Democrats in the Senate are stepping up their game in the ongoing battle to regulate the burgeoning cryptocurrency market. On Tuesday, they unveiled a comprehensive framework aimed at defining how digital assets should be governed within the United States’ regulatory landscape. This move comes as a direct response to the GOP’s recent efforts to push their own market structure bill through the Senate by the end of September.
A Framework with Seven Pillars
The Democrats’ proposal, which was signed by a dozen influential lawmakers including Senators Ruben Gallego, Mark Warner, and Kirsten Gillibrand, outlines seven “key pillars” intended to shape the future of crypto regulation. These pillars focus on fair regulation, consumer protection, and preventing corruption and abuse, among other priorities. The framework is a clear attempt to codify how digital assets should fit into existing regulatory jurisdictions, a task that has been anything but straightforward.
The lawmakers emphasized the importance of creating “clear rules of the road” to protect the millions of Americans participating in the cryptocurrency market. They are particularly concerned about the potential for digital assets to be used for illicit activities and to unjustly enrich those in power.
A Call for Bipartisanship
Senator Elizabeth Warren, a prominent figure on the Senate Banking Committee, weighed in on the proposal, calling for bipartisan cooperation. “Producing a new crypto regulatory regime requires legislation that can pass both the House and the Senate,” she said. Warren criticized the Republicans for drafting what she described as “partisan” proposals, allegedly based on secret feedback from industry stakeholders, which has not been shared with Committee Democrats or the public.
Warren’s call for transparency echoes the broader sentiment among Democrats that any legislation should be crafted openly, with input from both sides of the aisle and the public. This approach is seen as crucial for creating a regulatory framework that can withstand political changes and industry pressures.
Addressing Regulatory Gaps
One of the most significant aspects of the Democrats’ proposal is its call to address existing gaps in the regulatory framework. The document notes that the Commodity Futures Trading Commission (CFTC) currently lacks the resources to effectively oversee crypto spot markets. To rectify this, the framework suggests that both the CFTC and the Securities and Exchange Commission (SEC) should develop new frameworks tailored to their specific roles in the digital asset sector.
Additionally, the proposal calls for all digital asset platforms to register as “financial institutions” with the Financial Crimes Enforcement Network (FinCEN), a move aimed at enhancing the tracking of illicit finance.
Tackling Corruption and Abuse
A potentially contentious element of the Democrats’ framework is its focus on preventing corruption and abuse within the crypto sector. The proposal explicitly calls out former President Donald Trump, alleging that he has used digital asset projects to enrich himself and his family. As a result, the framework suggests legislation to limit the ability of elected officials and their families to issue, endorse, or profit from digital assets while in office.
This provision is reminiscent of debates surrounding the GENIUS Act, a law regulating stablecoins in the U.S. The act faced delays earlier this year due to similar concerns but was eventually passed without restrictions on Trump or his family. The Democrats’ renewed focus on this issue may prove to be a sticking point in negotiations.
Seeking Common Ground
In a recent interview with CoinDesk, Patrick Witt, the new White House crypto adviser, acknowledged the GOP’s efforts to incorporate feedback from Democrats in their legislation. Witt emphasized the importance of crafting a bill that can garner enough bipartisan support to pass the Senate. The Democrats’ framework, with its comprehensive approach and focus on key regulatory issues, may provide a foundation for finding common ground.
As the September deadline for the GOP’s market structure bill approaches, both parties will need to engage in meaningful dialogue to bridge their differences. With the cryptocurrency market continuing to grow and evolve, the stakes are high for creating a robust regulatory environment that protects consumers, fosters innovation, and prevents exploitation.
The Road Ahead
The unveiling of the Democrats’ framework marks a significant moment in the ongoing debate over crypto regulation. With input from both parties and a focus on addressing existing regulatory gaps, there is potential for meaningful progress. However, the road ahead is fraught with challenges, including political disagreements and industry pushback.
As lawmakers continue to refine their proposals, the involvement of stakeholders from various sectors will be crucial. The aim is to create a regulatory framework that not only protects consumers but also allows the U.S. to remain a leader in the rapidly evolving digital asset landscape.
In the coming weeks, all eyes will be on the Senate as lawmakers work to navigate the complex terrain of crypto regulation. The outcome of these discussions will have far-reaching implications for the future of digital assets in the United States and beyond.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
