quickly,” Steil told CNBC earlier this month.
White House economic adviser Kevin Hassett echoed cautious optimism, telling CNBC that the shutdown could end soon if moderate Democrats and Republicans reach a bipartisan agreement.
“The moderate Democrats will move forward and get us an open government, at which point we could negotiate whatever policies they want to negotiate with regular order,” Hassett said.
The standoff underscores the widening divide between regulators seeking stricter oversight of DeFi and industry leaders calling for innovation-friendly frameworks that preserve decentralization principles.
