"Senate Bill Redefines Crypto's Legal Borders"

The Senate Banking Committee has finalized a revised version of its market structure bill, the Responsible Financial Innovation Act of 2025, following extensive feedback from industry stakeholders and lobbying groups. The 182-page document introduces a number of significant provisions aimed at shaping the regulatory landscape for digital assets in the United States. Unlike the House’s CLARITY Act, the updated Senate version includes a section titled “protecting software developers and software innovation,” which explicitly shields developers of distributed ledger systems and decentralized finance (DeFi) platforms from securities law enforcement and disclosure requirements. The bill also clarifies that the offering, selling, or transferring of non-fungible tokens (NFTs) does not constitute a securities offering, a notable departure from the House’s approach.

This updated draft expands on an earlier 35-page version introduced by Senate Banking Committee Chair Tim Scott (R-S.C.) and co-sponsored by Senators Cynthia Lummis (R-Wyo.), Bill Hagerty (R-Tenn.), and Bernie Moreno (R-Ohio) in July. The original draft primarily focused on the U.S. Securities and Exchange Commission’s (SEC) oversight of digital assets, but the latest version outlines a collaborative framework for the SEC and the Commodity Futures Trading Commission (CFTC) in regulating digital commodities. It mandates that the two agencies issue joint rules defining the scope of digital commodity regulation, echoing a similar provision in the CLARITY Act. The new bill reflects growing industry demands for a clearer distinction between securities and commodities in the crypto space.

A key challenge ahead for the Senate’s effort is aligning it with the House’s CLARITY Act to create a unified legislative text. While the House passed its bill with a 294-134 vote and received bipartisan support from 78 Democrats, the Senate requires 60 votes to move forward. The current version is expected to face scrutiny during a markup hearing, with potential amendments and revisions to accommodate Democratic concerns. Senator Mark Warner (D-Va.), a key Democrat on the committee, has warned that pushing for a Sept. 30 markup could hinder the chances of a bipartisan agreement. Efforts to secure support from pro-crypto Democrats, such as Kirsten Gillibrand (D-N.Y.), are ongoing as the bill moves toward a full Senate vote.

The legislative progress is being supported by recent regulatory developments. On Friday, SEC Chair Paul Atkins and CFTC Acting Chair Caroline Pham issued a joint statement emphasizing the need for a regulatory environment that fosters innovation while protecting investors. The agencies declared a “new beginning” in their collaboration, stating that joint efforts could turn the U.S.’s regulatory framework into a “source of strength” for the industry. Earlier in the week, the SEC and CFTC staff released another joint statement clarifying that registered exchanges are permitted to facilitate trading of certain spot commodity products, including leveraged or financed transactions on digital assets. These developments underscore a broader shift toward harmonizing the regulatory approach to crypto markets.

The path forward remains uncertain, with the Senate’s version of the bill still needing approval from the Agriculture Committee and eventual reconciliation with the House. The current timeline projects a full Senate vote by November or December, with hopes that President Donald Trump could sign the final version by Thanksgiving, as stated by Lummis. The success of the bill will depend heavily on bipartisan cooperation and the ability to address concerns from both sides of the aisle. With the House’s CLARITY Act having cleared with a strong margin, the Senate’s revised version appears well-positioned to become the final enacted policy.

Industry observers are closely watching the regulatory developments, particularly in the DeFi sector, where total value locked (TVL) has surged 41% in the third quarter of 2025, reaching over $160 billion. The growth is attributed to renewed investor confidence following regulatory clarity and favorable macroeconomic trends. Protocols like Aave, Lido, and EigenLayer have seen significant TVL increases, reflecting a structural shift in on-chain capital flows driven by real-world assets and innovative products such as liquid staking tokens and perpetual contracts. As the U.S. legislative landscape for crypto continues to evolve, the Senate’s updated bill represents a pivotal step toward a more defined and supportive regulatory framework for digital assets.

Source:

[1] Senate Banking Committee finalizes updated market structure bill (https://blockworks.co/news/senate-crypto-market-structure-bill)

[2] 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)

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

[4] DeFi TVL Surges 41% in Q3 to Three-Year High (https://thedefiant.io/news/defi/defi-tvl-surges-41-in-q3-to-three-year-high)