The bill includes long-sought wins for the crypto industry, but the Senate Banking version goes far beyond the House-passed Clarity Act in expanding Treasury authority over digital assets, according to Head of Firmwide Research Alex Thorn.
A new Senate draft of the crypto market structure bill would dramatically expand federal illicit-finance and surveillance powers, potentially marking the largest such expansion since the USA PATRIOT Act, according to a Galaxy Research.
In a report published Tuesday, Galaxy Head of Firmwide Research Alex Thorn said the discussion draft released late Monday by the Senate Banking Committee contains sweeping new authorities for the U.S. Treasury that go well beyond those included in the House’s Clarity Act, which passed with overwhelming bipartisan support in July 2025.
“On balance, were the powers outlined in the Senate Banking draft to become law, we believe they would represent the single largest expansion to financial surveillance authorities since the USA PATRIOT Act,” Thorn wrote.
Senate Banking draft exceeds House’s Clarity Act
The warning comes even as the bill delivers major policy wins long sought by the crypto industry.
Galaxy noted that the draft preserves the right to self-custody, clarifies money transmitter definitions, protects developers, and draws clearer lines between the jurisdiction of market regulators — provisions that advocates have pushed for years.
The tension, Thorn argued, lies in how the bill addresses illicit finance.
Per Galaxy’s report, the Senate Banking draft would create new tools allowing the U.S. Treasury Department to impose special measures on digital asset-related transactions deemed to pose money laundering risks, introduce a “temporary hold” mechanism enabling quick transaction freezes without a court order, and explicitly extend sanctions and anti-money laundering obligations to blockchain front ends and certain DeFi applications.
The draft also outlines a framework for applying Bank Secrecy Act compliance to so-called “non-decentralized” DeFi protocols — those that retain practical centralized control — and establishes new information-sharing and interdiction programs between government agencies and private-sector firms.
Galaxy contrasted those provisions with the House-passed Clarity Act, which focused more narrowly on extending BSA compliance to certain centralized intermediaries and avoided creating new, enumerated surveillance authorities for digital assets.
Politically, the report argued that the Senate draft reflects major concessions to Democrats on illicit finance, even as Republicans secured core market structure reforms.
Galaxy warned that some lawmakers are still pressing for additional enforcement provisions, despite what it described as an already historic expansion of Treasury and law-enforcement powers.
Upcoming vote
The timing is critical. The Senate Banking Committee is scheduled to mark up and vote on the bill on Thursday, while the Senate Agriculture Committee — which oversees the Commodity Futures Trading Commission — has postponed its own hearing to later this month.
Any final legislation would need to reconcile competing committee versions and attract at least 60 votes to clear the Senate.
The illicit-finance debate has emerged as a central fault line in recent coverage of the bill, which has already sparked a showdown over stablecoin rewards and raised questions about whether industry support will hold.
Analysts at Bernstein have said the legislative window is “here and now,” while TD Cowen has warned that delays could push implementation years into the future.
