NYDIG Signals Potential Delay for Senate Crypto Bill Post-Midterms

The U.S. Senate’s bill regarding crypto market structure is now in a tight legislative window that could shut by August if lawmakers do not advance it before the midterm election cycle escalates, as noted by research firm NYDIG.

In a market note released on Friday, NYDIG’s head of research Greg Cipolaro indicated that the most feasible timeline for the bill to pass Congress is between June and early August. This comes despite comments from White House crypto adviser Patrick Witt, who earlier mentioned a goal of passing it by July 4.

Witt suggested there was enough time for a Senate markup, a floor vote, and final approval from the House. However, Cipolaro characterized the July target more as an “aspirational benchmark” rather than a definitive deadline.

A vote by the Senate Banking Committee on Thursday brought the legislation one step closer to a Senate floor vote after months of delays related to negotiations over stablecoin rules, ethical provisions, and the treatment of government officials engaged with digital assets. The bill was advanced mostly along party lines.

With Republicans currently holding 53 seats in the Senate, the measure will likely need support from at least seven Democrats to obtain the 60 votes necessary to avoid extended debate and facilitate swift passage. Several Democratic lawmakers have argued that the existing draft does not adequately address issues related to illicit finance and evasion of sanctions.

Election calendar may complicate crypto bill timeline

As noted by Cipolaro in the NYDIG report, Congress is set to recess from late July until early September, after which lawmakers will return to a politically sensitive period leading up to the November midterms.

This timeline suggests Senate leadership may refrain from scheduling a contentious vote needing bipartisan support once campaign activities ramp up. Cipolaro wrote that if lawmakers do not advance the bill prior to the recess, the next available opportunity may arise during a post-election lame-duck session.

Even then, NYDIG emphasized that the path forward would heavily depend on Republicans maintaining control of the Senate and Majority Leader John Thune choosing to prioritize crypto legislation along with government funding negotiations.

Current election predictions indicate a tightly contested Senate race. While some projections give Republicans a slight advantage, other models categorize several battleground seats as toss-ups, potentially shifting control to Democrats next year.

Cipolaro suggested that a Democratic-controlled Senate in the next Congress would likely diminish the prospects for advancing the current Republican-backed market structure proposal post-January.

In the same note, NYDIG highlighted that lawmakers are weighing the option of approving an imperfect bipartisan framework this year versus taking the risk of reopening negotiations under a different political climate post-elections.

Regulatory clarity viewed as essential institutional catalyst

Cipolaro further noted that the passage of the legislation could significantly enhance institutional confidence in crypto markets by establishing clearer oversight rules for digital assets within the U.S.

Among the bill’s notable provisions, NYDIG pointed out that Bitcoin would be formally classified under the jurisdiction of the Commodity Futures Trading Commission as a commodity, thereby resolving what the firm sees as one of the last major regulatory uncertainties regarding Bitcoin’s status as an institutional asset.

Conversely, failing to pass this legislation could perpetuate ongoing jurisdictional uncertainty within the crypto industry. NYDIG indicated that unresolved disputes over decentralized finance enforcement provisions, ethical guidelines, or procedural delays could derail negotiations before the current congressional session concludes.