Is the "defeat" of the crypto bill a genius strategic shift—what the DeFi community has truly discovered

This week, efforts to build a US cryptocurrency market structure framework faced a major obstacle. Coinbase withdrew its support for the bill, and a few hours later, the Senate Banking Committee canceled a public hearing. On the surface, this development appears to be a setback for the industry, but DeFi communities and industry leaders interpret it differently. They see the true meaning as a “genius turning point” that actually redefines negotiations.

The Core of the Genius Judgment Demonstrated by DeFi Leaders

Mike Shiragaze, founder of Ether.fi, offered a surprising perspective on this delay. He stated, “Actually, this is positive,” pointing out that the harms the initial bill would bring to the crypto industry far outweigh the benefits.

What Shiragaze’s statement implies is simple but significant. The original draft would have limited yields from stablecoin holdings and imposed excessive regulatory frameworks on decentralized finance. From his viewpoint, waiting for amendments rather than fully adopting the bill would be more beneficial for the entire industry in the long run. This is a genius strategic decision—understanding that “avoiding a bad outcome” is the key.

Negotiation Dynamics and True Opportunities Unveiled by Industry Lawyers

Bill Hughes, Senior Counsel at Consensys and Director of Global Regulatory Affairs, explains the same logic. He argues that this pause indicates that legislators and industry supporters are signaling “a willingness to step back from negotiations rather than over-regulate.”

Hughes points out that the shift in power dynamics is crucial. “Those advocating for more government oversight and regulation need this bill at least in the short term more than DeFi does,” he says, capturing regulators’ sense of urgency perfectly. In other words, the crypto industry’s willingness to seriously walk away has created a new parity at the negotiation table.

What the “Malicious” Provisions of the Bill Signified

What was the most problematic aspect of the initial draft? Understanding this is key to explaining why the industry’s response is considered “genius.”

The bill was not just about tightening regulations; it aimed to fundamentally restrict DeFi functions. It included lowering profitability from stablecoin operations, strict monitoring of smart contract activities, and high barriers to institutional investor entry. These measures threatened the very competitiveness of the DeFi industry.

The industry’s decision to reject these provisions and block the full adoption of the bill reflects a long-term mindset of “waiting for better alternatives,” rather than mere resistance.

Expectations for Amendments and the Industry’s Next Strategy

Hughes shares a forward-looking view: “If those supporting stricter oversight feel increased pressure on prices in the future, they will be less willing to make unreasonable demands that force us to withdraw.” This indicates a change in the rules of the negotiation game.

The delay in the bill increases the likelihood that a more flexible framework will be proposed in the revised version. In this sense, the DeFi community’s response is genius—accepting the setback but turning the situation toward re-negotiation under more favorable conditions.

Hughes also states that in the revised draft, “sponsors and the industry have conveyed a clear message to regulators that they are prepared to step away from legislation regarding market structure rather than accept overregulation of decentralized technologies.”

The True Meaning of the Deeper Strategic Thinking Spreading Throughout the Industry

This series of developments signifies that the crypto industry has matured from mere resistors to strategic negotiators. Coinbase’s withdrawal of support was also an expression of unified industry will—favoring expectations for a revised bill over outright support for the original.

South Carolina Republican Senator Tim Scott, chairman of the Senate committee, also stated, “The cryptocurrency industry, financial sector leaders, and colleagues from both parties are engaging in sincere negotiations,” suggesting that this process is moving toward more constructive discussions rather than breakdowns.

In conclusion, the true meaning uncovered by the DeFi community and industry leaders is that the “defeat” of the crypto legislation was actually a strategic retreat and a genius decision. By accepting short-term setbacks, they paved the way for a longer-term, more favorable regulatory environment. This shift in thinking is the most important evidence of the industry’s overall maturity.