Senate Crypto Bill Gridlocked Over DeFi Regulation as Risks Divide Lawmakers

The U.S. Senate Banking Committee is poised to vote on a landmark cryptocurrency market structure bill by December 2025, signaling a critical step toward federal oversight of digital assets, according to committee Chair Tim Scott. The legislation, which designates Bitcoin and Ether as commodities under the Commodity Futures Trading Commission (CFTC), aims to resolve a long-standing jurisdictional dispute between the SEC and CFTC while imposing new rules on exchanges to prevent conflicts of interest and safeguard customer funds. If passed, the bill would advance to the full Senate in early 2026, with President Donald Trump expected to sign it, solidifying the U.S. as a global crypto hub.

The draft legislation includes measures to segregate customer assets, mandate enhanced disclosures, and address vulnerabilities exposed by past exchange collapses like FTX. However, bipartisan negotiations remain contentious, particularly over decentralized finance (DeFi) regulation. Democratic lawmakers, including Sen. Elizabeth Warren, have raised concerns about money laundering risks and systemic instability linked to DeFi protocols, while Republican drafts have resisted banning Trump's crypto business ties.

The bill's passage would mark a pivotal shift in the crypto landscape, coinciding with a surge in institutional adoption and exchange-traded fund (ETF) listings. Meanwhile, the Senate Agriculture Committee is separately drafting its version of the bill, though gaps in its framework have drawn scrutiny from industry lobbyists.

Alternative regulatory proposals are also gaining traction. A Brookings Institution analysis argues that merging the SEC and CFTC would create a unified framework for digital assets, streamlining oversight as tokenization of traditional securities and derivatives gains momentum. The report critiques current legislative efforts for their complexity and risk of regulatory arbitrage, suggesting a merged agency could adapt more effectively to evolving market needs.

Market developments underscore the urgency for clarity. Bitcoin Munari, a Solana-based project, launched a $0.01 presale amid a phased deployment strategy, highlighting innovation in crypto infrastructure. Separately, the CFTC announced plans to enable spot trading of crypto on designated markets by year-end, aligning with broader efforts to formalize retail protections.

As the Senate races to finalize its bill, stakeholders remain divided. While proponents emphasize the need for innovation-friendly rules, critics warn of potential loopholes that could exacerbate financial risks. With Trump's anticipated support and mounting pressure from both industry and regulators, the outcome of December's vote could redefine the future of digital asset markets in the U.S.

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