Democratic Senators Propose New Crypto Guidelines
A group of Democratic US senators has announced its own set of guidelines aimed at shaping legislation for a crypto market structure, emphasizing the importance of taking time to achieve a “strong, bipartisan outcome.”
In a notice released on Tuesday, 12 Democratic senators, many of whom serve on the banking committee, presented a framework for market structure legislation in reaction to the proposals put forward by Republicans.
Similar to the Republicans’ most recent draft issued on September 5, the Democrats’ framework includes elements aimed at ensuring regulatory clarity and outlining the rules that the US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) could follow when managing digital assets.
“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 senators stated. “We also must ensure that digital assets are not used to finance illicit activities or to line the pockets of politicians and their families.”
Given the Democrats’ minority status in the Senate, it remains uncertain whether Republicans will take the framework recommendations into account as they work toward passing the bill through the banking committee by October, the agriculture committee by November, and into law by 2026.
Republican Senator Tim Scott, chair of the banking committee, mentioned in August that he anticipated “between 12 to 18” Democrats would support the majority’s version of the bill known as the Responsible Financial Innovation Act.
“Achieving a strong, bipartisan outcome will require time and cannot be rushed,” the 12 Democrats wrote. “We look forward to collaborating with our Republican colleagues.”
The Democratic framework, which outlined “seven key pillars,” includes suggested protections to combat illicit finance and address the “gap in the spot market” for digital assets that are not deemed securities. Additionally, the document explicitly called out US President Donald Trump, recommending measures to ensure “fair, effective regulation” over crypto markets.
“Designing and enforcing a digital asset framework will require significant additional resources for the SEC, CFTC, and the Treasury Department,” the proposed framework noted. “Moreover, President Trump has dismissed numerous Democratic commissioners from independent regulatory agencies and shown little interest in appointing new officials.”
Currently, the CFTC is led by one commissioner, acting chair Caroline Pham, following the departure of all other heads of the agency this year. The Senate is set to review the nomination of Brian Quintenz, Trump’s candidate to succeed Pham as chair.
Pham has indicated she plans to leave the CFTC once the Senate confirms a replacement. As of Tuesday, Trump had not nominated anyone else for the remaining four positions on the commission.
After the passing of the GENIUS Act—a bill governing payment stablecoins—in July, the Senate is anticipated to prioritize addressing the market structure bill following a month-long break.
The House’s version of the legislation, named the CLARITY Act, was passed with considerable bipartisan backing, while an anti-CBDC (central bank digital currency) bill garnered only two supportive votes from Democrats.
Although many senators who endorsed the Tuesday framework previously voted in favor of the GENIUS Act, it is unclear whether that enthusiasm will carry over to the market structure discussions, especially concerning the recommendations on “corruption and abuse.”
The document suggests that any proposed legislation include restrictions on elected officials and their families from “issuing, endorsing, or profiting from digital assets while in office,” along with strengthened disclosure requirements.
In addition to their worries about leadership at independent regulatory agencies, the Senate Democrats criticized Trump for having “turned to digital asset projects to enrich himself and his family.”
Trump’s connections to the industry through his family-backed crypto company World Liberty Financial, his personal memecoin, and his family’s mining venture could hinder efforts to garner bipartisan support for crypto legislation, particularly among Democrats like Senator Elizabeth Warren, who has frequently voiced concerns regarding the president’s crypto initiatives.
