Well, that escalated quickly. The Senate Banking Committee was all set to markup crucial cryptocurrency legislation when Coinbase Global Inc. (COIN) threw a wrench in the works, and now everyone's taking a timeout.

Pumping the Brakes

Senate Banking Committee Chair Tim Scott announced late Wednesday that the committee is hitting pause on the crypto market structure bill. The reason? Turns out not everyone in the industry is on the same page. Scott was quick to emphasize that this is just a "brief pause" and that all stakeholders are "working in good faith" to iron things out.

White House Crypto Czar David Sacks tried to play peacemaker, noting that passage of this legislation is "as close as it's ever been." He's urging the industry to use this breather to sort out their differences, which sounds reasonable until you remember that crypto people arguing on the internet is basically their natural state.

Industry Split

Senator Cynthia Lummis didn't hide her frustration. She thanked Scott for trying to find common ground, then delivered a pointed message: "Today's response from some in the industry proves they just are not ready, and while I am deeply disappointed, I am committed to taking this feedback and partnering with the industry to deliver a product that helps them thrive."

The drama started when Coinbase CEO Brian Armstrong announced his company wouldn't support the current version of the bill. His beef? Provisions around stablecoin rewards, tokenized equities, and what he sees as an "erosion" of the Commodity Futures Trading Commission's authority. When one of the biggest players in crypto pulls their support, lawmakers tend to notice.

Clock's Ticking

Here's the problem: the window for passing this legislation is getting narrower by the day. This bill would establish a federal regulatory framework for cryptocurrencies, something the industry desperately needs. But Galaxy Research estimates there's only a 25% chance enough Democrats break ranks to give it a real shot at becoming law.

Bernstein analysts are even more dire, warning that the legislation needs to advance by the second quarter or it risks getting swallowed up by midterm election politics. They've identified stablecoin rewards as the key sticking point that's gumming up the works.

The Senate Agriculture Committee already postponed markup of their version of the crypto bill until late January, so delays are becoming contagious. Still, Galaxy Digital CEO Mike Novogratz expressed confidence earlier Wednesday that the bill "will get done soon," noting that things always get "tense" at the end of legislative negotiations.

Market Reaction

Bitcoin (BTC) seemed unfazed by the political theater, trading up 1.44% at $96,203. Crypto has weathered enough regulatory uncertainty that one more delay barely registers.

Coinbase shares, however, took a hit. The stock dropped 2.15% in after-hours trading after closing up 1.25% at $255.86 during Wednesday's regular session. The stock has been showing weakness across multiple timeframes with poor momentum indicators recently.