Democratic Senators push for bipartisan crypto market structure legislation

A group of 12 Democratic U.S. Senators has introduced a framework to shape the crypto market structure, aiming for a bipartisan solution. The senators released their guidelines in a Tuesday notice, calling for a strong, bipartisan outcome. This initiative is in response to Republicans’ plans to pass a crypto market structure bill this month.

The Democratic framework, similar to the Republicans’ draft released on September 5, seeks to establish regulatory clarity and propose rules for handling digital assets. Specifically, it envisions a role for the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in overseeing the space.

A focus on consumer protection and illicit activity

The senators emphasized the need for clear rules of the road that protect consumers and ensure digital assets are not used for illicit activities. In their joint statement, the senators wrote: “We owe it to the millions of Americans who participate in this market to create clear rules that safeguard our markets and prevent the abuse of digital assets.”

Despite the Democrats being in the minority in the Senate, the framework puts forward protection measures aimed at fighting illicit finance and closing gaps in the spot market for digital assets not classified as securities. It remains unclear whether Republicans will incorporate these recommendations into their plans to pass the bill through the banking committee by October, the agriculture committee by November, and into law by 2026.

Leadership issues at the CFTC and Trump’s influence

The Democratic framework also addresses the current leadership void at the CFTC, which only has one commissioner, acting chair Caroline Pham, after the departure of other heads earlier this year. The senators noted the challenges of designing and enforcing a digital asset framework given the lack of resources for the SEC, CFTC, and the Treasury Department. They specifically criticized President Donald Trump for removing Democratic commissioners and failing to nominate new officials to lead key regulatory agencies.

The senators also criticized Trump’s connections to the digital asset industry, with his family-backed crypto company, World Liberty Financial, and his personal memecoin creating potential conflicts of interest. These concerns may complicate efforts to garner bipartisan support for crypto legislation, particularly among Democrats such as Senator Elizabeth Warren, who has often criticized Trump’s involvement in crypto.

Prospects for passing the bill by 2026

Following the passage of the GENIUS Act in July, which regulates payment stablecoins, the Senate is expected to prioritize the crypto market structure bill after returning from a month-long recess. The House’s version of the bill, known as the CLARITY Act, passed with significant bipartisan support, while an anti-CBDC bill received only minimal support from Democrats.

While many of the senators backing the Democratic framework voted in favor of the GENIUS Act, it remains uncertain whether their support will extend to the crypto market structure bill. Key concerns include recommendations to restrict elected officials and their families from engaging in digital assets while in office, as well as strengthening disclosure requirements.