Recent developments have sent ripples through the financial sector, as the anticipated regulatory framework for cryptocurrency has hit yet another roadblock. Investors are left wondering about the future of digital assets amidst increasing uncertainty.

Related Reading: Crypto Landscape Faces Setbacks as Regulatory Clarity is Postponed

The delay in regulatory setup, which many hoped would establish a more stable environment in 2025, has instead extended the period of ambiguity. This has triggered a wave of cautious sentiment among investors, leading to a notable pullback in digital asset valuations.

Recent prices show Bitcoin dipping below the $85,000 mark, contributing to an overall market decline that has witnessed a staggering loss of around $130 billion in total capitalization. The market value has now settled at approximately $2.9 trillion, marking the lowest figures seen in recent weeks as traders grapple with the stretched timelines for regulatory decisions.

Senate Delays Discussions on Crypto Regulation to 2026

In a recent announcement, the Senate Banking Committee revealed it will not be holding a markup session on the crypto market regulation bill before the close of Congress for the year.

While discussions have been characterized as bipartisan, lawmakers openly recognized the dwindling time left in 2025 to push the bill forward. Committee Chairman Tim Scott’s office expressed that talks will continue, but any markup is now expected to occur in early 2026.

This proposed legislation aims to clarify the regulatory landscape for digital assets within the U.S., particularly concerning the roles of the SEC and the CFTC.

Under current proposals, the CFTC would have authority over spot crypto markets, while securities laws would be applied more transparently to token issuers and relevant intermediaries. Efforts in the Senate Agriculture Committee, which also addresses CFTC regulations, have yet to reach a similar markup stage, further complicating progress.

Market Response Reveals Underlying Fragility

The immediate fallout from the legislative delay has resulted in tangible market contractions. Bitcoin’s price has plummeted from about $90,000 to roughly $85,000, and Ethereum has also seen declines, dipping below the $3,000 threshold. The average crypto RSI has dropped near 32, indicating the market is significantly oversold.

Analysts have noted that heightened positioning in derivatives and significant open interest at critical price points are likely contributing to this volatility. Furthermore, exchange-traded products like Bitcoin and Ethereum spot ETFs are reflecting the bearish sentiment, with substantial outflows as institutions pull back.

Observers have also reported a sharp rise in unrealized losses, compounded by stretched funding conditions and leverage, making the market more susceptible to negative catalysts such as policy delays.

Regulatory Challenges Continue Despite Agency Initiatives

Even with legislative progress stalled, regulatory agencies have not remained idle. The SEC continues to issue guidance and engage in public discussions regarding the applicability of existing securities laws to cryptocurrency activities, while the CFTC works to foster greater participation in supervised spot markets.

However, many in the industry argue that these steps do not provide the comprehensive clarity that the proposed market structure bill promises.

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The Senate’s recent decision reinforces a recurring theme in the cryptocurrency sector: delays in policy tend to amplify market volatility and uncertainty. With discussions scheduled to continue into early 2026, investors must brace themselves for an extended period of unresolved regulatory issues.

Cover image from ChatGPT, BTCUSD chart on Tradingview