In mid-January 2026, the U.S. Senate Banking Committee announced plans to restart the revision and voting process for the Digital Asset and Cryptocurrency Market Structure Bill at the beginning of the year. This move brought the long-shelved regulatory issues back into the spotlight. The core contradiction of the current legislation lies in the long-standing divide between the Democratic and Republican parties over whether the crypto regulatory framework should lean towards "strong regulation" or "tolerant innovation," intertwined with the political pressures of the approaching election year. Research institution TD Cowen provided an analysis suggesting that this key bill may not have a real chance of being enacted until 2027. This prediction is still an institutional viewpoint rather than a confirmed fact, but it is enough to send a signal to the market: the tug-of-war over the rules will be a prolonged battle rather than a sprint. In the coming years, every advance and pause in the legislative process will be interpreted by whales and institutional funds as a barometer, quietly rewriting their medium- to long-term strategies in the U.S. market.

Approaching Election Year: Shelved Bill Forced to Restart

Around mid-January 2026, the long-silent Senate Banking Committee's agenda quietly added the topic of the "Digital Asset/Crypto Market Structure Bill." According to public reports, the committee plans to restart negotiations and revisions of the bill during this time window and attempt to push for a substantive procedural advance. As the committee chair, Tim Scott has repeatedly signaled in public that he hopes to convene members around mid-January to focus on revising key provisions and push for a voting outcome at the committee level before sending the text to the full Senate. Compared to the earlier stagnation, this restart is not due to mature technical conditions but rather seems to be an acceleration button pressed under the countdown of the political clock. Previously, the bill had been pushed to the back burner by more electorally impactful issues within the committee, with both parties unable to reach a decision on how to divide regulatory authority and whether to start with stricter investor protections, causing the draft to remain at a framework level. As the election year approaches, the narrative pressure on legislators has suddenly increased—they must show voters that they "see crypto" and "are regulating crypto," even if truly binding rules will not materialize for years. This once-shelved bill has been forced back onto the agenda.

Bipartisan Tug-of-War: Who Will Regulate and How Strictly

At the negotiation table for the restart, the most unavoidable issue remains an old question: who will regulate, and to what extent. The directional differences between the two parties regarding the regulatory authority, the intensity of investor protection, and the tolerance for innovation have never truly reconciled. One side emphasizes giving more power to regulatory agencies known for investor protection, setting "guardrails" with stricter disclosure obligations and compliance thresholds; the other side prefers to maintain a more flexible division of power among regulatory agencies, allowing innovation to take off in a relatively loose environment before gradually calibrating risk boundaries through subsequent details. In this tug-of-war, the Democratic camp's demand to include stricter conflict of interest restrictions for officials in the bill has become one of the most symbolically significant focal points. According to public reports, some Democrats hope to incorporate clearer constraints on officials' disclosures of crypto-related holdings, post-employment transitions, and communication records with the industry, sending a signal to the public that "we are not writing rules for Wall Street and tech giants." This emphasis on "moral primacy" sharply contrasts with the Republican and some pro-market forces' approach of "setting the big framework first, then filling in the details." The latter is more concerned that overly preemptive political and ethical clauses could tighten the space for innovation before the market has formed a stable structure. In such an atmosphere, negotiators need to use strong language to prove to voters that they will "regulate" crypto, while also being cautious not to move towards a true "zero tolerance" in the text, for fear of being accused of stifling future growth engines. Thus, every wording on the table is scrutinized, and every blank space conceals traces of compromise.

DeFi Gray Area Tug-of-War: Not Easily Written In…

If the division of regulatory authority and conflict of interest clauses can still be maintained through vague statements and subsequent authorizations, the uncertainty exposed by the draft regarding decentralized finance (DeFi) is far sharper. According to briefings, handling the regulatory details surrounding DeFi has become one of the technical difficulties that both sides cannot easily compromise on. The starting point of the issue lies in a seemingly simple yet difficult question: who is the responsible party? When liquidity is driven by automated market-making contracts, governance is determined by votes from decentralized token holders, and the front-end interface can be separated from the protocol's back end, the traditional roles of "platform" and "intermediary" become blurred. Regulatory agencies find it challenging to identify a party that tightly connects with the existing legal framework when asking "who is responsible." The same applies to KYC and anti-money laundering requirements; regulators hope to bring on-chain activities into a traceable and accountable scope, but in an open, permissionless protocol environment, how to set thresholds that align with technical realities without excessively eroding privacy and decentralization characteristics remains unanswered. Furthermore, to what extent DeFi products should be regarded as "securities" or "commodities," and the functional boundaries of different tokens and protocols are easily blurred, making any attempts to define them precisely at the legislative level high-risk. Overly strict regulation could push a significant amount of on-chain liquidity towards offshore jurisdictions and higher anonymity environments, leaving only a filtered remnant for the domestic compliant market; overly lenient regulation could lead to accusations of "allowing the market to burn despite knowing there are systemic risks" during the next round of failures. For market participants, how the bill ultimately positions DeFi in the text is not just an abstract legal issue but will directly impact the current valuations of protocols and related tokens—higher uncertainty leads to greater discounts; once the direction is clearer, projects with stronger compliance expectations may enjoy premiums.

