Senate Democrats Propose Seven-Pillar Crypto Regulation Framework

Senate Democrats have introduced a comprehensive seven-pillar crypto regulation framework aimed at closing long-standing legislative gaps and creating clearer oversight for the nearly $4 trillion digital asset market. The proposal seeks to assign exclusive regulatory authority over non-security digital assets to the Commodity Futures Trading Commission (CFTC), while clarifying the Securities and Exchange Commission's (SEC) jurisdiction over security-classified assets, promoting collaboration between the two agencies. The framework also mandates all crypto platforms to register with the Financial Crimes Enforcement Network (FinCEN) under the Bank Secrecy Act to enhance anti-money laundering enforcement and consumer protections. Concurrently, the Senate Banking Committee advanced the CLARITY Act, which would protect Bitcoin and crypto developers from liability for operating unlicensed money transmitting businesses, including retroactive protections benefiting developers like Tornado Cash's Roman Storm, although not extending to all cases. The House Financial Services Committee has urged Senate approval of the CLARITY Act and related legislation to establish a federal framework for digital assets, emphasizing the importance of clear regulations to maintain U.S. leadership in digital finance and guard against authoritarian digital currency models. These legislative efforts reflect a bipartisan push to balance innovation, consumer protection, and national security in the evolving digital asset landscape.