Senate Banking Committee Releases Principles for Crypto Market Structure Bill

The Senate Banking Committee is actively preparing to release a set of core principles for its upcoming crypto market structure bill. This initiative is led by Senators Cynthia Lummis and Tim Scott, who are developing a framework to clarify the classification of digital assets as either commodities or securities. The proposed measure also suggests allowing cryptocurrency exchanges to register with the Commodity Futures Trading Commission (CFTC), thereby shifting more regulatory authority from the Securities and Exchange Commission (SEC) to the CFTC.

This move comes in the wake of the Senate's recent passage of a bipartisan stablecoin bill, which saw support from 18 Democrats and nearly all Republicans. Senator Lummis emphasized that this legislation is just the beginning and called for swift action on the more complex market structure bill, urging Congress to finalize it before the year ends. Senator Scott also confirmed plans for a full committee hearing next month, expressing hope that future agreements will maintain the nonpartisan spirit and create much-needed regulatory certainty.

However, there are legislative gaps between the House and Senate, particularly in their approaches to stablecoin regulation. The House has already approved its version of the market structure legislation, which passed through the Financial Services and Agriculture Committees. These differences could potentially slow down unified progress. President Donald Trump urged the House to act swiftly on the Senate’s stablecoin bill, but House Financial Services Chairman French Hill suggested a joint movement for both stablecoin and market structure bills, without confirming whether the House would consider the Senate’s version.

Despite these challenges, momentum is building across both chambers. The Senate's release of principles and the scheduled hearings mark a critical step toward comprehensive crypto regulation. Bipartisan collaboration is emerging as the driving force behind digital asset reform, with lawmakers pushing for rapid progress following the success of the stablecoin bill.

The Senate Banking Committee has outlined a set of principles to guide the establishment of a regulatory framework for the domestic crypto market. This framework, proposed by Chairman Tim Scott and other Republican senators, aims to provide clarity and structure for digital asset regulation. Key principles include distinguishing between digital securities and commodities, establishing a shared regulatory structure, and implementing a "small package" of money-laundering protections that are "pro-innovation." The senators also encourage federal regulators to embrace "no-action guidance, sandboxes, safe harbors, coordination and appropriate application requirements."

The Senate's efforts follow the passage of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which focuses on regulating payment stablecoins. The Senate is now shifting its attention to market structure, with a hearing scheduled to discuss the market structure work. The House of Representatives has been leading the efforts on market structure, having cleared its Digital Asset Market Clarity Act through the necessary committees. However, the Senate's passage of the GENIUS Act marks a significant step forward in the regulatory process.

The principles released by the Senate Banking Committee represent a bipartisan effort to provide long-overdue clarity for digital asset regulation. The senators involved in the framework hope that their colleagues will put politics aside and work towards a comprehensive regulatory structure for the crypto market. The hearing is expected to provide further insights into the Senate's approach to market structure and the potential for bipartisan legislation.

Crypto lobbyists are closely monitoring the House's strategy for approaching the two bills. The House has three options: passing the GENIUS Act as-is, merging it with the House's own stablecoin legislation, or packaging the stablecoin effort with the market structure bill as a single piece of legislation. The outcome of these discussions will have significant implications for the future of crypto regulation in the United States.