US Crypto Bill Poised for Passage: HSBC Sees Compromise as Crucial Despite Coinbase’s Stark Opposition

WASHINGTON, D.C., March 2025 – A pivotal U.S. crypto market structure bill faces a critical juncture as global banking giant HSBC provides a starkly pragmatic assessment, suggesting the legislation will likely pass into law despite the recent and vocal opposition from cryptocurrency exchange leader Coinbase. This analysis injects a dose of realpolitik into a heated debate, framing the current draft not as a perfect solution but as a necessary foundation for the entire digital asset ecosystem’s future stability and institutional adoption.

HSBC’s Pragmatic Stance on the US Crypto Bill

Financial analysts at HSBC have delivered a clear-eyed forecast regarding the contentious legislation. According to their research note, widely cited by industry publications like CoinDesk, the bank argues that establishing a legal baseline for digital assets is non-negotiable. This framework, they contend, provides the regulatory certainty that major financial institutions absolutely require before committing significant capital to the cryptocurrency space. Consequently, HSBC views the current legislative effort, formally known as the Digital Asset Market Structure Bill, as a compromise that may be fundamentally preferable to the alternative of having no federal legislation at all.

Furthermore, the bank’s analysts presented a forward-looking political risk assessment. They suggested that while the present draft of the bill contains provisions that industry players find objectionable, future amendments under a potentially different presidential administration could prove far more restrictive or unfavorable. This perspective frames the bill as a defensive measure, locking in a specific regulatory approach before the political winds might shift. The core of HSBC’s argument rests on the principle that some regulatory clarity, even if imperfect, is superior to the persistent ambiguity that has characterized U.S. crypto policy for over a decade.

Understanding Coinbase’s Core Opposition

Coinbase, the largest U.S.-based cryptocurrency exchange, publicly withdrew its support for the bill in late 2024, marking a significant fracture in the industry’s lobbying front. The company’s primary objection centers on a specific provision within the bill’s extensive text. This provision could be interpreted as effectively banning interest payments, often called “yield,” for holders of certain stablecoins. Stablecoins are cryptocurrencies designed to maintain a stable value, typically pegged to a fiat currency like the U.S. dollar.

For Coinbase and many of its users, this represents a direct threat to a key product and service. The exchange and other platforms have offered programs where customers can lend their stablecoin holdings to earn interest. Coinbase argues that prohibiting this practice would stifle innovation, reduce consumer choice, and put U.S. firms at a competitive disadvantage against international exchanges operating in less restrictive jurisdictions. Their opposition highlights a central tension in crypto regulation: balancing consumer protection and financial stability with the desire to foster a competitive and innovative market.

The Institutional Imperative for Clear Rules

The push for a comprehensive federal bill did not emerge in a vacuum. For years, institutional investors like hedge funds, asset managers, and pension funds have cited regulatory uncertainty as the single largest barrier to greater cryptocurrency allocation. The current patchwork of state regulations and conflicting guidance from federal agencies like the SEC and CFTC has created a compliance minefield. A unified federal statute would directly address this concern by delineating clear jurisdictional lines, defining what constitutes a security versus a commodity in the digital asset context, and establishing standardized custody and consumer disclosure rules.

This institutional perspective is precisely what HSBC’s analysis captures. As a global systemically important bank, HSBC’s clientele includes the very institutions seeking this clarity. The table below contrasts the key arguments from the two primary perspectives in this debate:

The Legislative Pathway and Political Dynamics

The bill’s journey through Congress has been complex, involving multiple committee markups and revisions. Its progress signifies a growing, albeit reluctant, consensus among lawmakers that the United States cannot afford to ignore the digital asset sector. Key drivers behind the legislative push include:

• Consumer Protection Mandates: High-profile failures of crypto firms like FTX have intensified congressional pressure to establish robust consumer safeguards.
• Financial Stability Oversight: Regulators express concern about the systemic risks posed by large, unregulated stablecoin issuers.
• Geopolitical Competition: Policymakers are increasingly aware of other jurisdictions, like the EU with its MiCA framework, moving ahead with comprehensive crypto rules.

