Major U.S. crypto companies and lobbyists are turning against a sweeping digital-asset bill they had championed, threatening efforts to lock in a regulatory framework while Republicans still control Congress, the Financial Times reported.

The legislation, known as the Clarity Act, hit a roadblock in the Senate this week after Coinbase chief executive Brian Armstrong publicly withdrew his support, an abrupt reversal that helped prompt a delay in Senate consideration of the measure, according to the newspaper.

The bill, nearly 300 pages long, is designed to establish a broad regulatory regime for digital assets and to clarify which federal agencies would oversee different parts of the market, according to the FT.

The setback reflects intensifying industry infighting and a widening clash between crypto companies, banks, and lawmakers over key provisions, the newspaper said. A version of the bill passed the House of Representatives in July with support from crypto lobbyists, but the disputes now imperil plans to move it through the Senate before lawmakers pivot toward midterm elections.

“There’s definitely an assumption that crypto is not going to have a friendly Congress post-midterms,” Gabe Rosenberg, a partner at Davis Polk, told the FT. “This is the shot.”

A central fault line is stablecoins and, specifically, whether companies should be allowed to pay rewards to stablecoin holders. Crypto firms have faced a sustained pushback from bank lobbyists, with banks arguing that higher yields on dollar-linked tokens could draw deposits out of traditional banks, reducing lending capacity, the FT said.

On an earnings call cited in the report, Bank of America CEO Brian Moynihan warned that a movement of funds away from banks would “reduce lending capacity of banks,” which would “particularly hurt small and medium-sized businesses” compared with larger borrowers that can access alternative sources of debt.

Other provisions have also become flashpoints. Tokens that represent ownership of stocks—a form of tokenized equities—have drawn objections from crypto players after a last-minute language that would make it harder for these assets to obtain permission to trade, the Financial Times said. 

Decentralized finance groups are pushing back against proposed obligations related to anti-money laundering and other controls, arguing such requirements would hamper developers’ ability to build systems without centralized oversight and would stifle innovation, according to the FT.

Read more at the Financial Times