Democrats Push Bipartisan Crypto Market Structure Bill

Twelve Democratic senators, led by Senator Ruben Gallego and including prominent figures such as Mark Warner, Kirsten Gillibrand, and Cory Booker, issued a significant statement on September 19 calling for Republican cooperation on comprehensive crypto market structure legislation. The lawmakers explicitly sought “true collaboration” on legislation addressing regulatory gaps that have left businesses and investors without explicit protections. Their statement emphasized the need for “mutual understanding” while moving forward quickly on digital asset regulation, proposing a bipartisan authorship process as the norm for legislation of this scale.

The Democratic senators’ framework represents a strategic effort to bridge the partisan divide that has historically stalled crypto legislation. By inviting Republican colleagues to participate in a collaborative drafting process, the Democrats are acknowledging that meaningful regulatory progress requires cross-party support. The lawmakers wrote: “We hope our Republican colleagues will agree to a bipartisan authorship process, as is the norm for legislation of this scale. Given our shared interest in moving forward quickly on this issue, we hope they will agree to reasonable requests to allow for true collaboration.” This approach signals a pragmatic recognition that comprehensive crypto regulation must transcend political divisions to effectively address the complex challenges of digital asset markets.

The Democratic proposal centers on seven key pillars designed to close oversight gaps and restore investor confidence in digital assets. Central to the framework is resolving the longstanding regulatory ambiguity between the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC). The legislation would grant the CFTC complete jurisdiction over spot markets for digital commodities that do not qualify as securities, while maintaining SEC authority over tokenized securities under existing disclosure regimes.

According to the framework shared on September 9, the legislation would provide the CFTC with new registration and enforcement authority over crypto trading platforms, requiring mandatory disclosures and consumer protections. Both agencies would receive expanded funding and authority to regulate custody arrangements, margin requirements, and conflicts of interest under crypto-native business models. The platform regulation component aims to standardize supervision of crypto exchanges akin to traditional securities exchanges, creating a more consistent regulatory environment for market participants.

The framework also includes provisions preventing public officials from profiting from digital asset projects, specifically referencing former President Donald Trump’s financial entanglements with crypto initiatives. It seeks to bar elected officials and their families from issuing or profiting from tokens while in office and mandates disclosure of all digital asset holdings, addressing concerns about conflicts of interest in the rapidly evolving digital asset space.

The proposed legislation significantly expands anti-money laundering requirements to cover all digital asset intermediaries, including foreign entities serving US customers. This means mandatory Financial Crimes Enforcement Network (FinCEN) registration and sanctions compliance for a broader range of market participants. The framework also subjects decentralized finance (DeFi) protocols to increased scrutiny for compliance vulnerabilities, recognizing that technological innovation cannot exempt platforms from fundamental regulatory obligations.

The proposal preserves GENIUS Act provisions prohibiting stablecoin issuers from offering interest-bearing products while directing regulators to develop new oversight models for DeFi protocols. This dual approach aims to safeguard traditional markets from the destabilizing effects of unregulated innovations while allowing for responsible development of new financial technologies. The framework mandates comprehensive registration and compliance obligations across the entire digital asset ecosystem, applying to both centralized and decentralized platforms to prevent criminal exploitation.

To ensure effective implementation, the framework requires cross-party commissioner quorums for SEC and CFTC rulemaking while enabling rapid hiring of staff with digital assets expertise. The authors characterized the proposal as “a turning point” that would ensure America maintains leadership in financial innovation rather than ceding ground to international adversaries. By establishing clear regulatory parameters and robust enforcement mechanisms, the legislation seeks to create a stable environment for digital asset innovation while protecting investors and maintaining market integrity.