U.S. Senate Unveils Draft to Redefine Crypto Regulation Framework

Regulations

After months of anticipation, U.S. lawmakers have taken a major step toward establishing a clear framework for digital asset oversight.

Key Takeaways:

Bipartisan Senate draft proposes shifting crypto oversight from the SEC to the CFTC.
Most cryptocurrencies would be classified as digital commodities under the plan.
Lawmakers remain divided over DeFi rules and the CFTC’s regulatory capacity.
The proposal marks the most significant step yet toward a unified U.S. crypto framework.

Washington’s long debate over who should regulate digital assets has reached a turning point. Senators John Boozman and Cory Booker have introduced a bipartisan discussion draft that would shift the bulk of cryptocurrency oversight from the Securities and Exchange Commission (SEC) to the Commodity Futures Trading Commission (CFTC)—a move long favored by both the crypto industry and the Trump administration.

The proposal, released by the Senate Agriculture Committee, lays out the foundation for a broader market structure bill that aims to bring long-awaited clarity to how digital assets are classified, traded, and supervised at the federal level. Under the plan, most cryptocurrencies such as Bitcoin and Ethereum would be treated as digital commodities, falling under the CFTC’s jurisdiction. The bill would also introduce new registration requirements, disclosure obligations, and transaction fees for certain market participants, tightening accountability in what has been a largely unregulated landscape.

A Divided but Determined Congress

While the legislation reflects rare bipartisan cooperation, it also exposes divisions over resources and priorities. Senator Booker welcomed the progress but warned that the CFTC currently lacks the staff and infrastructure to regulate a trillion-dollar market. The commission, designed as a five-member bipartisan body, currently has only one active member—Acting Chair Caroline Pham—after a wave of resignations. The draft would require that at least two of the CFTC’s future commissioners be Democrats, ensuring balance once Trump’s nominee for chair, Mike Selig, is confirmed.

Republicans, including Senate Banking Committee Chair Tim Scott (R-S.C.), praised the draft, calling it an important milestone toward comprehensive crypto regulation. Democrats remain cautious, arguing that while the CFTC may be more aligned with the industry’s preferences, it needs significantly more resources and enforcement capability to handle the complexity of the digital asset sector.

Key Issues Still on the Table

The current version of the bill leaves several major topics unresolved, particularly around decentralized finance (DeFi) and anti-money-laundering (AML) standards. DeFi has become a flashpoint between parties—many Democrats are pushing for stricter controls, while Republicans and most industry leaders prefer a lighter touch. Lawmakers plan to continue negotiations on these provisions before moving the bill to markup.

Crypto executives have been lobbying intensely for the legislation, meeting with senators from both parties in recent weeks. Ji Hun Kim, CEO of the Crypto Council for Innovation, described the release of the draft as “meaningful positive progress” toward a “fit-for-purpose” regulatory structure that could bring stability to the U.S. digital asset landscape.

Road Ahead for the Market Structure Bill

The Senate Agriculture Committee, which oversees the CFTC, has yet to schedule hearings or a formal vote on the proposal. Meanwhile, the Senate Banking Committee—responsible for the securities portion of the bill—continues to refine its own draft released earlier this year. Lawmakers hope to merge both versions into a single bipartisan package before year’s end.

Even with Republican backing, at least seven Democratic votes would be required to overcome a filibuster, making bipartisan cooperation essential. The House passed a similar version of the market structure bill earlier this year with the support of more than 70 Democrats, raising cautious optimism that the Senate could follow suit.

If enacted, the legislation would not only clarify which federal agency oversees digital assets but also redefine how cryptocurrencies operate in U.S. markets, setting the stage for the most comprehensive crypto regulatory framework in the nation’s history.

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