Tensions Between Trad-banks and the Crypto Industry Could Come to a Head in 2026

According to Decrypt, crypto’s improved standing in Washington is the result of sustained lobbying, favorable court decisions and a shifting posture among federal regulators. Industry executives now expect Congress to continue refining crypto market structure legislation in 2026, even if passage of a comprehensive bill slips further into the future. Senate Banking Committee chair Tim Scott (R-SC) plans to bring a market-structure bill up for a key vote next week despite uncertainty as to whether it has enough support on the committee to pass.

The legislative effort is no longer focused solely on whether digital assets fit within existing securities or commodities laws, but on carving out tailored exemptions and supervisory regimes for decentralized finance, trading platforms and stablecoins. That evolution has raised alarms among entrenched financial institutions that see crypto-specific relief as a threat to longstanding investor protection frameworks.

Those concerns surfaced publicly in late 2025, when Citadel Securities sent a sharply worded letter to the Securities and Exchange Commission (SEC) urging it to reconsider exemptive relief for large segments of the crypto industry. Citadel argued that broad exemptions could weaken core market safeguards and suggested that significant portions of decentralized finance activity should fall squarely under SEC oversight. Other traditional finance players, including Nasdaq, echoed similar arguments, warning regulators against what they view as preferential treatment for crypto firms.

Read more: CFTC Withdraws Guidance on ‘Actual Delivery’ in Crypto Transactions, Leaving Regulatory Void

Crypto policy leaders interpret those moves as precursors to litigation. “I do think we’re going back to court whether we want to or not,” Amanda Tuminelli, executive director of the DeFi Education Fund, said at a recent crypto policy event, per Decrypt. “I’m not just speculating. [The letter] makes it abundantly clear that Citadel is getting ready to sue.”

From the industry’s perspective, these legal threats underscore how much the balance of power has shifted. Crypto firms now see themselves as capable of winning regulatory and legislative battles that would have been unthinkable just two years ago.

Banking trade groups strongly opposed provisions in the GENIUS Act related to stablecoin rewards, for instance, arguing that such incentives blur the line between deposits and nonbank instruments. Despite that resistance, Congress enacted the bill, and efforts by banks to retroactively alter the language have so far failed to gain traction with the administration. For crypto advocates, that episode is evidence that the sector can withstand coordinated opposition from the banking lobby.

Still, Wall Street is far from unified, according to Decrypt. While some firms frame crypto as an existential threat to the regulated financial system, others are increasingly embracing blockchain technology to reduce costs, modernize settlement infrastructure or gain exposure to new asset classes. Large asset managers and custodians are experimenting with tokenization and crypto-linked products, complicating the narrative of a simple crypto-versus-banks showdown.

That internal split may determine how events unfold in 2026. Policy insiders told Decrypt they expect tensions will crest during SEC and Commodity Futures Trading Commission(CFTC) rulemakings later this year implementing new statutory authorities or exemptions. Those proceedings will give traditional finance firms formal avenues to challenge crypto-friendly policies, while also providing opportunities for compromise.

Whether the standoff resolves into cautious coexistence or escalates into prolonged regulatory warfare will shape not only the future of crypto legislation, but also the broader relationship between fintech innovation and the U.S. banking system.