U.S. senators late on Monday unveiled draft legislation that would create a regulatory framework for cryptocurrency which, if signed into law, would clarify financial regulators’ jurisdiction over the burgeoning sector, potentially boosting digital asset adoption.
The crypto industry has long pushed for such legislation, often arguing it is existential to the future of digital assets in the U.S. and necessary to fix core, longstanding problems for crypto companies.
Among other things, the legislation would define when crypto tokens are securities, commodities or otherwise, giving the industry long-hoped-for legal clarity.
It would also give the U.S. Commodity Futures Trading Commission — the industry’s preferred regulator, as opposed to the U.S. Securities and Exchange Commission — authority to police spot crypto markets.
The bill also gives the banking industry a fix it had sought stemming from legislation signed into law last year to create a federal regulatory framework for dollar-pegged crypto tokens called stablecoins.
Bank lobbyists had urged Congress to close what they deemed a loophole in the bill that allowed intermediaries to pay interest on stablecoins. Banks have argued this would lead to a flight of deposits from the insured banking system, potentially threatening financial stability.
Crypto companies have fought back against that assertion, contending that prohibiting third parties, such as crypto exchanges, from paying interest on stablecoins would be anti-competitive.
“What is threatening progress is not a lack of policymaker engagement, but the relentless pressure campaign by the Big Banks to rewrite this bill to protect their own incumbency,” said Summer Mersinger, CEO of the Blockchain Association, a crypto industry trade group.
“Their demands to eliminate stablecoin rewards are designed to choke off consumer choice and kill innovative financial products before they can compete.”
Monday’s bill, which could change as senators consider amendments, prohibits crypto companies from paying interest to consumers solely for holding a stablecoin. However, it allows crypto companies to pay rewards or incentives to customers for certain activities, such as sending a payment or participating in a loyalty program.
The SEC and the CFTC would also be required to issue a joint rule requiring clear disclosures from crypto companies about rewards paid in connection with using stablecoins.
‘CRYPTO PRESIDENT’
The Senate Banking Committee is scheduled to debate the bill and consider possible amendments on Thursday. The Senate Agriculture Committee, which is writing its own version of the bill, will meet later this month to discuss its version.
In a statement, Cody Carbone, CEO of crypto industry trade group The Digital Chamber, said it was “encouraging to see the process continue to move forward.”
“We will remain actively engaged to improve the text as the bill continues to evolve and are encouraged by the continued momentum to advance a market structure bill this year,” he said.
Trump courted industry cash pledging to be a “crypto president,” and his family’s own crypto ventures have helped to propel the sector into the mainstream.
The industry spent heavily in the 2024 elections to promote pro-crypto candidates in the hopes of getting this landmark market structure bill across the line.
The House of Representatives passed its version of the bill in July, but talks stalled in the Senate last year, with lawmakers divided over provisions on anti-money-laundering and requirements for decentralized finance platforms, which allow crypto users to buy and sell tokens without an intermediary, according to three sources familiar with discussions.
With Congress already pivoting to focus on the 2026 midterm elections, in which the Democrats could take the House, some lobbyists are skeptical that the crypto market structure bill could make it into law.
That would leave crypto firms to rely on regulatory guidance that could be overturned under a future administration, industry executives have said.
Read more on Insurance Journal
