Benchmark: If the Market Structure Bill is not passed, the U.S. crypto market will face "structural constraints"

On January 26, Wall Street brokerage Benchmark said the U.S. crypto market won’t return to the aggressive regulatory enforcement environment of 2022–2023 if Congress fails to pass cryptocurrency market structure legislation this year. But amid surging global adoption and growing institutional interest, market structure will remain constrained. Analyst Mark Palmer wrote in a Monday report: “Lack of legislation will mean a structural risk premium lingers across much of the digital asset ecosystem.” This will limit valuation upside for platforms focused primarily on the U.S. market, he added. Palmer noted legislative failure would delay—not halt—crypto’s maturation, leaving the U.S. market unable to fully realize its potential. In that scenario, investors will favor Bitcoin-focused assets, strong balance sheet firms, and cash-flow-stable infrastructure over regulation-sensitive areas like trading platforms, decentralized finance (DeFi), and altcoins. The legislation aims to set a U.S. crypto regulatory framework by clarifying how digital assets are classified as commodities or securities, and defining oversight roles for the SEC (Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission). While last year’s House-passed bill shifted focus to details like stablecoin yields and DeFi interfaces, Senate negotiations are slower and more contentious—with final approval at risk of being pushed to next year. Palmer says the market has already started pricing in this timeline risk. If the bill fails, trading platforms will face ongoing listing uncertainty, higher compliance costs, and restrictions on expanding high-margin products. Stablecoin monetization could also be delayed due to unclear rules around yields and distribution. The report notes Bitcoin’s established commodity status means Bitcoin and Bitcoin-focused asset managers will be relatively unaffected. Regulatory risk exposure is also smaller for mining firms and energy-backed infrastructure. DeFi and smart contract platforms remain most vulnerable—regulatory ambiguity will continue to limit U.S. market participation. Custody and compliance service providers, by contrast, are in a relatively defensive position. Despite the delay, Palmer still sees the bill passing as likely—even in a diluted form. “Any legislation will help reduce regulatory risk and drive broader institutional participation,” he emphasized.