The US Senate released the first draft legal framework for the crypto market, giving the CFTC authority over Spot Trading and defining the boundary between the SEC and CFTC.
US Senate releases draft of new legal framework for crypto market
On November 11, the US Senate Agriculture Committee officially released a draft framework for regulating the crypto market, aiming to establish a line of supervision between the two most powerful agencies in the US financial sector, the SEC and CFTC .
A turning point in efforts to perfect the crypto legal framework in the US
- The new bill was introduced by Senators John Boozman (Republican – Arkansas) and Cory Booker (Democrat – New Jersey), two influential figures in the fields of agricultural and financial policy in the US Senate.
- This is a rare bipartisan bill that demonstrates the shared determination of both sides to build a clear legal foundation for the digital asset market, which has grown beyond the control of traditional regulatory frameworks.
- Specifically, the draft aims to establish a unified monitoring mechanism for the entire crypto market in the United States, while giving more direct authority to the Commodity Futures Trading Commission (CFTC).
- The CFTC will be responsible for overseeing digital assets designated as “digital commodities,” which are Token that can be traded peer-to-peer, without an intermediary, and recorded on a public blockchain, such as Bitcoin, Litecoin, or similar Proof-of-Work Token .
- This move not only creates a clear legal boundary between the CFTC and the SEC, but also lays the groundwork for the classification of crypto assets, an issue that has been controversial for years. While the SEC asserts that most Token are securities and therefore fall under its regulatory purview, the CFTC XEM many digital assets to be commodities.
- The Boozman and Booker draft is expected to thoroughly resolve this jurisdictional conflict, helping the US market have a more coherent legal framework. Senator John Boozman said:
“The CFTC is best suited to regulate commodity crypto trading. Congress should act now to provide clarity, protect consumers, and promote responsible innovation.”
- Meanwhile, Mr. Cory Booker further emphasized that the draft will provide the CFTC with new authority to monitor the crypto spot market, establish investor protection measures, and ensure the agency has enough resources and personnel to keep up with the industry's development.
- The Agriculture Committee's draft is XEM as a counterweight and expanded version of the “Clarity” Act that the House passed last July.
- In addition, the Senate Banking Committee is developing a parallel securities-related bill with the goal of merging these two legal frameworks into the “Comprehensive Digital Asset Market Structure Act.”
Many issues remain "open" in the draft
- This 155-page draft still has many parts in square brackets, indicating the content that has not been agreed upon between the two parties. Some of the controversial provisions include:
The Chia of oversight between the CFTC and the SEC, especially with hybrid assets between commodities and securities.
New financial mechanism for CFTC: the draft proposes the agency to collect fees directly from licensed crypto organizations to offset its budget, given that CFTC has only about 543 employees, compared to more than 4,200 at the SEC.
- Preventing conflicts of interest: Many Democratic lawmakers have expressed concerns about the financial ties of President Donald Trump and his family in the crypto sector. Bloomberg estimates that Mr. Trump hasearned more than $620 million from projects such as World Liberty Financial (DeFi and stablecoin) and American Bitcoin Mining.
Impact on the market
- If passed, this bill would lay the foundation for legalizing the crypto spot trading market in the US under the direct supervision of the CFTC.
- In the near future, the entire crypto trading ecosystem in the US will be able to witness for the first time a unified and transparent legal framework.
- Exchanges and Token Issuance will have a clear compliance roadmap, instead of operating in a legal “gray zone” as they do now. Investors will also be protected within the legal framework, significantly reducing the risk from fraudulent, manipulative or unlicensed offshore exchanges.
- In addition, the CFTC also said it is directly working with licensed exchanges to launch margin and leveraged crypto Spot Trading as early as next December. Marking the agency's biggest milestone in years in its efforts to legalize crypto trading in the US.
- These moves could strongly attract institutional Capital that is on the sidelines due to concerns about legal risks, strengthening the US's position as a leading financial center in the digital asset era.
Coin68 synthesis
