A high-stakes legislative turf war has paralyzed the Senate Banking Committee’s crypto market structure bill. In a sharply worded letter sent late Wednesday to Chair Tim Scott (R-S.C.) and Ranking Member Elizabeth Warren (D-Mass.), Senate Judiciary leaders Chuck Grassley (R-Iowa) and Dick Durbin (D-Ill.) formally demanded the removal of the Blockchain Regulatory Certainty Act (Section 604).
The move forced the Banking Committee to abruptly cancel its planned Thursday markup, signaling a major fracture in the bill’s path to the floor.
The ‘Title 18’ Kill Shot
Grassley and Durbin’s opposition hinges on jurisdiction, not just policy. The Senators argued that Section 604, which exempts non-custodial developers from being classified as “money transmitters”, creates a loophole in the federal criminal code (Title 18), an area exclusively controlled by the Judiciary Committee.
“The Senate Judiciary Committee, which has jurisdiction over Title 18, was not consulted or given the opportunity to meaningfully review the proposed changes in advance,” the Senators wrote.
They contend the exemption would “weaken” anti-money laundering (AML) enforcement, explicitly citing the Department of Justice’s prosecution of Tornado Cash developer Roman Storm. The DOJ has successfully argued in court that code deployment can constitute money transmission if the developer retains control or profit mechanisms, a precedent the new bill sought to overturn.
Market & Political Impact
The blockage leaves the comprehensive market structure bill in limbo. Without the developer protections, DeFi advocates have threatened to pull support, arguing the bill would otherwise codify liability for writing open-source code. Conversely, keeping the provision now requires navigating a hostile Judiciary Committee.
Market Reaction: Broader DeFi markets shrugged off the legislative gridlock, though privacy tokens showed ironic resilience. Tornado Cash (TORN) traded up 1.94% following the news, despite being the focal point of the Senators’ AML concerns. Major assets like Ethereum remained flat as traders priced in the delay.
The Banking Committee has not set a new date for the markup, with insiders suggesting the “turf war” between the committees must be resolved before the bill can proceed.
