U.S. Crypto Faces Structural Crunch Without Market Structure Bill

The U.S. cryptocurrency market is heading toward a prolonged period of constrained growth unless Congress passes a long-awaited market structure bill in 2026, according to a new warning from Wall Street brokerage Benchmark. Analyst Mark Palmer says regulatory uncertainty is embedding a lasting “structural risk premium” into crypto valuations, capping upside for exchanges, DeFi platforms, and smart contract networks. Put simply, unclear rules are now a pricing factor. The warning comes as lawmakers continue to debate how digital assets should be classified and which agencies should oversee the industry.

What You Need to Know

• Benchmark says U.S. crypto valuations face a structural cap without new market structure legislation in 2026.
• Analyst Mark Palmer warns a persistent “structural risk premium” is delaying market maturation and steering capital toward Bitcoin and infrastructure.
• DeFi, exchanges, and smart contract platforms are seen as most exposed to regulatory uncertainty.
• Any version of a federal market structure bill could reduce regulatory risk and unlock broader institutional participation.

Benchmark Warns of a Structural Risk Premium

Benchmark’s latest research frames U.S. crypto not as a pure growth story, but as a market increasingly constrained by policy uncertainty in Washington.

In a report cited by Odaily and summarized by Phemex, analyst Mark Palmer said that failure to pass a comprehensive market structure bill this year would leave U.S.-linked crypto platforms trading with a permanent discount. “Without congressional action, the market will continue to assign a structural risk premium to U.S.-exposed platforms,” Palmer wrote, according to Phemex.

That premium shows up in two ways. Valuation multiples remain compressed relative to fundamentals, and investors hesitate to price in long-term growth for businesses that could face sudden enforcement actions or rule changes.

In plain terms, uncertainty is now directly suppressing how high valuations can reasonably go.

What the Market Structure Bill Is Designed to Fix

Securities or Commodities — and Who Regulates What

At the heart of Benchmark’s warning is a proposed U.S. market structure bill meant to resolve a basic but unresolved question: when is a digital asset a security, and when is it a commodity.

The legislation would define classification standards and clarify the regulatory boundaries between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). It would also establish consistent rules for trading, custody, and disclosure across digital asset platforms.

Put simply, the bill is meant to end regulation by enforcement.

For years, exchanges, DeFi protocols, and token issuers have operated under shifting interpretations and retroactive actions. Benchmark argues that this legal ambiguity has become one of the largest structural barriers to institutional adoption.

Palmer said the probability of passage remains “greater than not,” even if delays persist. Importantly, he added that almost any workable version of the bill would be directionally positive by lowering compliance risk and improving capital formation.

Bitcoin and Infrastructure Emerge as Relative Safe Havens

A Clear Divide in Regulatory Exposure

Benchmark’s analysis draws a sharp line between segments of the crypto economy that can tolerate regulatory ambiguity and those that cannot.

On the less exposed side sit Bitcoin and Bitcoin-linked businesses. As the most decentralized network with growing consensus as a commodity, Bitcoin faces fewer classification risks. Public mining companies and energy-backed infrastructure providers also benefit from tangible assets, predictable cash flows, and clearer legal treatment.

On the more exposed side are centralized exchanges, DeFi protocols, and smart contract platforms. These businesses depend heavily on token issuance, staking models, and automated financial products that fall directly into the SEC–CFTC gray zone.

Palmer wrote that the absence of legislation is “expected to delay the maturation of cryptocurrencies, prompting investors to favor Bitcoin-centric investments, robust balance sheets, and cash flow-generating infrastructure over exchanges, DeFi, and altcoins.”

That rotation is already visible in institutional positioning, with asset managers concentrating exposure in Bitcoin, exchange-traded products, and mining equities while trimming allocations to regulatory-sensitive tokens.

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How Regulatory Uncertainty Filters Into Valuations

Benchmark’s “structural risk premium” functions as a macro overlay applied specifically to U.S.-tied crypto assets.

Until Congress acts, investors must price in the probability of enforcement actions, product restrictions, or sudden reclassification events that could impair earnings and user growth. In practice, that leads to:

• Lower valuation multiples for U.S.-listed crypto firms relative to peers in clearer jurisdictions.
• A bias toward commodity-like Bitcoin exposure rather than yield-driven DeFi strategies.
• Slower institutional inflows into sectors with undefined regulatory pathways.

Benchmark also warned that prolonged uncertainty could weaken U.S. competitiveness as other regions move faster. Europe’s MiCA framework and emerging digital asset hubs in Asia already offer clearer statutory regimes, attracting developers and liquidity that might otherwise anchor in U.S. markets.

Institutional Adoption and Global Competitiveness at Stake

Beyond short-term valuations, Benchmark highlights a strategic risk: the possibility that the U.S. forfeits leadership in digital asset markets.

Large asset managers, insurers, and corporate treasuries typically require predictable, rules-based environments before scaling exposure to complex or yield-bearing crypto products. Palmer said that any credible market structure law would “reduce regulatory risks and encourage broader institutional participation,” deepening liquidity and lowering funding costs over time.

Without that clarity, innovation may continue to migrate offshore, leaving U.S. markets in a defensive posture as global competitors codify more comprehensive frameworks.

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Why This Matters

Regulatory gridlock is no longer just a policy issue, it has become a structural force shaping valuations, capital flows, and where the next phase of crypto innovation chooses to build.

What This Means for Traders

• Maintain a tilt toward Bitcoin, miners, and infrastructure with strong balance sheets and clearer regulatory narratives.
• Treat U.S.-exposed exchanges, DeFi tokens, and speculative altcoins as structurally higher risk until legislation advances.
• Watch Congressional signals closely; even incremental progress could compress risk premiums and unlock upside in discounted names.
• Factor jurisdiction into long-term positioning as regulatory clarity becomes a competitive advantage.

Conclusion

Benchmark’s warning underscores a defining reality for U.S. crypto markets in 2026: without congressional clarity, uncertainty will continue to cap valuations, steer institutional capital, and reshape sector leadership. Whether lawmakers deliver a coherent market structure framework, or allow the status quo to persist, may determine the trajectory of American crypto markets for years to come.

Disclaimer: The information provided in this article is for informational purposes only and does not constitute investment advice. Always do your own research before making financial decisions. Follow us for more updates from CoinNewsRadar.com