Democrat lawmakers have introduced a comprehensive legislative blueprint aimed at reshaping U.S. digital asset regulation, proposing to close longstanding gaps in crypto oversight and restore investor confidence in the nearly $4 trillion market, according to a newly released framework.

The proposed plan would grant the Commodity Futures Trading Commission (CFTC) full jurisdiction over spot markets for digital commodities, tokens that do not qualify as securities, resolving the regulatory ambiguity that has left both businesses and investors without clear protections.

It also calls for the CFTC to be given new registration and enforcement authority, as well as mandatory disclosures and consumer protections for crypto trading platforms.

Tackling misconduct

The framework sets out seven core pillars for digital asset legislation, including clarifying token classification, adapting securities rules for token issuers, bringing crypto platforms under exchange-like regulation, and strengthening illicit finance safeguards.

It proposes a dual approach, empowering the SEC to integrate tokenized securities into existing disclosure regimes while instructing the CFTC to police non-security digital assets.

Both agencies would gain expanded funding and authority to regulate custody, margin, and conflicts of interest under crypto-native business models.

Significantly, the framework calls for new controls to prevent public officials from abusing digital asset projects.

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It references President Donald Trump’s financial entanglements with crypto initiatives and seeks to bar elected officials and their families from issuing or profiting from tokens while in office, as well as mandates disclosure of all digital asset holdings.

DeFi and stablecoins

The bill also directs regulators to build new oversight models for DeFi protocols and to safeguard traditional markets from the destabilizing effects of unregulated innovations. It reiterates prohibitions on stablecoin issuers offering interest-bearing products, a provision preserved from the 2025 GENIUS Act.

To prevent criminal exploitation of the digital ecosystem, the framework mandates that all digital asset intermediaries, including those abroad serving U.S. customers, register with FinCEN and comply with anti-money laundering and sanctions obligations. DeFi protocols will also be scrutinized for compliance vulnerabilities.

Finally, the proposal highlights the need for bipartisan regulatory leadership. It would require the SEC and CFTC to maintain cross-party commissioner quorums for rulemaking and enable rapid hiring of staff with digital assets expertise.

According to the authors:

“This framework represents a turning point. It restores trust, prevents abuse, and ensures that America—not its adversaries—leads the next generation of financial innovation.”

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President Donald Trump signed the GENIUS Act into law on July 18, pledging that the measure will secure “global dominance” in crypto technology.

The legislation gives the US its first federal framework for dollar‑backed stablecoins. Trump celebrated the passing of the bill, saying:

“Crypto has gone up more than any stock. Crypto makes the dollar look good. Crypto is good for the dollar, the nation.” 

He added that the GENIUS Act positions the country to lead the sector and vowed to approve broader crypto market structure legislation before the end of the year. 

Senate Banking Committee ranking member Tim Scott called the statute “regulatory clarity for the stablecoin industry” and said faster, cheaper payments would “solidify the US dollar’s dominance across the world.” 

Treasury Secretary Scott Bessent echoed the theme in an X post, thanking House Republicans for “actions that keep the promise” to make America the “crypto capital of the world.”

Stablecoin framework

The GENIUS Act creates a federal framework for issuing and overseeing payment stablecoins.

It assigns the Federal Reserve to license and supervise national-level, insured depository institutions, while permitting eligible, state-chartered firms to mint dollar-pegged tokens if they meet equivalent standards on reserves, disclosures, redemptions, and risk controls.

Issuers must back every token with high-quality liquid assets, such as cash, Treasury bills, or other short-dated government securities, that match their outstanding liabilities and provide regular attestation reports.

The law also directs bank regulators to set examination schedules, guarantees consumers the right to redeem at face value within specific time frames, and requires that reserve assets remain segregated unless customers give explicit consent for rehypothecation.

Last stretch

The House cleared the GENIUS Act 307‑122 on July 17, one day after adopting a 215‑211 motion to reconsider a procedural package that combined the GENIUS Act with the CLARITY Act and the Anti‑CBDC Surveillance Act.

Lawmakers first bundled the three measures on July 16 to expedite floor action, but that resolution did not constitute enrollable text. Committee staff then prepared the GENIUS language as a stand‑alone bill that both chambers could pass in identical form. 

The Senate approved the consolidated version late on July 17, completing the bicameral process required for enrollment and presentation to the White House.

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The Senate Banking Committee released a seven-point framework for digital asset market structure and heard testimony urging Congress to translate those principles into statute without delay on June 23.

