Regulating Digital Assets: New Market Structure Bill Builds on FIT21 Framework
The House Committees on Financial Services and Agriculture have unveiled a discussion draft for a new comprehensive U.S. crypto market structure bill, aiming to establish clear regulatory boundaries between the U.S. Securities and Exchange Commission ("SEC") and Commodity Futures Trading Commission ("CFTC"), protect consumers, and position the United States as a global leader in digital assets.
On May 5, 2025, the House Committees on Financial Services and Agriculture released a discussion draft of legislation that would establish a regulatory framework for digital assets. Drawing from last session's Financial Innovation and Technology for the 21st Century Act ("FIT21"), the draft introduces changes aimed at better regulatory coherence.
Key Provisions
- Jurisdictional Clarity. The draft reaffirms that FIT21's categories of "digital commodities" (digital assets regulated by the CFTC) and "permitted payment stablecoins" are not "securities." This draft also tightens affiliate sale rules, encourages joint SEC-CFTC rulemaking, and introduces optional early registration for issuers.
- Disclosure and Capital Raising. Registration requirements for digital commodity exchanges, brokers, and dealers with the CFTC, and securities intermediaries with the SEC, are established. This draft extends further than FIT21 by establishing procedures for notice of intent to register and ongoing disclosure obligations.
- Consumer Protection. This draft toughens up disclosure requirements for digital asset developers, emphasizing consumer protections, transparency, and state-level rulemaking.
- Decentralized Finance ("DeFi"). While FIT21 did not explicitly address DeFi exemptions, this draft excludes certain DeFi activities from registration or regulation, including exemptions for non-custodial DeFi protocols without discretionary control over funds. The agencies' respective anti-fraud and anti-manipulation enforcement authority is preserved.
- Decentralization Test. This draft simplifies the decentralization test, requiring no single entity to have unilateral control and mandating disclosures for holders of over 10% of tokens in centralized projects. It replaces SEC certification of decentralization with an ongoing "mature blockchain" concept.
- Market Access. The draft exempts secondary market transactions from securities laws if those transactions do not represent claims on an issuer or associated enterprise. Permitted payment stablecoins may be brokered, traded, or custodied by a broker, dealer, or through an alternative trading system or the national securities exchange. Also, this draft removes FIT21's income and wealth limits and accredited investor checks to broaden market participation for retail investors.
Next Steps
If enacted, the draft legislation would require joint rulemaking by the CFTC and SEC on several matters, including defining the process to delist an asset for trading and permitting the SEC to issue rules applicable to mixed digital asset transactions. The new law would take effect within a year of enactment or 60 days after publication of final rules in the Federal Register.
