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

BlockBeats News, January 26th, Wall Street brokerage firm Benchmark stated that if the U.S. Congress fails to pass cryptocurrency market structure legislation this year, the U.S. crypto market will not revert to the strong regulatory enforcement environment of 2022-2023. However, at a critical moment of global adoption and accelerating institutional interest, market structure will continue to be constrained.

Analyst Mark Palmer wrote in a report on Monday, "The absence of legislation will result in a structural risk premium persisting across much of the digital asset ecosystem." He added that this would limit the valuation expansion space for platforms primarily targeting the U.S. market.

Palmer pointed out that legislative failure would delay rather than halt the maturation of cryptocurrency, resulting in the U.S. market not fully realizing its potential. In this scenario, investors would favor assets with a Bitcoin core, a strong balance sheet, and cash flow-stable infrastructure rather than areas sensitive to regulation such as trading platforms, decentralized finance (DeFi), and altcoins.

This legislation aims to establish a regulatory framework for the U.S. cryptocurrency market by clarifying how digital assets should be classified as commodities or securities and defining the regulatory responsibilities of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Although last year's bill passed by the House of Representatives shifted the discussion focus to details like stablecoin yields and DeFi interfaces, negotiations in the Senate are slower and more contentious, with the risk of final approval being delayed until next year.

Palmer believes the market has begun to price in this type of time risk. If the market structure bill fails to pass, trading platforms will continue to face uncertainty in listings, higher compliance costs, and restrictions on expanding high-margin products. The process of stablecoin monetization may also be delayed due to unclear rules on yields and distribution.

The report notes that given Bitcoin's established status as a commodity, Bitcoin and Bitcoin-focused asset management companies will be relatively unaffected, and the regulatory risk exposure for mining companies and energy-supported infrastructure is also smaller.

DeFi and smart contract platforms remain the most vulnerable, with regulatory ambiguity continuing to constrain U.S. market participation; whereas custody and compliance service providers are in a relatively defensive position.

Despite the legislative process delay, Palmer still believes that the likelihood of the cryptocurrency market structure bill being passed is high—even in a diluted form. He emphasized that any form of legislation would help reduce regulatory risk and drive broader institutional participation.