Senators Release Updated Discussion Draft of the "Responsible Financial Innovation Act of 2025"
On September 5, 2025, Senators Tim Scott (R-SC), Cynthia Lummis (R-WY), Bill Hagerty (R-TN), and Bernie Moreno (R-OH) released an updated discussion draft of the "Responsible Financial Innovation Act of 2025" ("RFIA"), which seeks to modernize U.S. digital asset oversight by clarifying asset classifications as well as disclosure, banking, and compliance rules.
This draft bill not only updates a prior discussion draft of the RFIA, but also appears to update bill S.2281, introduced in the 118th Congress, as well as a previous version introduced by the senators in the 117th Congress, both of which were not previously acted upon. The RFIA follows on the heels of the House of Representatives' passage of the Digital Asset Market Clarity Act of 2025 on July 17, 2025.
Key provisions of the updated discussion draft include:
- Digital Asset Classification and Definitions. The RFIA defines key terms such as "digital assets," "ancillary assets," and "digital commodities," and establishes tests distinguishing digital asset securities from commodities. "Ancillary assets" meeting the definition of such in the RFIA would not be considered securities. The RFIA also directs the Securities and Exchange Commission ("SEC") to engage in rulemaking to clearly define "investment contracts."
- Disclosure and Exemption Regimes for Ancillary Assets. The RFIA establishes initial and periodic disclosure requirements for transactions involving "ancillary assets," with tailored exemptions.
- Responsible Banking Innovation. The RFIA authorizes certain banks to engage in a broad range of digital asset activities, provided such activities are otherwise permissible under existing law.
- Illicit Finance and Compliance. The RFIA would require new anti-money laundering regulations, the creation of a public-private information sharing pilot program to help identify and address potential illicit finance violations and emerging risks, and an independent working group to study and propose measures to combat illicit finance and terrorism involving digital assets.
- Software Development and Non-Fungible Tokens ("NFTs") Safe Harbors. The RFIA shields certain software development activities and NFTs from federal and state securities laws.
- Joint Rulemaking and Regulatory Harmonization. The SEC and the Commodity Future Trading Commission ("CFTC") would be charged with jointly promoting a "Micro-Innovation Sandbox" for innovative activity. The RFIA would also create a Joint Advisory Committee on Digital Assets to advise the SEC and the CFTC on regulatory harmonization and dispute resolution.
Market participants and financial institutions should closely monitor the progress of this bill, which, if enacted, could also affect the regulation of other non-digital asset investments.
