Bipartisan Senate Proposal Seeks to Extend CFTC’s Reach Into Crypto Spot Markets

A new bipartisan discussion draft from the Senate Agriculture Committee would hand the Commodity Futures Trading Commission (CFTC) explicit authority to regulate spot-market trading in digital commodities such as Bitcoin and other non-security crypto tokens.

Chairman John Boozman (R-AR) and Senator Cory Booker (D-NJ) introduced the proposal following months of negotiation, which expands upon the CLARITY Act that passed the House in July, with 78 Democrats joining Republicans despite concerns over President Donald Trump’s personal crypto ventures.

The draft legislation defines digital commodities as “any fungible digital asset that can be exclusively possessed and transferred, person to person, without necessary reliance on an intermediary, and is recorded on a cryptographically secured public distributed ledger.”

“The CFTC is the right agency to regulate spot digital commodity trading, and it is essential to establish clear rules for the emerging crypto market while also protecting consumers,” Boozman said in the statement. “This discussion draft advances those goals and lays an important marker as we work toward final policy language.”

The draft bill proposes a dedicated CFTC funding stream for its new spot market regime, taking effect 270 days after enactment, with a transition period allowing existing operators to function while awaiting registration.

Why the Agriculture Committee matters

The Agriculture Committee’s role in crypto traces back to its 19th-century oversight of farm commodities. As futures markets expanded to meet rising demand, Congress passed the Grain Futures Act of 1922 and the Commodity Exchange Act of 1936, placing federal derivatives regulation under the committee’s authority.

The CFTC, established in 1974 from that lineage, already regulates Bitcoin and other crypto commodities, but only their derivatives, with the new draft seeking to close that gap by extending its authority to spot trading, where most retail activity occurs.

Regulatory framework

The proposal requires major crypto spot platforms to register with the CFTC and adopt anti-fraud, recordkeeping, fund-segregation, and dispute-resolution measures.

Brokers and dealers would follow separate registration rules, with bracketed options over CFTC exemption powers still under debate.

Bill Hughes, Senior Counsel and Director of Global Regulatory Matters at ConsenSys, tweeted Monday that the draft explicitly protects self-custody rights.

Hughes argues it does so by allowing individuals to hold and transact digital assets directly through hardware or software wallets, and by shielding developers from being treated as money transmitters for “publishing code or running infrastructure.” However, he cautioned that it’s “not a safe harbor for operating DeFi interfaces.”

Gaps remain

The draft leaves several sections bracketed and unresolved, including DeFi oversight, anti-money laundering rules, broker and dealer exemptions, and the balance between CFTC discretion and industry safe harbors.

“Note that the entire section on ‘Decentralized Finance’ reads ‘Seeking further feedback,'” Hughes noted.

Minority commentary embedded in the draft indicates that Democrats on the Agriculture Committee believe provisions on blockchain developer immunity fall under the Banking Committee’s oversight, not Agriculture’s jurisdiction.

The Agriculture draft advances alongside the Banking Committee’s bill defining “ancillary assets” and SEC oversight, both of which require CFTC–SEC coordination and committee approval before a Senate vote.

The timeline for Senate passage remains uncertain, with predictions shifting from Trump’s original August deadline to September, then November, and more recently, the end of the year, if at all.

Decrypt has reached out for further information on an updated legislative timeline.