Crypto Market‑Structure Bills Move Toward Senate Markup Sessions
Washington, Jan. 15 – Two committees are set to debate and amend competing legislation that would delineate the regulatory frontier between the SEC and the CFTC.
What’s on the docket
- Committees involved: The Senate Agriculture Committee and the Senate Banking Committee.
- Timeline: Both committees are scheduled to hold markup hearings on January 15. During these sessions lawmakers can propose amendments, vote on the bills, and decide whether to forward them to the full Senate.
The two proposals, though different in wording, share a common objective: to bring clarity to the oversight of crypto‑related activities in the United States by defining which markets fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC) and which are the domain of the Securities and Exchange Commission (SEC).
Key provisions under discussion
| Area | Potential requirement |
|---|---|
| Exchange registration | Digital commodity exchanges, brokers and dealers would be required to register with the CFTC, adopt basic trade‑monitoring and reporting standards, and keep customer assets segregated – a safeguard aimed at preventing commingling scandals like the collapse of FTX. |
| Yield‑bearing stablecoins | The bills may close a current loophole that allows certain stablecoins to generate interest. If enacted, such products could be prohibited unless they meet stricter securities‑law criteria. |
| DeFi and privacy | Proposals could impose enhanced tracking and reporting obligations on privacy‑focused protocols, which may tilt the regulatory balance in favor of regulated exchanges over decentralized platforms. |
| Reporting burden | Companies would face expanded paperwork, risk‑control frameworks, and regular disclosures, but would gain regulatory certainty that could lower the risk of future enforcement actions. |
Industry reactions
- Legal perspective: Eli Cohen, chief legal officer at Centrifuge, called the markups “a pivotal step for bipartisan reform” but warned that the final language will determine market impact. He suggested that a ban on third‑party yield on stablecoins would be detrimental to market liquidity and could cause the legislation to stall.
- Exchange and infrastructure outlook: Maghnus Mareneck, co‑founder of Cosmos Labs, highlighted that tighter registration rules could curb the growth of some crypto exchanges while benefiting traditional banks. He also noted that Layer‑1 protocols and other infrastructure projects might see limited direct impact, though the broader competitive dynamics would shift.
- Compliance vs. innovation: Hedy Wang, co‑founder of Block Street, argued that although the regulatory load will increase, the clarity it provides could encourage legitimate projects to enter the space with confidence. She sees the trade‑off as favorable, emphasizing that uncertainty has been a larger barrier than compliance costs.
What the markup could mean for the broader crypto agenda
- If both committees approve their respective bills: The texts are expected to be merged into a single version that would move to the Senate floor. That would be the first comprehensive attempt to codify market‑structure rules for digital assets.
- If one or both proposals fail: Industry insiders warn that momentum for market‑structure reform could evaporate for the remainder of the 2024 session, leaving the regulatory landscape fragmented and dependent on case‑by‑case enforcement.
- Potential ripple effects: A clear delineation of SEC vs. CFTC authority may prompt exchanges and custodians to re‑evaluate licensing strategies, while DeFi projects could face new compliance horizons, especially around yield‑bearing products and privacy tooling.
Takeaways
- Regulatory clarity is the central promise of the pending legislation, but the exact definition of “commodity” vs. “security” for various crypto products remains contentious.
- Yield‑bearing stablecoins are likely to be a flashpoint. A ban or tighter oversight could reshape the stablecoin market and affect liquidity providers across both centralized and decentralized platforms.
- Industry opinion is split between increased compliance costs and the benefits of predictability. Many see the bills as an opportunity to establish a level playing field, while others fear that over‑regulation could stifle innovation, especially in the DeFi sector.
- The outcome of the January 15 markups will set the tone for any future crypto legislation in the current Congress. A successful passage could usher in a new regulatory framework; a deadlock could push policymakers to revisit the issue in a later session.
As the Senate Agriculture and Banking committees convene, market participants will be watching closely—not only for the immediate wording of the bills, but for the signal it sends about how the United States intends to integrate digital assets into its broader financial system.
Source: https://thedefiant.io/news/regulation/crypto-market-structure-bill-heads-to-key-senate-votes-this-week