Delayed to 2027? Market Understanding…

On the timeline of this prolonged tug-of-war, TD Cowen's analysis report provides a rather calm prediction: this cryptocurrency market structure bill may not have a real chance of passing until 2027. It is important to emphasize that this is merely an institutional prediction based on the current political and legislative environment, and it is explicitly marked in the research brief as pending further verification, rather than a timeline confirmed by the legislative body. However, this expectation does not contradict the reality of the U.S. legislative mechanism. Any complex market structure bill must first undergo revisions and reviews in specialized committees like the Banking Committee, and only after voting can it be submitted to the full Senate. After a round of voting in the full Senate, if there are differences between the two chambers' versions, it must enter a reconciliation process to refine the text before being signed by the president to take effect. Each step adds new political variables, and in the context of election cycles, party struggles, and lobbying forces intertwining, extending timelines has become almost the norm. From a market pricing perspective, short-term participants are more focused on "rumors" and "statements"—which side takes the initiative in the media, which lines are included in the latest draft, which key senator changes their stance, all of which can trigger a round of volatility. For medium- to long-term funds, the approximate year of enactment is more critical: whether they will face rigid new regulations within one to two years or have a three to five-year window to adjust their structures in advance. The timeframe described by TD Cowen provides institutions and whales with a relatively calm planning period, while also implying that the policy uncertainty premium will weigh on pricing for a longer time until the rules are firmly established.

Whale Calculations: Operating Under Uncertain Rules…

Under this "gradually clarifying but short-term fluctuating" U.S. path, the considerations of large institutions and crypto whales are far more nuanced than they appear. Compared to some jurisdictions that have already provided relatively complete crypto frameworks, the U.S. advantage has never been speed but rather the depth and scale that come when the rules finally take effect. For many global funds, the current state resembles a time-locked game: they must endure the slow heating of the legislative process and the repeated tug-of-war in the public opinion cycle in the short term, but in the long run, as long as the legal direction moves along the track of "allowing existence and being predictable," the U.S. market remains worth heavy investment. This gives rise to a more layered behavioral model. Some funds choose to increase their hedging efforts around the election period, using options combinations, over-the-counter agreements, or cross-market hedging structures to smooth potential regulatory shocks, while focusing on spot and long-term allocations that align closely with compliance narratives. Other funds place greater emphasis on the potential "compliance premium" that may form in the future: whether it is assets related to trading platforms with clear licensing paths, service providers offering custody and compliance infrastructure, or public chains and applications emphasizing KYC friendliness and deep integration with traditional finance, all are expected to receive better funding preferences once regulatory gates are clarified. In this framework, what whales truly care about is not whether regulation is absolutely strict or lenient, but whether the rules can be expected to be stable—so long as there are no drastic policy reversals, they are willing to operate under a relatively strict but clear set of rules. It is this preference for "predictability" that supports the U.S. market, amidst ongoing regulatory debates, as one of the key battlegrounds for global crypto funds.

Legislative Slow Train Continues: How to Keep Up with the Rhythm

Returning to the legislative drama currently unfolding, the negotiations for the crypto market structure bill, restarted under election year pressure, are essentially a long-term game with multiple fronts. On one end is the tug-of-war over how high the regulatory intensity should be, and on the other is the symbolic dispute over how to define the boundaries of officials' conflicts of interest, with the gray area of DeFi—a mix of technology and ideology—interspersed, making each round of revisions feel like setting new footholds on thin ice. Institutions like TD Cowen projecting the passage timeline to 2027 is a judgment that certainly awaits continuous verification, but it also objectively reminds the market: at least in the foreseeable future, crypto assets will proceed on a "regulatory slow lane," shaped by long-term uncertainty and gradual constraints. For crypto investors, a more realistic strategy is not to fixate solely on a specific passage point but to learn to interpret the signals released during the process—whether the committee's revision meeting schedule is advanced or delayed, whether key wording shifts from "encourage" to "require," or from "suggest" to "mandatory," these details often reveal the true expectations of funds earlier than price fluctuations. In terms of asset and sector selection, how to identify areas more likely to be categorized as "compliance-friendly" in advance will also determine the starting point for the next round of revaluation. It is certain that the U.S. legislative slow train is still moving forward slowly, and its rhythm will continue to reshape the weight and structure of the global crypto landscape. As for the main line of the next major trend, whether it comes from a technological breakthrough on-chain or a seemingly dull amendment to a legal clause on Capitol Hill, the answer is likely already hidden within these tug-of-war meetings and continuously revised drafts.

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