US Senate Launches Bipartisan Follow-Up to CLARITY Act

The US Senate Agriculture Committee has officially released the draft of a comprehensive, bipartisan bill aimed at regulating the digital asset market. The core of the legislation is the establishment of a supervisory framework centered on the Commodity Futures Trading Commission (CFTC). Key Provisions Target Consumer Protection and Clarity The Senate Agriculture Committee published the draft on its website on Monday, stating it would continue to work across the aisle to pass the legislation to protect consumers, ensure financial market stability, and allow US companies to thrive. The draft bill arrives approximately four months after the House passed its own comprehensive crypto legislation, the CLARITY Act. The key provisions outlined in the upper house’s draft include: CFTC Oversight: Establishing a clear definition of digital commodities and granting the CFTC regulatory authority over the digital commodity spot market. Customer Safeguards: Mandating robust consumer protections, including customer fund segregation, conflict of interest safeguards, detailed customer disclosure requirements, and prohibitions on certain affiliated trading. Innovation Protection: Ensuring protections for self-custody and innovative technology. Interagency Coordination: Requiring the CFTC and the Securities and Exchange Commission (SEC) to coordinate on necessary inter-agency rulemakings. Dual Oversight Aims to Solve SEC Jurisdiction Fight The draft particularly emphasizes “establishing criteria to clearly define whether a digital asset is a security,” seeking to mitigate jurisdictional conflicts with the SEC. This approach signals the introduction of a dual regulatory system in which the CFTC oversees spot exchanges for digital commodities and the SEC regulates investment-contract tokens. Senator Cory Booker (D-NJ), a co-sponsor of the draft, emphasized the urgency: “More Americans are engaging with novel financial markets and payment systems than ever before, and Congress must take steps to strengthen and expand regulatory frameworks to protect consumers… and prevent bad actors from exploiting regulatory gaps.” Divisions Remain Over Enforcement and Ethics While the core regulatory structure has bipartisan consensus, debates over detailed provisions persist. Senator Booker acknowledged that the draft is only a “first step” and significant work remains. “I’m specifically concerned about the lack of resources and the bipartisan commissioners at the CFTC, preventing regulatory arbitrage, as well as the ongoing corruption of public officials and whether Congress has created the correct guardrails to prevent those misdeeds,” he stated, urging colleagues to address these issues. Democrats, in particular, continue to press for the bill to address potential conflicts of interest involving the Trump family and the crypto industry. Sen. Elizabeth Warren previously sent a formal inquiry to the Department of Justice in September regarding alleged ties between the Trump family and global exchange Binance. Industry Cheers Clarity, But Calls for Expansion Despite creating the CLARITY Act earlier this year, both parties in the Senate faced delays in advancing the legislation due to differing opinions. Similarly, while the current draft has bipartisan consensus on the core regulatory structure, debates over detailed provisions still persist. Some critics expressed reservations. Alex Thorn, Head of Firmwide Research, commented that while the draft is “great to see,” it “still falls quite short of where we know it needs to go.” He noted that the draft “explicitly punts on key issues that have divided dem and repub crypto lawmakers, like defi and dev protections.” Attorney Bill Hughes of Consensys pointed out a specific flaw in the “Protection of Self-Custody” clause, noting that it applies only to “personal use.” “The rule applies only to personal use, not to persons acting as custodians, fiduciaries, or financial service providers for others,” Hughes warned. The post US Senate Launches Bipartisan Follow-Up to CLARITY Act appeared first on BeInCrypto.