Senate leaders Grassley and Durbin warn that the draft crypto bill could create enforcement gaps for decentralized platforms, making it harder to prosecute illicit financial activity.

They sent a letter to Banking Committee leaders, cautioning that the changes might attract illicit actors and complicate enforcement against unlawful crypto transactions.

Crypto industry stakeholders, including Coinbase, have withdrawn initial support amid ongoing negotiations with lawmakers.

Coinbase publicly pulled its support for the bill, citing several provisions, even as talks with legislators continue.

The debate underscores the broader challenge of balancing regulatory clarity for crypto markets with tools to combat financial crime.

The push comes as the Senate Banking and Agriculture committees advance legislation on crypto policing, with a January 12 draft that BRCA-like exemptions would shield crypto software and network maintenance from certain money-transmitter laws.

Path forward remains uncertain amid cross-committee delays and the need for 60 votes on the Senate floor, signaling a need for broad bipartisan support.

Central dispute centers on language from the Blockchain Regulatory Certainty Act, which would treat crypto software developers and decentralized networks as not money transmitters, potentially shielding them from some regulations.

Judiciary Committee leaders want to remove crypto developer protections from the market structure bill, arguing such protections would weaken unlicensed money transmitting laws.

Judiciary Committee says it was not consulted on these changes and urges the Banking Committee to reject language that would undermine accountability for unlicensed money transmitting businesses.

Grassley and Durbin assert the bill could hinder prosecuting criminals who already obscure illicit transactions, increasing enforcement challenges.