Senate Crypto Bill Shifts Regulatory Power to CFTC as Partisan Concerns Emerge

The U.S. Senate has unveiled a bipartisan draft bill aimed at clarifying the regulatory framework for cryptocurrency, positioning the Commodity Futures Trading Commission (CFTC) as the primary federal overseer of digital assets. The proposal, introduced by Senators John Boozman (R-AR) and Cory Booker (D-NJ), seeks to define the CFTC's authority over crypto spot markets, classification of digital commodities, and market structure rules, while limiting the SEC's role in the sector. The draft aligns with the House-passed CLARITY Act, which has already advanced through the House and is now under Senate consideration.

Central to the debate is the confirmation of Michael Selig, President Donald Trump's nominee to lead the CFTC. During a Senate Agriculture Committee hearing, Selig faced scrutiny over his reluctance to commit to expanding the agency's resources or ensuring a bipartisan commission. The CFTC currently operates with a single commissioner, Republican Caroline Pham, who also serves as acting chair. Democrats expressed concerns that a CFTC led solely by Trump-appointed commissioners could lack checks and balances, particularly as the agency gains broad authority over crypto markets.

The draft bill proposes a federal framework that would classify most cryptocurrencies as commodities, placing them under CFTC jurisdiction. This shift reflects growing industry and political support for the CFTC's expertise in derivatives and global commodity markets. Proponents argue that the CFTC's experience with agricultural and energy futures makes it better suited to regulate crypto's volatility and trading dynamics than the SEC, which focuses on securities. The legislation also mandates joint rulemaking between the CFTC and SEC for hybrid digital assets, aiming to resolve years of regulatory ambiguity.

However, Democrats have raised concerns about the CFTC's capacity to handle the crypto market's rapid growth. The agency has faced staffing reductions and a lack of Democratic commissioners since Trump's administration began replacing term-limited appointees. Sen. Elissa Slotkin warned that a CFTC with only Republican leadership could be vulnerable to political pressure, undermining its independence. Critics also question whether the CFTC's current structure can enforce robust anti-money laundering (AML) and consumer protection standards, which are critical for traditional financial markets.

The path forward remains contentious. The Senate's Agriculture Committee, which oversees the CFTC, will likely debate the bill before it moves to the full Senate. Meanwhile, Selig's confirmation hearing is set for Thursday, with a final Senate vote expected soon. If confirmed, Selig would become the sole commissioner, granting him unilateral authority to shape crypto policy-a scenario that has drawn skepticism from both parties.

Industry stakeholders, including major crypto firms, have largely endorsed the CFTC's expanded role, viewing it as a step toward regulatory clarity. The draft bill's emphasis on self-custody rights and reduced intermediary requirements has also been welcomed by proponents of decentralized finance (DeFi) according to industry sources. Analysts suggest that a finalized framework could accelerate institutional adoption, with clearer custody rules and compliance standards potentially unlocking billions in investment as market analysts note.

As negotiations continue, the outcome of these legislative and regulatory efforts will determine whether the U.S. solidifies its position as a global crypto leader-or faces fragmentation and uncertainty in its digital asset markets.