Senate Democrats unveiled their own framework for market structure legislation to define how cryptocurrencies fit into current or future regulatory frameworks in the U.S., including how the Securities and Exchange Commission and Commodity Futures Trading Commission should oversee the digital asset sector.
The lawmakers’ framework, published Tuesday, listed seven “key pillars,” including calling for fair regulation that protects consumers and investors, defining how digital assets fit into different regulators’ jurisdictions and “preventing corruption and abuse.” Republicans on the Senate Banking Committee have already released multiple drafts of their own market structure bill, which Committee Chairman Tim Scott said should be through the Senate by the end of September.
Senators Ruben Gallego, Mark Warner, Kirsten Gillibrand, Cory Booker, Catherine Cortez Masto, Ben Ray Lujan, John Hickenlooper, Raphael Warnock, Adam Schiff, Andy Kim, Lisa Blunt Rochester and Angela Alsobrooks signed onto the framework. All but two of these lawmakers — Hickenlooper and Kim — had previously voted in favor of the GENIUS Act, a law regulating stablecoins in the U.S., suggesting these are members who may be willing to back this more consequential legislation. Gillibrand has previously sponsored numerous bills with Republican Cynthia Lummis addressing crypto. Any bill will need bipartisan support to advance through the Senate.
“We owe it to the millions of Americans who participate in this market to create clear rules of the road that protect consumers and safeguard our markets,” the lawmakers said in a statement. “We also must ensure that digital assets are not used to finance illicit activities or to line the pockets of politicians and their families.”
Their framework contends the existing regulatory regime in the U.S. has “hobbled both innovation and consumer protection,” and it called for legislation to clarify how digital assets that are not securities fit into the rules and how they would be regulated. The seven pillars include “closing the gap in the spot market” for cryptocurrencies that aren’t securities; clarifying regulatory jurisdiction; bringing issuers into a regulatory framework; bringing other platforms into a framework; blocking illicit finance; preventing corruption through crypto and “ensuring fair, effective regulation.”
New White House crypto adviser Patrick Witt said in a CoinDesk interview this week that the GOP-driven effort has been seeking input from Democrats to ensure a bill that can pass the Senate. This document may stand as the most significant response so far, giving both parties something more concrete to talk about.
The 6-page document notes that the CFTC does not currently have the resources to properly oversee the crypto spot markets, and it calls for both that agency and the SEC to come up with new frameworks for overseeing their respective portions of the digital asset sector.
It also called for legislation to have all digital asset platforms register as “financial institutions” with the Financial Crimes Enforcement Network (FinCEN), a U.S. Treasury Department branch tasked with tracking illicit finance.
One sticking point may come through the sixth pillar, titled “preventing corruption and abuse.”
The section said U.S. President Donald Trump “has turned to digital asset projects to enrich himself and his family,” and said legislation should “limit elected officials and their families from issuing, endorsing, or profiting from digital assets while in office” and require disclosures.
Similar arguments contributed to a hold-up in the passage of the GENIUS Act earlier this year, but the bill ultimately passed without any provisions blocking Trump or his family from engaging in crypto.
Read more: New White House Crypto Adviser Patrick Witt Calls Market Structure Bill Top Priority