Regulators Clear Path for Crypto as Senate Seeks to Define Power

Senate Democrats have intensified their focus on cryptocurrency regulation by releasing a detailed framework that outlines their vision for a comprehensive market structure bill. The framework, led by Senators Ruben Gallego (D-Ariz.), Mark Warner (D-Va.), Kirsten Gillibrand (D-N.Y.), and Cory Booker (D-N.J.), emphasizes the Commodity Futures Trading Commission’s (CFTC) exclusive jurisdiction over non-security crypto markets, alongside calls for greater clarity on securities laws as they apply to digital assets [1]. This aligns with broader bipartisan efforts to define regulatory roles, although Democratic proposals contain specific provisions targeting the Trump family’s crypto involvement that could face resistance.

The Democrats’ framework also highlights the need for the Securities and Exchange Commission (SEC) to integrate digital assets into its existing regulatory framework while ensuring robust oversight for decentralized finance (DeFi) protocols. Notably, the framework proposes that digital asset platforms must register as financial institutions under the Bank Secrecy Act, thereby subjecting them to anti-money laundering rules. While these proposals share similarities with Republican-leaning positions, the Trump family’s deepening ties to the crypto space are a focal point of contention. The framework seeks to impose restrictions on elected officials and their families from endorsing, issuing, or profiting from digital assets, with reporting requirements for crypto holdings.

In parallel, the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have jointly signaled a shift toward facilitating spot crypto trading on registered exchanges. The agencies clarified that current laws do not prohibit registered national securities exchanges or foreign boards of trade from listing and trading specific spot crypto asset products [2]. This development removes a long-standing legal barrier and indicates a coordinated effort to bring crypto trading into the mainstream U.S. financial system. The joint guidance from SEC and CFTC staff emphasizes operational expectations for custody, market surveillance, and trade reporting, which collectively support the integration of crypto within existing regulatory frameworks.

The regulatory landscape is evolving in favor of market participants seeking greater clarity and access to U.S.-based trading platforms. The move away from jurisdictional disputes toward active supervision could attract more institutional and retail investors, reducing reliance on offshore markets. Coin exchanges such as Coinbase and Kraken are expected to benefit early on due to their existing infrastructure and regulatory cooperation. Over time, however, traditional exchanges may also expand into crypto trading, increasing competition and choice for investors [3].

Simultaneously, the Trump family’s involvement in the crypto sector has drawn attention to potential conflicts of interest. The family’s stake in World Liberty Financial, a crypto firm they co-founded, is now valued at approximately $5 billion based on the recent public listing of its token, WLFI [4]. Critics, including Democrats, argue that such ventures pose risks of corruption and regulatory bias, especially as Trump’s administration has shifted toward a pro-crypto policy. In contrast, the White House has defended the family’s involvement, asserting that no conflicts have occurred and emphasizing the administration’s commitment to fostering innovation in digital asset markets.

The regulatory and political dynamics surrounding crypto are converging at a critical moment. While the SEC and CFTC continue to refine their joint approach, the Senate’s market structure bill faces uncertainty amid partisan disagreements. The administration, meanwhile, is advancing a broader digital asset roadmap, which includes modernizing banking rules and strengthening oversight of stablecoins [5]. As the crypto market gains regulatory clarity and institutional legitimacy, the U.S. is positioning itself to maintain a competitive edge in the global digital economy.

Source: [1] Senate Democrats lay out framework for crypto market structure bill (https://thehill.com/policy/technology/5492926-senate-democrats-lay-out-framework-for-crypto-market-structure-bill/) [2] SEC and CFTC Open Path for Spot Crypto on Regulated Venues (https://www.kiln.fi/post/sec-and-cftc-open-path-for-spot-crypto-on-regulated-venues) [3] SEC And CFTC's New Joint Crypto Initiative–What You Need to Know (https://www.mitrade.com/insights/news/live-news/article-3-1094040-20250904) [4] Trump and sons' stake in crypto firm worth $5bn (https://www.bbc.com/news/articles/ckgjgyyqgvyo) [5] Remarks by Acting Chairman Caroline D. Pham before the UK All-Party Parliamentary Group on Blockchain Technologies (https://www.cftc.gov/PressRoom/SpeechesTestimony/opapham18)