Senate Draft Gives CFTC Authority Over Crypto Spot Markets

Senate Agriculture Chairman John Boozman (R-AR) and Senator Cory Booker (D-NJ) have released a discussion draft that would hand the Commodity Futures Trading Commission explicit authority to regulate spot-market trading in digital commodities such as Bitcoin and other non-security crypto tokens. The proposal follows months of negotiation and expands upon the CLARITY Act that passed the House in July, where 78 Democrats joined Republicans despite concerns over former President Donald Trump’s personal crypto ventures.

“The CFTC is the right agency to regulate spot digital commodity trading, and it is essential to establish clear rules for the emerging crypto market while also protecting consumers,” Boozman stated, calling the draft “an important marker” as lawmakers work toward final policy language. The legislation defines digital commodities as “any fungible digital asset that can be exclusively possessed and transferred, person to person, without necessary reliance on an intermediary, and is recorded on a cryptographically secured public distributed ledger.”

The Agriculture Committee’s role in crypto regulation traces back to its 19th-century oversight of farm commodities. As futures markets expanded, Congress passed the Grain Futures Act of 1922 and the Commodity Exchange Act of 1936, placing federal derivatives regulation under the committee’s authority. The CFTC, established in 1974 from that lineage, already regulates Bitcoin and other crypto commodities but only their derivatives—creating a significant gap since most retail activity occurs in spot trading.

The new draft seeks to close this gap by extending CFTC authority to spot trading. The proposal requires major crypto spot platforms to register with the CFTC and adopt comprehensive measures including anti-fraud protections, recordkeeping requirements, fund-segregation rules, and dispute-resolution mechanisms. Brokers and dealers would follow separate registration rules, with bracketed options over CFTC exemption powers still under debate.

The legislation establishes a dedicated CFTC funding stream for its new spot market regime, taking effect 270 days after enactment. A transition period would allow existing operators to function while awaiting registration, providing market stability during the regulatory shift.

A key feature of the draft legislation is its explicit protection of self-custody rights. Bill Hughes, Senior Counsel and Director of Global Regulatory Matters at ConsenSys, noted that the proposal allows individuals to hold and transact digital assets directly through hardware or software wallets without intermediary reliance. The legislation also shields developers from being treated as money transmitters for “publishing code or running infrastructure,” though Hughes cautioned that it’s “not a safe harbor for operating DeFi interfaces.”

This protection for self-custody wallet rights represents a significant victory for crypto advocates who have argued that individuals should maintain control over their digital assets without requiring third-party custodians. The approach balances regulatory oversight with the fundamental principles of cryptocurrency ownership and transfer.

Despite the comprehensive framework, the draft leaves several critical sections bracketed and unresolved. Key areas requiring further development include DeFi oversight, anti-money laundering rules, broker and dealer exemptions, and the balance between CFTC discretion and industry safe harbors. Hughes noted that “the entire section on ‘Decentralized Finance’ reads ‘Seeking further feedback,'” indicating significant work remains on this complex issue.

Jurisdictional questions also loom large. Minority commentary embedded in the draft indicates that Democrats on the Agriculture Committee believe provisions on blockchain developer immunity fall under the Banking Committee’s oversight, not Agriculture’s jurisdiction. This creates potential conflicts as the Agriculture draft advances alongside the Banking Committee’s bill defining “ancillary assets” and SEC oversight.

The timeline for Senate passage remains uncertain, with predictions shifting from August to September, then November, and more recently to the end of the year—if at all. Both proposals require CFTC-SEC coordination and committee approval before a Senate vote, creating a complex legislative pathway that could delay final action. The Agriculture Committee’s historical role in commodities regulation provides a solid foundation, but inter-committee coordination will be essential for comprehensive crypto legislation to reach the Senate floor.