The banking committee of the U.S. Senate advances the Financial Innovation Act, which has once again stalled. The core disagreement between both sides revolves around how to define stablecoins that generate yields — traditional banks insist on classifying them as deposits, while crypto companies argue that this stifles the potential for financial innovation.

This is not the only issue. A leading exchange withdrew support due to restrictive clauses on DeFi and bans on tokenized stocks in the bill, and there have been some disagreements between the White House and industry leaders. Underlying these conflicts is actually a fundamental clash of underlying logics between two worlds.

The banking system seeks regulatory clarity and risk isolation. Every transaction must be traceable, and every asset must have a clear legal status. Native crypto institutions, however, require operational flexibility. The core value of DeFi lies in financial composability; excessive regulatory intervention would lock down innovation.

Negotiations are ongoing, and it is expected to take a few more weeks before there is any new progress. But frankly, this tug-of-war itself represents some form of progress — at least everyone is willing to sit at the same table and talk. For projects and investors eager to clarify compliance boundaries, this back-and-forth indeed tests patience. Conversely, the slow pace of U.S. regulation objectively provides other countries and regions with opportunities to seize the initiative.