On November 10, 2025, Senator John Boozman (R-AR), Chairman of the Senate Agriculture, Nutrition, and Forestry Committee, and Senator Cory Booker (D-NJ) released a bipartisan discussion draft building on the Digital Asset Market Clarity Act of 2025 (“CLARITY Act”) passed by the House of Representatives earlier this year. In September 2025, the Senate Banking Committee, which oversees the Securities and Exchange Commission (“SEC”), issued the Responsible Financial Innovation Act of 2025 (“Proposed RFIA”) addressing SEC-related issues, as we have summarized previously. The Senate Agriculture Committee oversees the Commodity Futures Trading Commission (“CFTC”) and its discussion draft proposes granting new authority to the CFTC to regulate digital spot trading in commodities. The press release accompanying the discussion draft says it reflects months of negotiations (including with the Senate Banking Committee) and incorporates agreed-upon policies “that will protect consumers, ensure the stability of our financial markets, and enable American businesses to thrive.” The press release also identifies unresolved issues marked in parentheses, with senators appreciating comments from their colleagues, stakeholders and thought leaders. This note provides a summary of the draft discussion, with more in-depth analysis to follow.
Definitions and rules
Title I of the Discussion Draft includes definitions of brokers and dealers in digital commodities, as well as their associated persons. The discussion draft also defines qualified digital product custodians and calls for rulemaking by the CFTC to allow a digital product custodian to be registered as a qualified digital product custodian with the CFTC. Additionally, the discussion draft defines “digital asset” as “any representation of value that is recorded on a cryptographically secure distributed ledger,” as well as “digital commodity” as “any fungible asset that can be exclusively owned and transferred, from person to person, without the need for an intermediary, and that is recorded on a cryptographically secure public distributed ledger.” The definition of a “digital product” excludes titles, but brackets the definition of a “title” for further negotiations. The proposed definition of a “digital commodity” excludes authorized payment stablecoins, bank deposits, and commodities and commodity derivatives. Notably, the definitions of blockchain and decentralized financial systems and protocols are in square brackets and are therefore subject to further negotiations.
Title I of the Discussion Draft also sets forth provisions regarding rulemaking. For further discussion, there is joint SEC and CFTC rulemaking to exempt persons registered with both the CFTC and SEC from duplicative, conflicting, or unduly burdensome provisions, as well as with respect to mixed digital asset transactions and portfolio margin determinations. The discussion draft calls for the rules to be promulgated no later than 18 months after promulgation and requires the CFTC to develop rules on conflicts of interest between and among registered entities. The CFTC is required to coordinate with foreign regulators on the application of consistent international standards for the regulation of digital products.
Registration regime
Title II of the Discussion Draft addresses the registration of digital commodity intermediaries and gives the CFTC jurisdiction over digital commodity transactions. While the CFTC would have jurisdiction over a cash or spot agreement, contract, or transaction in an authorized payment stablecoin offered by a registered entity as if it were a digital product, such jurisdiction would only be intended to regulate the offering, execution, solicitation, or acceptance of an authorized cash or spot stablecoin transaction. The CFTC would have no authority or ability to establish rules or impose requirements on an authorized payment stablecoin issuer regarding the operation of an authorized payment stablecoin issuer or an authorized payment stablecoin.
Written certification to the CFTC that a digital commodity meets the requirements of the law before being listed or offered for trading on a spot or digital commodity market is also required. Such certification would be effective within a potential 30 days (the specific number of days is in brackets in the draft, indicating that it is subject to further negotiations) unless the CFTC issues a decision of disapproval.
Trading facilities that offer or seek to offer a cash or spot market for at least one digital commodity would also be required to register with the CFTC as a digital commodity exchange and become a member of a registered futures association. The CFTC would be required to prescribe rules regarding the content of such a request. Digital commodity exchanges would be subject to the CFTC Fundamentals and required to establish and enforce rules covering: trading, transaction processing, participation, operations, monitoring of transactions and transaction processing, conflicts of interest, disciplinary procedures, good governance standards, system safeguards, and risk management procedures. This section also includes provisions regarding listing standards for digital commodity exchanges where digital commodity exchanges will only be permitted to permit trading in a digital commodity that is not readily susceptible to manipulation and would be subject to public information requirements. The CFTC would be required to adopt consumer protection rules that require the disclosure of customer information and the safe handling of customer assets. Digital commodity exchanges would also be subject to recordkeeping and reporting requirements, as well as maintaining adequate financial, operational and management resources. Client funds should also be segregated, with mixing prohibited.
Title II also includes a section on the registration and regulation of digital commodities brokers and dealers, with the CFTC to promulgate rules applicable to registered digital commodities brokers and dealers. Brokers and dealers in digital commodities would also be subject to recordkeeping and reporting requirements, as well as new prescribed standards of business conduct. Brokers and dealers in digital commodities should establish robust and professional risk management systems, procedures to manage conflicts of interest, designate a compliance officer and segregated funds. Brokers and dealers in digital commodities would additionally be required to disclose transactions, trading operations, financial integrity protections, and other information related to trading in digital commodities to the CFTC. Individuals associated with brokers and dealers in digital commodities would also be required to register with the CFTC.
As with the definitional section of Title I, the discussion draft notably brackets “decentralized finance,” indicating that additional comments are requested. The question of how to regulate decentralized finance is one of the main challenges with crypto market structure legislation, given the industry’s strong view that developers should not get caught up in regulations aimed at centralized intermediaries and custodians. However, the panacea may come from the SEC’s “innovation exemption”, expected by the end of the year, which could resolve some of these problems.
CFTC Funding and Resources
Proposed Section 8e would address resources needed to implement this legislation and impose fees to be collected by the CFTC to recover the annual costs of registering digital commodity exchanges, brokers, and dealers, monitoring these entities, and providing outreach and education. In determining fees, the CFTC will consider the entity’s volume of activity and registration category. Unlike the SEC, the CFTC’s budget currently relies solely on appropriated funds approved by Congress. This provision allowing the CFTC to collect fees from registered digital product companies is expected to significantly improve the CFTC’s staffing and resources, which have suffered significant reductions under the current administration.
This section would also give the Chairman of the CFTC expedited hiring authority to appoint individuals with specialized knowledge of digital commodity markets, financial and capital market formation or regulation, financial market structures or supervision, data collection or analysis, or information technology, cybersecurity, or systems protections.
The Discussion Draft would also establish the Office of the Digital Commodities Retail Advocate in the Spot or Cash Market to help identify and resolve significant issues that retail participants in the spot or spot digital commodities market may encounter and to identify areas in which retail participants could benefit from changes in regulations and rules, and to analyze the potential impact of proposed CFTC regulations and registered futures association rules on retail participants.
Conclusion
The Senate Agriculture Committee’s discussion draft still contains several areas requiring additional input and negotiation, particularly regarding key definitions and DeFi, but sets out a comprehensive framework for registering digital commodity brokers and dealers with the CFTC and essential funding for the CFTC to carry out its expanded mission. The Senate Banking Committee and Senate Agriculture Committee will need to advance their respective bills out of their respective committees and bring their bills in line with the House CLARITY Act, but the fact that the discussion draft was released while the government remains paralyzed reflects the continued push to get crypto market structure legislation across the finish line.
