The U.S. Senate Agriculture Committee has taken a significant step toward establishing regulatory oversight for the digital asset space, advancing its version of a cryptocurrency market structure bill that would grant the Commodity Futures Trading Commission (CFTC) authority over digital commodities. The legislation, known as the Digital Commodity Intermediaries Act, passed along party lines with a vote of 12 Republicans in favor and 11 Democrats opposed. This marks a pivotal moment, as it’s the first time a comprehensive crypto market structure bill has successfully moved beyond a Senate committee.
For this bill to progress further, the Senate Banking Committee must also approve its own version of a crypto market structure bill. Subsequently, the two legislative measures would need to be reconciled before being presented to the full Senate for consideration.
The advancement of the bill comes after earlier attempts to secure bipartisan support for a similar measure faced challenges. Senator John Boozman, R-Ark., who chairs the Senate Agriculture Committee, moved forward with the current iteration of the bill after a previous draft, developed in collaboration with Senator Cory Booker, D-N.J., lost traction. While Senator Booker ultimately did not support the version voted on by the committee, Senator Kirsten Gillibrand, D-N.Y., expressed optimism about the committee’s progress in a recent interview.
The Senate Banking Committee’s own review of its crypto market structure bill was postponed, reportedly due to opposition from key industry players, including Coinbase. A new date for this consideration has not yet been set. Senator Boozman has indicated his willingness to collaborate with the Banking Committee on issues identified during the Agriculture Committee’s deliberations, such as addressing the prevalence of scams associated with crypto ATMs.
In a statement, Senator Boozman characterized the committee’s vote as a “critical step toward creating clear rules for digital asset markets,” acknowledging that “there’s still more work ahead.” He expressed hope that this development will “build momentum in the Senate to advance this legislation.”
The proposed legislation aims to create a clear legal definition for digital commodities and establish a regulatory framework for spot market digital commodity intermediaries under the purview of the CFTC. Furthermore, it seeks to bolster consumer protections through measures such as safeguards against conflicts of interest and requirements for customer disclosures.
The current version of the bill, released on January 21st, expands the CFTC’s mandate to regulate digital assets. It builds upon the CLARITY Act, a bipartisan bill passed by the House of Representatives, and integrates provisions negotiated with Senate Democrats, as well as input gathered from stakeholders during bipartisan discussions.
During the committee hearing, Senator Booker highlighted the development of a bipartisan discussion draft in November and expressed disappointment that, upon his return to Washington in January, Republican colleagues seemed to be moving away from the collaborative process and the agreed-upon principles. He stated that the bill presented was not aligned with the bipartisan draft previously worked on and did not fully reflect the principles agreed upon. Despite these reservations, Booker emphasized his continued belief in the importance of the work undertaken.
Democratic concerns extended to the potential for conflicts of interest related to the involvement of public officials, including the President, in the cryptocurrency industry. Amendments proposed by Democrats to address these concerns, such as banning public officials from engaging in crypto activities and mitigating the influence of foreign adversaries in digital commodities, were not approved. Senator Boozman noted that these matters fall outside the jurisdiction of the Agriculture Committee.
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