A group of twelve Senate Democrats has formally requested a collaborative, bipartisan process for writing a comprehensive bill to regulate the cryptocurrency market. The senators issued a statement on Friday, September 20, urging their Republican colleagues to move beyond a review-and-comment process and engage in joint authorship for the landmark legislation.
This move signals a critical juncture in the ongoing effort to establish clear rules for the digital asset industry in the United States, highlighting fundamental differences in approach between the two parties as they navigate the complexities of financial regulation in the digital age.
Key Takeaways
- Twelve Senate Democrats, including Kirsten Gillibrand and Mark Warner, are pushing for a “bipartisan authorship process” on crypto market structure legislation.
- Democrats want to co-write the bill from the ground up, rather than simply providing feedback on a bill already drafted by Republicans.
- The request comes as Republicans advance their own bill, the Clarity Act, which has already passed the House of Representatives.
- Key policy differences exist, particularly regarding the specific regulatory powers of the SEC and the CFTC.
- The Democratic framework also includes a proposal to prohibit elected officials and their families from launching or profiting from crypto projects while in office.
Democrats Call for Collaborative Legislation
A dozen influential Senate Democrats have publicly called for a more integrated approach to drafting new laws for the digital asset sector. In a joint statement, the group emphasized the need for true collaboration on a bill of this magnitude and importance.
"We hope our Republican colleagues will agree to a bipartisan authorship process, as is the norm for legislation of this scale," the senators stated. "Given our shared interest in moving forward quickly on this issue, we hope they will agree to reasonable requests to allow for true collaboration."
The statement was signed by a notable group of senators actively involved in financial and technology policy. Signatories include Kirsten Gillibrand of New York, Cory Booker of New Jersey, Mark Warner of Virginia, and Ruben Gallego of Arizona. According to aides familiar with the matter, the senators are firm in their position that providing comments on a Republican-written bill is insufficient for creating durable, effective regulation.
Background: The Legislative Landscape
This development follows the House of Representatives' passage of the Clarity Act, a Republican-led initiative aimed at creating a regulatory framework for digital assets. As that bill moves to the Senate for consideration, Democrats are positioning their own comprehensive plan, setting the stage for significant negotiations.
Competing Visions for Crypto Regulation
The call for joint authorship comes shortly after the same group of Democratic senators unveiled a detailed seven-pillar framework for regulating U.S. crypto markets. This framework outlines their legislative priorities and serves as a direct counterpoint to the existing Republican proposal.
The Democratic Framework
The Democrats' plan proposes several significant changes to the current regulatory environment. A central element is granting the Commodity Futures Trading Commission (CFTC) new, direct authority over spot markets for digital assets that are not classified as securities. This would give the CFTC a much larger role in overseeing day-to-day crypto trading.
Their framework also aims to create a clear, legally defined process to determine when a digital token should be regulated as a security by the Securities and Exchange Commission (SEC). This addresses a long-standing point of confusion and contention within the crypto industry.
The Republican Proposal
In contrast, the latest draft of the Republican-led Clarity Act takes a different approach. It proposes the establishment of a joint committee composed of members from both the SEC and the CFTC. This committee's primary task would be to develop recommendations for achieving "regulatory harmonization" between the two agencies, which have historically had overlapping and sometimes conflicting views on digital assets.
Jurisdictional Divide: SEC vs. CFTC
The debate over which agency should regulate crypto is central to the legislative effort. The SEC typically oversees securities (investment contracts), while the CFTC regulates commodities (raw goods and derivatives). The classification of a digital asset as either a security or a commodity has profound implications for how it is issued, traded, and managed.
Procedural and Ethical Considerations
Beyond the core regulatory structure, the negotiations involve procedural dynamics and new ethical rules. The Democrats are pushing for closer coordination with the Senate Agriculture Committee, the body that has oversight of the CFTC. This move is intended to ensure the agency's perspective is fully integrated into the legislative process.
Senate Banking Committee Republicans have reportedly indicated a willingness to accept input on their bill until October 20, but a final schedule for committee work has not been confirmed. The Democratic push for co-authorship seeks to accelerate and deepen this collaboration.
Proposed Ban on Crypto Activities for Officials
A significant and pointed proposal within the Democratic framework is a new ethics rule. It would bar elected government officials and their immediate family members from launching, promoting, or directly profiting from cryptocurrency projects during their term in office.
This proposal is widely seen as a response to the financial activities of former President Donald Trump, who has been involved in various crypto-related ventures that have substantially increased his net worth. The provision also calls for increased funding for regulatory agencies like the SEC and CFTC to enhance their enforcement capabilities.
As Congress moves closer to establishing the first comprehensive regulatory framework for digital assets in the U.S., the call for bipartisan authorship from Senate Democrats marks a pivotal moment. The outcome of these negotiations will shape the future of the crypto industry, impacting everything from investor protection to financial innovation for years to come.
