Senate Banking Committee Unveils Digital Asset Market Framework

The Senate Banking Committee has released a seven-point framework for the digital asset market structure, emphasizing the need for rapid legislative action. The framework, unveiled on June 23, outlines principles that aim to clarify regulations and classifications for the industry. Committee Chair Tim Scott, along with Senators Cynthia Lummis, Thom Tillis, and Bill Hagerty, presented a plan that distinguishes between digital asset securities and commodities. However, a draft bill has not yet been released.

The plan proposes allocating jurisdiction to existing regulators rather than creating a new crypto agency. It also suggests updating registration paths to allow compliant issuers to raise capital under an exemption tailored for distributed-ledger projects. The document further calls for rules that preserve self-custody, recognize the differences between centralized firms and decentralized protocols, and treat tokenization as an efficiency upgrade rather than a novel financial product.

During a hearing on the bipartisan regulatory effort, witnesses agreed on the necessity for Congress to create a clear regulatory framework. Ryan VanGrack, Coinbase’s vice president of legal, highlighted that over 52 million Americans now own digital assets, emphasizing the need for clear regulations to prevent loopholes and gaps that bad actors could exploit. Former Commodity Futures Trading Commission (CFTC) chair Rostin Behnam, now a Georgetown fellow, echoed this sentiment, noting that the non-security segment of the market still lacks a structured regime.

Greg Xethalis, general counsel at Multicoin Capital, warned that unclear guidance could push founders and capital overseas, forcing US start-ups to seek legal opinions for even simple projects. Sarah Hammer of the Wharton School pointed to Singapore’s licensing model and strict anti-fraud standards as an example of how clear obligations can coexist with innovation.

The principles sheet proposes innovation-friendly registration for intermediaries, right-sized capital and segregation rules, and explicit bankruptcy protection for customer assets. Behnam identified segregation as the "number-one issue" for user protection. The senators also endorsed a targeted anti-money laundering package that extends the Bank Secrecy Act and IEEPA tools to offshore entities interacting with US users, mirroring points raised by Hammer on deterring fraud without stifling compliant activity.

For federal agencies, the plan recommends safe-harbor pilots, no-action letters, and inter-agency coordination to avoid duplicative exams. This language echoes VanGrack’s view that the United States can do better than a patchwork of enforcement actions. Senator Hagerty cited the recent 51-23 GENIUS Act vote as evidence of bipartisan momentum, while Senator Lummis, co-sponsor of a comprehensive bill with Senator Kirsten Gillibrand, urged colleagues to maintain this bipartisan channel despite political friction.

Committee members also pressed witnesses on the practical benefits of decisive legislation. Xethalis argued that such legislation would prevent Europe from setting global norms, as occurred with internet commerce rules, and would forestall a replay of the lag in 5G and semiconductor leadership. Senator Angela Alsobrooks inquired about tangible benefits for households, with speakers highlighting lower settlement costs, faster remittances, and new credit rails.

Staff will now translate the principles into statutory language, assigning the Securities and Exchange Commission authority over asset fundraising and the secondary trading of securities tokens. The CFTC would supervise commodity tokens and derivative products. Lawmakers indicated that customer asset segregation, capital requirements scaled to risk, and a tailored exemption for token sales will form the foundation of the draft. The next step is to finalize a market structure law, which would join a similar proposal introduced by House Republicans on May 5.