Senate Banking Committee Unveils Crypto Market Structure Proposal and Seeks Public Input

In a significant move to align blockchain and digital assets with the broader U.S. financial ecosystem, the Senate Banking Committee has released a discussion draft aimed at creating a regulatory structure for crypto markets. This development follows the bipartisan approval of the Digital Asset Market Clarity Act of 2025 (the “Clarity Act”) in the House and complements ongoing efforts from various federal bodies.

The discussion draft, introduced on July 22, 2025, proposes amendments to the Securities Act of 1933 and is intended to expand upon the House’s Clarity Act. Meanwhile, the Senate Agriculture Committee is also expected to issue its own proposal focused on aspects governed by the Commodity Futures Trading Commission (CFTC). These three efforts will likely be merged to create a comprehensive regulatory framework, although the integration process may require further negotiations.

Key Provisions in the Senate Banking Committee Draft

The House’s Clarity Act established a dual regulatory structure dividing oversight between the SEC and CFTC, and introduced a temporary registration process for entities like digital commodity brokers and exchanges. Building on that, the Senate proposal introduces several new elements:

1. “Ancillary Assets” Classification:
   Digital assets that are distributed in relation to investment contracts but do not offer traditional security rights or payments would be treated as non-securities. Issuers can self-certify such assets, although the SEC retains the authority to challenge this within 60 days.
2. Disclosure and Threshold Exemptions:
   The SEC would develop disclosure requirements for ancillary assets, including issuer background and economic data. Ancillary assets could also be exempt from registration if sales stay below $75 million over 10 years or 10% of total outstanding assets.
3. Investment Contract Redefinition:
   The draft seeks to clarify what qualifies as an “investment contract,” building on the Howey Test but potentially removing the “commonality” requirement. This marks a shift from previous court interpretations and SEC practice.
4. New Avenues for Rulemaking:
   The SEC and CFTC would be directed to propose joint rules on portfolio margining and to update regulations for digital asset operations. A framework for regulatory sandboxes—including international collaboration—would also be introduced.
5. Expanded Bank Authority in Crypto:
   Banks and financial holding companies would be allowed to engage in digital asset activities they are otherwise legally permitted to perform. These could include custody services, payment processing, brokerage, and secondary market operations. Federal regulators like the Fed, OCC, and FDIC would craft capital and risk requirements tied to digital assets.
6. Exclusions and Self-Custody Rights:
   Developers maintaining blockchain infrastructure would not automatically be classified as money transmitters, and individuals would retain the right to self-custody assets used for personal purchases, shielding developers from unnecessary regulation.

Public Comment Opportunity: Request for Information

Accompanying the draft, the Committee has issued a Request for Information (RFI) with 78 specific questions covering areas such as:

• Regulatory clarity and proportionality
• Investor protections
• Trading and market infrastructure
• Custody and banking issues
• Anti-money laundering and illicit finance
• Innovation and preemption considerations

Stakeholders are invited to submit feedback by August 5, 2025, underscoring the urgency placed on shaping crypto policy in the coming months.

Broader Legislative and Regulatory Context

This draft follows the recent signing of the GENIUS Act, which established standards for payment stablecoins, and reflects an accelerated push by the federal government to integrate digital finance into the traditional system. Additional initiatives include:

• The White House Crypto Czar’s ongoing strategy development
• The SEC’s Crypto Task Force
• Multiple Executive Orders aimed at setting crypto priorities

Looking ahead, the White House is expected to release a detailed crypto policy report on July 30, 2025, which will likely outline a federal framework for digital asset regulation. Lawmakers are reportedly working toward passing comprehensive crypto legislation by September 2025.

Final Thoughts

These developments mark a pivotal phase in the evolution of U.S. crypto regulation. For those interested in contributing to this critical dialogue, submitting formal feedback to the Senate Banking Committee’s discussion draft is highly encouraged. Reach out to your usual contact at DWT’s financial services team for guidance on the comment process.