Committee Chair Tim Scott and Senators Cynthia Lummis, Thom Tillis, and Bill Hagerty set out a plan that draws a statutory line between digital asset securities and commodities. However, there is no draft of a bill as of press time.

Furthermore, the plan allocates jurisdiction to existing regulators instead of creating a single crypto agency while updating registration paths so compliant issuers can raise capital under an exemption tailored to distributed-ledger projects. 

The document also calls for rules that preserve self-custody, recognize the difference between centralized firms and decentralized protocols, and treat tokenization as an efficiency upgrade rather than a novel financial product.

Hearing on bipartisan regulatory effort

Witnesses at the Digital Assets Subcommittee hearing agreed that Congress needs to create a framework that clarifies regulations and classifications for the industry.

Ryan VanGrack, Coinbase’s vice president of legal, told lawmakers:

“More than 52 million Americans, one in five adults, now own digital assets.”

VanGrack said that the current ambiguity in rules leads to loopholes and gaps that are exploitable by bad actors. Former Commodity Futures Trading Commission (CFTC) chair Rostin Behnam, now a Georgetown fellow, echoed the sentiment and added that the non-security segment “still lacks a market structure regime.”

Both described a traditional hierarchy of customer, broker, exchange, clearinghouse, and custodian that can migrate to crypto with minimal change.

Greg Xethalis, general counsel at Multicoin Capital, warned that unclear guidance pushes founders and capital overseas and forces US start-ups to “get a law-firm opinion to launch” even simple projects. 

Sarah Hammer of the Wharton School pointed to Singapore’s licensing model and strict anti-fraud standards as proof that clear obligations can coexist with innovation.

Consumer safeguards and regulatory coordination

The principles sheet proposes innovation-friendly registration for intermediaries, right-sized capital and segregation rules, and explicit bankruptcy protection for customer assets. Behnam called segregation the “number-one issue” for user protection. 

The senators also endorsed a targeted anti-money laundering package that extends the Bank Secrecy Act and IEEPA tools to offshore entities that interact with US users, mirroring points raised by Hammer on the need to deter fraud without stifling compliant activity.

For federal agencies, the plan recommends safe-harbor pilots, no-action letters, and inter-agency coordination to avoid duplicative exams. The language echoes VanGrack’s view that the United States can “do better” than a patchwork of enforcement actions. 

Senator Hagerty cited last week’s 51-23 GENIUS Act vote as evidence that bipartisan momentum exists. Lummis, who co-sponsors a comprehensive bill with Senator Kirsten Gillibrand, urged colleagues to keep that bipartisan channel open despite political friction.

Committee members also pressed witnesses on practical benefits. Xethalis argued that decisive legislation would prevent Europe from setting global norms, as occurred with internet commerce rules, and would forestall a replay of the lag in 5G and semiconductor leadership. 

Senator Angela Alsobrooks inquired about tangible benefits for households. Speakers highlighted lower settlement costs, faster remittances, and new credit rails.

Path to draft text

Staff will now translate the principles into statutory language that assigns the Securities and Exchange Commission authority over asset fundraising and the secondary trading of securities tokens. At the same time, the CFTC would supervise commodity tokens and derivative products. 

Lawmakers indicated that customer asset segregation, capital requirements scaled to risk, and a tailored exemption for token sales will form the foundation of the draft.

The next step is to finalize a market structure law, which would join a similar proposal introduced by House Republicans on May 5.

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The US securities regulator is working on an “innovation exemption” to stoke the creation of more onchain products and services, according to Securities and Exchange Commission chair Paul Atkins.

Atkins, a former crypto lobbyist, said during a Monday crypto roundtable led by the SEC’s crypto task force titled DeFi and the American Spirit that he has directed staff to consider a conditional exemption relief framework. 

Exemptions could speed up innovation

These temporary exemptions would relieve firms from specific regulatory requirements to foster innovation in emerging tech sectors, provided they meet certain conditions.

Atkins said it would speed up the process of bringing onchain products and services to market while the SEC staff considers amendments to the Commission’s rules and regulations.

“An innovation exemption could help fulfill President Trump’s vision to make America the crypto capital of the planet by encouraging developers, entrepreneurs, and other firms that are willing to comply with certain conditions to innovate with onchain technologies in the United States,” he said.

At the same time, Atkins said he has asked staff to consider whether amendments to the commission’s rules and regulations would provide needed accommodation for issuers and intermediaries who seek to administer onchain financial systems.

“Most current securities rules and regulations are premised upon the regulation of issuers and intermediaries, such as broker-dealers, advisers, exchanges and clearing agencies,” he said.

