US senators introduce long-awaited Bill to define crypto market rules
The legislation gives the industry legal clarity, and defines when tokens are securities, commodities or otherwise
[NEW YORK] US senators on Monday (Jan 12) unveiled draft legislation that would create a regulatory framework for cryptocurrency which, if signed into law, would clarify financial regulators’ jurisdiction over the burgeoning sector, potentially boosting digital asset adoption.
The crypto industry has long pushed for such legislation, often arguing that it is essential for the future of digital assets in the US, and necessary to fix core, longstanding problems for crypto companies.
Among other things, the legislation would define when crypto tokens are securities, commodities or otherwise, giving the industry long-hoped-for legal clarity.
It would also give the US Commodity Futures Trading Commission (CFTC) authority to police spot crypto markets. It is the industry’s preferred regulator, as opposed to the US Securities and Exchange Commission (SEC).
The Bill also gives the banking industry a fix it had sought – to create a federal regulatory framework for dollar-pegged crypto tokens called stablecoins.
Bank lobbyists had urged Congress to close what they deemed a loophole in the law, which allowed intermediaries to pay interest on stablecoins.
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The banks have argued that this would lead to a flight of deposits from the insured banking system, potentially threatening their financial stability.
The crypto companies have fought back against that assertion, contending that prohibiting third parties, such as crypto exchanges, from paying interest on stablecoins, would be anti-competitive.
The Bill – which could change as the senators consider amendments – proposes to bar crypto companies from paying interest to consumers solely for holding a stablecoin.
However, it allows crypto companies to pay rewards or incentives to customers for certain activities, such as sending a payment or participating in a loyalty programme.
The SEC and the CFTC would also be required to issue a joint rule, requiring clear disclosures from crypto companies about rewards paid in connection with using stablecoins.
Trump courted industry cash, pledging to be a “crypto president”, and his family’s own crypto ventures have helped to propel the sector into the mainstream.
The industry spent heavily in the 2024 elections to promote pro-crypto candidates, in the hopes of getting this landmark market structure Bill across the line.
The House of Representatives passed its version of the Bill in July, but talks stalled in the Senate last year.
The lawmakers were divided over the provisions on anti-money laundering and requirements for decentralised finance platforms, which enabled crypto users to buy and sell tokens without an intermediary, indicated sources.
With Congress already pivoting to focus on the 2026 midterm elections, in which the Democrats could take the House, some lobbyists are sceptical that the crypto market structure Bill could make it into the law.
That would leave crypto firms to rely on regulatory guidance, which could be overturned under a future administration, said industry executives. REUTERS
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