Congress Puts SEC and CFTC on Collision Course Over Crypto

The cryptocurrency market is a paradox of modern finance.

The technological removal of intermediaries has resulted in a borderless, 24/7 experiment where code, speculation and ideology collide, frequently generating volatility and innovation in arguably equal measure.

That complexity has made regulation a moving target. Crypto blends elements of securities, commodities and currencies, but it fits neatly into none of them. Its decentralized structure blurs the lines of jurisdiction, while the pace of innovation can outstrip the ability of lawmakers to define what, exactly, they’re trying to oversee.

However, as the sector becomes increasingly embraced by the traditional financial establishment, regulation and oversight of crypto markets is becoming a priority, particularly in the United States, which already signed a stablecoin bill into law over the summer.

This prioritization was evident Monday (Nov. 10), when, among the first things that senators did upon the re-opening of the federal government, was secure bipartisan agreement for a crypto market structure draft bill.

The bill , introduced by Arkansas Sen. John Boozman , chairman of the Senate Committee on Agriculture, Nutrition and Forestry , and New Jersey Sen. Cory Booker , would “provide for a system of regulation of the offer and sale of digital commodities by the Commodity Futures Trading Commission .” It sets the stage for new custody rules, asset safeguarding obligations, and intermediary registration obligations across payments and financial services.

“More Americans are engaging with novel financial markets and payment systems than ever before, and Congress must take steps to strengthen and expand regulatory frameworks to protect consumers from predatory practices, keep our markets safe, and prevent bad actors from exploiting regulatory gaps,” Booker said in a Monday press release .

The draft legislation, as its name implies, assigns primary jurisdiction over “transactions in digital assets” to the CFTC, empowering the agency to regulate such transactions and set core principles for digital commodity exchanges, brokers and dealers, while leaving the role of the Securities and Exchange Commission comparatively muted.

Redefining Crypto’s Oversight Territory

For industry players, market participants and observers, the implications of a crypto market framework could be profound. The regulatory limbo that has dogged crypto firms, stemming from unclear jurisdictional boundaries between the SEC and CFTC, would finally be addressed.

But the draft also flags large unresolved domains. The entirety of Section 208 on “Decentralized Finance” remains bracketed and marked “Seeking further feedback,” underscoring that regulation of protocols, non-custodial actors, validators and open-network infrastructure is still in flux. Likewise, definitions of “blockchain,” “blockchain protocol,” “blockchain system,” and the criteria for “digital commodity” are still to be finalized.

Still, the Senate is inching toward its own version of the House’s CLARITY Act and trying to delineate the regulatory boundaries between the CFTC and the SEC. That’s arguably good news for the crypto industry.

That delineation matters for business models. Firms building spot exchange infrastructure, custody platforms, decentralized finance (DeFi) protocols and trading venues have long sought clarity about which regulator governs what. The draft’s classifying of many crypto tokens as commodities under the CFTC side of the ledger would give businesses operating in that space a clearer path and perhaps lower regulatory burden than under the SEC’s existing securities framework.

At the same time, key issues left unresolved include how to treat DeFi (what constitutes a protocol versus a service provider); how to define “digital commodity” versus “security”; how to ensure the CFTC is properly funded and equipped (as it currently lacks a full complement of commissioners); and how to coordinate with the SEC so oversight is not fragmented or duplicated. The Senate Banking Committee also has its own draft of a crypto market structure bill aimed at the SEC side of oversight, the Responsible Financial Innovation Act (RFIA).

Read also: Institutional-Grade Custody Remains Missing Link in Crypto’s Mainstream Breakthrough

What Comes Next for the Bill and the Crypto Industry

The next legislative phases will test whether this discussion draft becomes law or remains at the margins. A markup session in each committee, followed by reconciliation of the Agriculture and Banking Committee versions, will be required before a floor vote. The timeline, though, is hazy. Given that the Senate is juggling other priorities post-shutdown, the legislation may not reach final form until early 2026.

But from an innovation lens, the draft may send a message that Congress is moving off the sidelines. That could matter for payments and financial services firms that have hesitated to integrate crypto features because of regulatory ambiguity.

Coinbase , for example, announced Monday that it will host the first digital token sale in the U.S. in seven years, with the first sale set to take place Nov. 17-22.

The draft bill also heightens the expectation that intermediaries offering custody must be registered, segregate client funds, use qualified custodians, and adhere to insolvency safeguards. Payments firms that offer wallets or custodial services may need to recalibrate operations accordingly.