Despite Coinbase’s opposition, the bill retains support from other segments of the crypto industry, particularly those focused on Bitcoin and commodity-classified assets, who see it as a way to secure favorable treatment from the CFTC. Additionally, several traditional finance trade groups have quietly advocated for the bill’s passage, seeing it as a way to bring crypto under a familiar regulatory umbrella. The political calculus suggests that lawmakers may view the compromise as capturing enough support from both sides of the aisle—and from both traditional and crypto-native interests—to secure passage, even if it means some parties, like Coinbase, remain dissatisfied.

Historical Context and the Evolution of Crypto Lobbying

The current debate represents a maturation of cryptocurrency lobbying efforts in Washington. Initially fragmented and reactive, the industry has developed more sophisticated advocacy operations. However, the split over this bill reveals enduring fissures. The emergence of distinct factions—such as Bitcoin maximalists, DeFi advocates, and exchange platforms—means that a “one-size-fits-all” bill was always likely to create dissent. This legislative process, therefore, serves as a stress test for the industry’s political cohesion and its ability to negotiate with policymakers on complex technical issues.

Potential Impacts on the Broader Crypto Ecosystem

Should the bill pass as HSBC predicts, its ramifications will extend far beyond the specific dispute over stablecoin yield. The legislation would create a foundational classification system for digital assets, determining which regulatory body holds primary oversight. This clarity could unleash a wave of new, regulated financial products, such as spot Bitcoin ETFs for other cryptocurrencies and more straightforward paths for public companies to hold digital assets on their balance sheets.

Conversely, the bill would also impose significant new compliance costs. Exchanges and issuers would need to adhere to strict reporting, auditing, and risk-management standards. The specific language around decentralized finance (DeFi) protocols remains a particularly contentious and closely watched area, with many fearing that overly broad definitions could inadvertently stifle open-source software development. The long-term effect will likely be a formalization and institutionalization of the U.S. crypto market, potentially at the expense of some experimental and fringe activities.

Conclusion

The analysis from HSBC underscores a pivotal moment for cryptocurrency regulation in the United States. The path forward for the US crypto bill appears to hinge on a difficult but politically necessary compromise. While industry leaders like Coinbase have legitimate concerns about specific restrictive provisions, the overwhelming demand from the broader financial system is for definitive rules of the road. Passage of this market structure legislation would represent the most significant regulatory development for digital assets in U.S. history, setting a course that prioritizes institutional integration and consumer protection, even as it forces adaptation and sacrifice from certain segments of the native crypto industry. The coming months will test whether the pragmatic calculus highlighted by HSBC prevails over the targeted objections raised by major exchanges.

FAQs

Q1: What is the main reason HSBC thinks the crypto bill will pass despite opposition?
A1: HSBC analysts believe a compromise establishing a basic legal framework is politically preferable to continued regulatory uncertainty, especially as future administrations might draft even more restrictive laws.

Q2: Why did Coinbase withdraw its support for the bill?
A2: Coinbase opposes the bill primarily due to a provision it believes could ban interest-bearing accounts for stablecoins, which it views as an anti-innovation measure that harms consumers.

Q3: How would this bill help institutional investors enter the crypto market?
A3: The bill would provide clear regulatory classifications and custody rules, reducing legal and compliance risks that have traditionally prevented large institutions like pension funds from investing.

Q4: What are stablecoins, and why is their regulation so contentious?
A4: Stablecoins are cryptocurrencies pegged to stable assets like the U.S. dollar. Their regulation is contentious because they sit at the intersection of banking, payments, and crypto, raising concerns about financial stability and consumer protection.

Q5: Has any other major economy passed similar comprehensive crypto legislation?
A5: Yes, the European Union’s Markets in Crypto-Assets (MiCA) regulation is a comprehensive framework that took effect in 2024, often cited as a model and a motivator for U.S. legislative action.