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US Senate Draft Bill Aims to Define Digital Commodities and Strengthen Consumer Protections
The US Senate Agriculture Committee has released a draft of a bipartisan bill aimed at creating a comprehensive regulatory framework for the digital asset market, signaling a major step toward clarity and consumer protection in crypto.
CFTC Takes the Lead on Oversight
The draft legislation centers on establishing a supervisory structure under the Commodity Futures Trading Commission (CFTC). Key provisions include a clear definition of digital commodities, regulatory authority over digital commodity spot markets, and measures to protect investors and consumers.
Senator Cory Booker (D-NJ), a co-sponsor of the bill, highlighted the urgency: “More Americans are engaging with novel financial markets and payment systems than ever before, and Congress must take steps to strengthen and expand regulatory frameworks to protect consumers… and prevent bad actors from exploiting regulatory gaps.”
Consumer Protections and Innovation Safeguards
The draft emphasizes robust customer safeguards, including fund segregation, conflict of interest rules, detailed disclosure requirements, and limits on certain affiliated trading. It also aims to protect self-custody and innovative technologies, although some critics have noted the protections apply primarily to personal use, not institutional custodians.
Additionally, the legislation calls for interagency coordination between the CFTC and the SEC to ensure cohesive rulemaking, while establishing criteria to clarify whether a digital asset qualifies as a security, helping reduce regulatory conflicts.
Bipartisan Support and Ongoing Debates
While there is bipartisan consensus on the core framework, debates continue over enforcement, ethics, and detailed provisions. Senator Booker acknowledged that this draft is only a “first step” and highlighted concerns about CFTC resources, bipartisan commissioners, and regulatory guardrails.
Industry voices have welcomed the clarity but urge expansion on issues like DeFi, developer protections, and broader custodial rules. Alex Thorn, Head of Firmwide Research, noted that the draft “still falls quite short of where we know it needs to go,” while Attorney Bill Hughes cautioned about limits in the self-custody clause.
The Senate’s draft comes four months after the House passed the CLARITY Act, and both chambers are working toward a unified framework that balances consumer protection, innovation, and market stability. As the digital asset ecosystem evolves, this legislation could mark a defining moment for US crypto regulation.