“The drafters of these rules and regulations likely did not contemplate that self-executing software code might displace such issuers and intermediaries.”

Crypto framework is still a work in progress

The agency’s Crypto Task Force was launched on Jan. 21 by acting SEC chair Mark Uyeda, who was tasked with establishing a workable crypto framework for the agency. 

Atkins revealed in June 3 remarks to the Senate Appropriations Subcommittee on Financial Services that the SEC will hone its crypto policies with “notice and comment” and move away from shaping its rules through the courts.

He previously appeared before lawmakers on May 20 and said the Crypto Task Force would release its first report in the next few months.

New approach at SEC

During Monday’s crypto roundtable, Atkins also bashed the previous administration under former SEC Chair Gary Gensler and its approach to crypto.

Gensler was heavily criticized by the crypto industry for supposedly creating policy through lawsuits and legal settlements rather than rulemaking.

Related: SEC charges Unicoin crypto platform over alleged $100 million fraud

Since Gensler resigned on Jan. 20, the SEC has adopted a different approach to crypto, dismissing long-running enforcement actions against crypto firms.

SEC staff have also released guidance around the most common crypto staking activities, saying they do not violate securities laws, as well as information about how federal securities laws could apply to crypto.

Magazine: SEC’s U-turn on crypto leaves key questions unanswered 

The U.S. Securities and Exchange Commission (SEC) is ready to reset its relationship with the crypto industry, according to Commissioner Hester Peirce.

The SEC’s new “Crypto Task Force” held its inaugural roundtable event on Friday, which brought together regulators, private-sector lawyers and digital asset firm executives.

At the event, Peirce, a longtime crypto advocate, spoke of “a restart of the Commission’s approach to crypto regulation.”

“The formation of the Crypto Task Force gave permission to staff in the building to work earnestly towards a workable framework for crypto regulation, and staff have responded with palpable enthusiasm. The enthusiasm in this room is also palpable, so let us seize the moment and have a meaningful conversation today. 

This room is full of people—on the panel, on the Crypto Task Force, on the Commission staff, and in the audience—who are ready for [the] sprint ahead. People have been talking, thinking, and writing about the issues with which we are now wrestling. The roundtable series will allow us to explore the issues collaboratively.”

Peirce leads the Crypto Task Force, which launched in January. The commissioner said last month that the team is currently working on questions related to the security status, public offerings, custody and secondary market trading of crypto assets.

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The US Securities and Exchange Commission (SEC) held its first crypto task force roundtable on March 21 to discuss regulation, which ended in a consensus that crypto needs regulatory clarity in the US despite diverging views among the panelists.

Panelists ranged from crypto advocates to skeptics and the session focused on longstanding debates, including the classification of digital assets and the limits of existing securities laws in addressing decentralized technologies.

Advocates defended decentralization as a gauge for determining whether a token is a security. At the same time, skeptics argued that the current definition by the Howey test works, as the SEC won more motions than lost.

The event marked a shift in tone from the SEC under former Chair Gary Gensler, who frequently characterized most crypto tokens as securities and pursued enforcement actions against major firms.

Legal definitions and the scope of securities law

Discussions extended to what characteristics of digital assets, if any, justify different treatment under the law. Crypto advocates at the event suggested that beyond asking whether something is a security, the more relevant question may be whether certain securities merit exemptive relief. 

Proponents argued that one possible differentiator is the degree of control exerted by issuers, a concept that better captures the decentralized nature of many blockchain networks.

Lee Reiners, a lecturing fellow at the Duke Financial Economics Center, said that all panelists agree that Bitcoin (BTC) is not a security because it is sufficiently decentralized. 

However, he added that drawing a line to define if something is sufficiently decentralized or an investment contract is impossible, citing a Commodity Futures Trading Commission (CFTC) report that divides decentralization by spectrums based on different aspects.

Investor risk and statutory authority

Skeptics of the crypto industry presented contrasting perspectives. Former SEC enforcement official John Reed Stark and the most vocal critic maintained that the agency’s responsibility is to protect investors who purchase digital assets. 

Additionally, crypto critics argued that the Howey Test remains a sufficient legal standard and that the SEC’s track record of litigation success affirms its interpretive authority. Stark suggested that there is no need to reinvent the framework.

Despite these divisions, participants generally agreed that clearer definitions and regulatory consistency would benefit the industry and the SEC’s oversight responsibilities. 

The roundtable represents the first in a series of efforts to modernize the agency’s stance on crypto markets while balancing investor protection with technological innovation. It signals the beginning of the regulator’s reassessment process.

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