A delay in passing U.S. crypto market structure legislation is limiting valuation growth for American-exposed crypto firms, according to Benchmark analyst Mark Palmer. The holdup prolongs regulatory uncertainty amid rising global adoption, though bitcoin and infrastructure plays remain relatively insulated. Palmer still expects the bill to pass, albeit possibly later than anticipated.
The U.S. Congress's hesitation on crypto market structure legislation is imposing a structural risk premium on the digital asset sector, capping potential valuation expansions for platforms with significant U.S. exposure. In a report released on Monday, Benchmark analyst Mark Palmer noted that without the bill, the market would remain constrained even as institutional interest and global adoption accelerate.
"The absence of legislation would cause a structural risk premium to persist across much of the digital asset ecosystem," Palmer wrote, explaining that this would particularly hinder exchanges, decentralized finance (DeFi) protocols, and altcoins due to ongoing listing uncertainties, higher compliance costs, and delays in stablecoin monetization.
In contrast, bitcoin—currently trading at $87,948.56—and infrastructure-focused firms, such as miners and energy-backed projects, are better positioned. Bitcoin's established status as a commodity offers insulation, while custody and compliance providers hold defensive roles. DeFi and smart-contract platforms face the highest vulnerability from continued ambiguity around U.S. participation.
The legislation aims to clarify whether digital assets are commodities or securities and delineate oversight between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). The House passed a version last year, advancing debates on issues like stablecoin yields and DeFi interfaces. However, Senate progress has stalled.
A scheduled markup by the Senate Banking Committee on January 15 was postponed after cryptocurrency exchange Coinbase withdrew support. CEO Brian Armstrong stated on X: “We’d rather have no bill than a bad bill. Hopefully we can all get to a better draft.” Committee Chairman Tim Scott announced the pause, emphasizing ongoing bipartisan talks. Reports from January 21 indicated further delays as lawmakers prioritized housing affordability.
Banks have lobbied against crypto products resembling deposits, such as stablecoin rewards, influencing the bill's provisions and contributing to industry divisions. Despite these hurdles, Palmer views passage as more likely than not, even if diluted, arguing it would reduce risks and boost institutional involvement. Markets appear to be pricing in the timing uncertainty already.
