Senators Unveil Draft Crypto Bill Giving CFTC Oversight Power

Two US senators proposed a bipartisan bill to shift cryptocurrency oversight from the Securities and Exchange Commission to the Commodity Futures Trading Commission — a move long favored by the industry.

John Boozman, an Arkansas Republican who chairs the Senate Agriculture Committee, and Cory Booker, a New Jersey Democrat, disclosed the draft Monday. Their proposal would empower the CFTC to regulate market structure, classify most cryptocurrencies as digital commodities, require companies to register some of their actions, create new disclosure rules and assess new fees on some transactions.

The SEC and CFTC have both sought to set rules for the growing crypto markets, but the industry has lobbied heavily for the commodities regulator. The Trump administration supports the smaller CFTC taking the lead, but Democrats worry it lacks the capacity to regulate the booming crypto sector effectively. The Senate draft builds on a similar House proposal that also favors the CFTC.

“This discussion draft is a first step, and we still have significant work to do before advancing the legislation out of committee and eventually to the Senate floor,” Booker said in a statement. “I’m specifically concerned about the lack of resources and the bipartisan commissioners at the CFTC.”

Because the CFTC is overseen by the Senate Agriculture Committee, market structure legislation must pass through it and the Senate Banking Committee. Senators working on crypto, including Senate Banking Committee Chair Tim Scott, a South Carolina Republican, had made passage of market structure a priority for this year. He said Monday he welcomed the draft from Boozman and Booker.

The Senate Agriculture Committee hasn’t scheduled a hearing or markup on the bipartisan draft. 

‘Appropriately Staffed’

The CFTC, intended to be a five-person, bipartisan commission, has only one member — Acting Chairman Caroline Pham, a Republican — following a series of resignations. The draft proposal from Boozman and Booker would require Democrats to have a say in at least two nominees to the commission. In addition, the draft calls on ensuring the CFTC is “appropriately staffed” with enough expertise and enforcement readiness to carry out the duties of any law. 

Pham is expected to transition off the CFTC after Trump’s nominee for chair, Mike Selig, is confirmed. 

Republicans on the Senate Banking Committee unveiled a draft of their portion of market structure legislation in July and are negotiating with Democrats to move legislation through their committee as well. 

The Booker-Boozman proposal leaves unresolved disagreements on decentralized finance and anti-money-laundering provisions. DeFi, which uses smart contracts on the blockchain, has been a sticking point, with some Democrats calling for stronger regulation, while the industry and most Republicans favor little oversight. 

Crypto leaders went to the Capitol in late October to push for the passage of market structure legislation, and their conversations with Democratic senators centered on DeFi and money laundering. 

“The release of the Senate Agriculture Committee’s bipartisan discussion draft bill marks meaningful positive progress toward establishing a comprehensive, fit-for-purpose market structure framework for digital commodities in the US,” Ji Hun Kim, the chief executive officer of the Crypto Council for Innovation, said in a statement. 

If all Republicans in the Senate support market structure, it would still require at least seven Democratic vote to avoid a filibuster, meaning Democrats have been far more involved in negotiations in the Senate than the House, which passed its version of market structure legislation this summer with the support of more than 70 Democrats.