Senate committees are preparing for markup hearings on a major market structure bill scheduled for next Thursday, setting the stage for a critical debate over the future of digital asset regulation in the United States. The discussions center on the Senate Banking Committee’s oversight of matters involving the Securities and Exchange Commission and the Senate committee with jurisdiction over the Commodity Futures Trading Commission. While momentum is building, the bill faces several obstacles, particularly around whether the CFTC has sufficient resources, how compliance obligations would be enforced, and how securities should be defined in the context of digital assets. The crypto industry had hoped market structure legislation would advance alongside the GENIUS Act last year, but tensions persist, especially between traditional banks and crypto firms, as exchanges reopen and revisit policies around payable interest.
To examine these developments, FintechTV anchor Remy Blaire spoke with Timothy Massad, director of the Digital Assets Policy Project at the Harvard Kennedy School. Massad outlined two central objectives of the upcoming hearings: clarifying whether a digital token should be classified as a security or a commodity, and determining appropriate regulatory standards for crypto trading platforms such as Coinbase. He noted that reaching agreement on these issues has been difficult, as some Democrats worry that providing clarity could unintentionally promote certain technologies in ways that weaken long-standing securities regulations. Those concerns center on the risk of regulatory arbitrage, where firms exploit gaps between oversight regimes.
Massad also raised questions about whether current regulatory proposals adequately address the realities of retail crypto markets. He explained that platforms like Coinbase are regulated in a manner similar to futures markets, which were originally designed for institutional participants, not retail investors. According to Massad, a durable framework would require robust, high-quality disclosures, an area he suggested remains underdeveloped in the proposed legislation. Beyond technical considerations, he noted that political dynamics also play a role, including concerns over potential conflicts of interest tied to high-profile crypto involvement connected to the President’s family.
The discussion then turned to the GENIUS Act, which places restrictions on stablecoin issuers by prohibiting them from paying interest on stablecoins, which are traditionally viewed as payment instruments. Massad pointed out that uncertainty remains over whether third-party platforms, including exchanges, could offer yield or interest tied to stablecoins. This ambiguity has heightened concerns among banks, which argue that insufficient regulation of stablecoin issuers could threaten financial stability and prompt depositor flight. From their perspective, any entity accepting deposits and offering interest should be subject to bank-like regulatory standards to ensure a level competitive landscape.
Massad also addressed leadership changes at the CFTC, noting the recent confirmation of Mike Selig, a move welcomed by much of the crypto industry. However, he cautioned that Selig faces significant challenges, particularly as the agency has lost experienced staff while simultaneously taking on expanded responsibilities in prediction markets and crypto oversight. Massad emphasized that traditional futures markets must not be neglected, as they remain vital to farmers, energy producers, and other participants who rely on them for price stability and risk management.
Looking toward 2026, Massad offered a cautiously optimistic outlook for digital assets policy. If market structure legislation advances, he said, the industry could undergo meaningful change. At the same time, the continued rollout of the GENIUS Act will shape the regulatory environment and influence future reforms. Massad stressed the importance of building a framework that not only accommodates cryptocurrency but also encourages the development of practical, socially beneficial applications.
Overall, the ongoing debate over crypto regulation reflects a pivotal moment for the financial system, as lawmakers seek to balance innovation with consumer protection and market integrity. As the Senate prepares to address these issues, industry participants remain engaged but watchful, recognizing that the decisions made in the coming months could define the trajectory of digital assets, blockchain technology, and financial innovation for years to come.