Senate Aims to Solve Crypto's SEC vs. CFTC Divide

The U.S. Senate Banking Committee has advanced its revised draft bill for crypto market structure, aiming to bring clarity to the regulatory landscape for digital assets. The Responsible Financial Innovation Act of 2025 is intended to delineate the boundaries between securities and commodities in crypto markets, a critical step in defining oversight responsibilities for agencies such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Senate Republicans, led by Committee Chair Tim Scott (R-SC), have been pushing for a bipartisan agreement on the bill, with expectations of a Senate Banking Committee vote on the SEC-related portion by the end of the month and the CFTC section likely to be addressed in October by the Agriculture Committee. A full Senate vote is anticipated as early as November, though the timeline remains subject to Democratic responses and potential delays.

A key provision in the latest draft seeks to prevent stocks and other securities from being treated as commodities if they are tokenized. This effort aligns with broader discussions around tokenization and the need for consistent regulatory definitions across different asset classes. The Senate’s version of the market structure bill is seen as a follow-up to the House’s Digital Asset Market Clarity Act, which passed in July with broad bipartisan support. However, unlike the House version, the Senate’s bill must gain the support of at least seven Democrats to pass, as it is unlikely all Republicans will back the measure. Senate Banking Committee Chair Scott and Wyoming Senator Cynthia Lummis have emphasized ongoing bipartisan discussions on sub-issues within the bill to reach a consensus on key provisions.

The bill also reflects feedback from over 100 stakeholders in the crypto industry, according to a statement from the Senate Banking Committee. These consultations have shaped provisions such as protections for developers of non-custodial software and clarifications on how digital assets are treated during bankruptcy proceedings. A recent coalition of over 100 crypto companies and advocacy groups has urged lawmakers to ensure that developers of decentralized software are exempt from money transmission regulations, citing a New York court case involving the Tornado Cash mixer as a catalyst for this demand.

Bipartisan challenges remain a focal point of debate. Ranking Member Elizabeth Warren (D-MA) has been a vocal critic of the current draft, issuing a fact sheet highlighting what she calls “five major flaws” in the Republican-led bill, including concerns about reduced SEC oversight and increased systemic risks. Meanwhile, pro-crypto Democrats, including Sen. Kirsten Gillibrand (D-NY), have not yet aligned publicly with the bill, although efforts are underway to bring them on board.

The Senate’s market structure bill also seeks to clarify how digital assets will transition from being regulated as securities to commodities, a core issue in defining regulatory oversight. This distinction is critical for determining which agency—SEC or CFTC—has jurisdiction over specific crypto activities. The bill is expected to incorporate further revisions as Democrats weigh in, potentially reshaping the final language to address concerns raised by both sides.

As the House and Senate move toward reconciling their respective versions of the market structure bill, the final outcome will likely reflect a compromise between the House’s more industry-friendly approach and the Senate’s broader regulatory ambitions. The Senate’s efforts will also need to align with the White House’s goal of establishing the U.S. as a global leader in crypto innovation. While initial deadlines for passage have shifted, the bill remains a top priority for both chambers, with a projected timeline for enactment by the end of 2025.

Source:

[1] Senate seeks to rein in stock tokenization in latest crypto bill (https://www.cnbc.com/2025/09/05/senate-stock-tokenization-crypto-bill.html)

[2] Senate Banking Finalizes Details on Market Structure (https://www.cryptoinamerica.com/p/senate-banking-finalizes-details)

[3] Legislation Steering U.S. Fate of Crypto Emerges in New Version in Senate (https://www.coindesk.com/policy/2025/09/05/legislation-steering-u-s-fate-of-crypto-emerges-in-new-version-in-senate)

[4] SEC Pushes Forward With Sweeping Crypto Rulemaking Plan (https://finance.yahoo.com/news/sec-pushes-forward-sweeping-crypto-235349699.html)

[5] Market Structure Faces Headwinds From Senate Critics, Crypto Industry (https://www.forbes.com/sites/jasonbrett/2025/09/04/market-structure-faces-headwinds-from-senate-critics-crypto-industry/)

[6] Crypto regulatory affairs: From China to Russia to South... (https://www.elliptic.co/blog/crypto-regulatory-affairs-stablecoin-and-digital-payments-work-accelerates-following-us-genius-act)

[7] Crypto Regulation in the USA, UAE and EU: A Full Comparison (https://irinauae.law/en/blog/crypto-regulation-usa-uae-eu)