U.S. Senate advances crypto regulation bill in January, CFTC's authority may be significantly expanded

The U.S. cryptocurrency regulatory framework is about to reach a critical milestone. According to the latest news, the U.S. Senate Banking Committee is expected to review the Digital Asset Market Structure Act in the second week of January (around January 12-16), marking an important advancement since the bill passed the House of Representatives in July. The core of this bill is to redefine the allocation of regulatory authority over U.S. cryptocurrencies, significantly expanding the scope of the Commodity Futures Trading Commission (CFTC).

Key Timeline of the Bill’s Progress

The progress of this bill has not been smooth. Cody Carbone, CEO of the digital asset advocacy organization The Digital Chamber, stated that the Senate will conduct at least one review of market structure legislation in the second week of January. However, prior to this, the bill has stalled due to two main factors: Democratic concerns over decentralized finance (DeFi) and delays caused by the longest government shutdown in U.S. history.

Core Content of the Bill

Power Redistribution

The key change in this bill is to grant the CFTC more authority to regulate digital assets. This means that in terms of classification and regulation of cryptocurrencies, the CFTC will have broader powers. According to early Senate draft bills, the regulatory framework features the following characteristics:

• CFTC gains more regulatory authority over digital assets
• SEC retains regulatory authority over securities-like crypto assets
• CFTC and SEC establish closer cooperation mechanisms

Coordination Between Regulatory Agencies

It is noteworthy that this bill emphasizes cooperation between the CFTC and SEC. Early drafts show that the two regulatory agencies will coordinate more in cryptocurrency regulation, seen as an attempt to address current overlaps and ambiguities in regulatory authority. This cooperation framework could provide clearer regulatory expectations for the U.S. cryptocurrency industry.

Market Impact Assessment

From a market perspective, the advancement of this bill has several important implications:

Impact on Compliance Institutions: Crypto exchanges and service providers will face a clearer regulatory framework, potentially prompting more platforms to strengthen compliance efforts. Reports indicate that some platforms are already preparing for the new regulatory rules.

Constraints on DeFi: Democratic lawmakers’ concerns mainly focus on the risks associated with DeFi, implying that the bill may impose more restrictions on decentralized finance, which is also a key reason for the bill’s delay.

Enhanced Industry Transparency: A clearer regulatory framework will help distinguish compliant from non-compliant projects, potentially increasing transparency and credibility across the industry in the long term.

Follow-up Focus

The Senate review in the second week of January will be a critical moment. If the bill passes the Senate, it will still require the President’s signature to become law. The entire process may involve further amendments and discussions, especially regarding DeFi and the distribution of regulatory powers.

Summary

The U.S. Senate is about to initiate review of the Digital Asset Market Structure Act, marking a new phase in the evolution of the U.S. cryptocurrency regulatory framework. The bill’s core is to expand CFTC authority and strengthen cooperation with the SEC, providing market participants with clearer regulatory expectations. Although delayed due to DeFi concerns and the government shutdown, its advancement is now certain. For institutions engaged in cryptocurrency business, monitoring the latest developments and specific provisions of this bill will be crucial.