At a crucial juncture for U.S. crypto policy, a significant milestone has been reached when the Senate Committee on Agriculture, Nutrition & Forestry released their discussion draft of a “market structure” bill for digital assets such as cryptocurrency – offering clarity as to how cryptocurrencies may be regulated in the near future. As reported by CoinDesk and Ledger Insights.
While the text remains an early draft, it reveals legislators’ intent to define digital asset classes, assign regulatory roles, and improve consumer protections.
Here is an outline of the draft’s key features and why they matter, along with any outstanding issues or unanswered questions that remain outstanding.
Key Components of the Draft Plan
Definition and Role of the CFTC for Digital Commodities This draft suggests classifying many crypto tokens as “digital commodities,” with primary jurisdiction given to the Commodity Futures Trading Commission (CFTC). McMillan LLP offered their legal expertise during this discussion process.
Draft legislation defines digital commodities as any “fungible asset that can be owned, traded and transferred directly between individuals without needing an intermediary” whilst recording on a cryptographically secured public distributed ledger (CDL). Davis Wright Tremaine proposes two definitions of such assets.
Registration Regime for Exchanges, Brokers and Custodians This draft would mandate digital-commodity trading platforms, brokers, dealers and custodians register with the Commodity Futures Trading Commission (CFTC). Davis Wright Tremaine.
Ledger Insights Additionally, it includes provisions for customer asset segregation, conflict-of-interest controls, disclosure to retail participants and new fee-building mechanisms for entities overseen by the Commodity Futures Trading Commission. Toutes These Provisions
Inter-Agency Collaboration and Certification Process
This draft includes an inter-agency collaboration and certification process wherein the CFTC and Securities and Exchange Commission (SEC) would coordinate on creating rules together, particularly regarding distinguishing assets that qualify as digital commodities from securities. McMillan LLP provided expertise during this joint rule-making process.
Davis Wright Tremaine suggests that issuers of digital assets could submit a certification request to the Commodity Futures Trading Commission before listing, to validate their commodity status and avoid possible disapproval by regulators.
Excluded Items and Pending Issues
The draft includes specific exclusions to its definition of digital commodities–for instance, permitted payment stablecoins, banking deposits and commodity derivatives are not considered digital commodities under this definition. Davis Wright Tremaine represents clients on this issue.
Important areas remain undecided (i.e., open for discussion), such as the definitions of decentralized finance (DeFi) protocols, blockchain systems and what constitutes “security.” Ledger Insights currently offers some insight into these topics.
Why It Matters
This draft represents one of the most tangible moves by U.S. lawmakers to modernize digital asset regulation. By providing clarity about which assets fall into which categories and which regulator oversees them, it addresses long-standing confusion that has hindered industry growth while leaving many risk averse. CoinDesk reports.
Industry participants could benefit from clearer rules through reduced regulatory surprises, more secure custody frameworks and enhanced investor protection.
Consumer and retail participants may find the draft’s emphasis on disclosures, segregation of funds and conflict-of-interest controls beneficial in building trust in crypto marketplaces.
By expanding the CFTC’s role in spot markets, this draft responds to industry sentiment–many crypto firms and users have called for clearer frameworks instead of enforcement by litigation. McMillan LLP proposed this policy last December as well.
What Is Left Unresolved
Although progress has been made, some key issues still need to be discussed and agreed upon before moving to a final draft text. Key unanswered questions include:
How will DeFi and decentralized protocols be managed and organized?
Finalizing what constitutes a digital commodity vs security remains to be defined.
Stablecoins, payment tokens and banking-affiliated crypto will not be discussed for now.
Timing of effective rule-making, transitional provisions, and how existing platforms will adapt are crucial considerations.
What Next
For now, the draft must still pass out of the Senate Agriculture Committee, be reconciled with versions from both Banking Committees, and eventually meet requirements set by House representatives. As CoinDesk notes:
Draft timelines suggest agencies may have up to 18 months after legislation has been passed to develop regulations and issue them for implementation.
Davis Wright Tremaine Industry stakeholders, regulators and market participants will closely watch how this process unfolds as its outcome could either open new innovation avenues or place heavier burdens.
