From Gray Area to Ground Rules – Breaking Down U.S. Senate’s Crypto Market Structure Principles
Main Takeaways
A bipartisan group in the United States Senate has released foundational principles aiming to define how crypto markets should be structured, regulated, and supervised.
The framework outlines clear legal classifications, regulator responsibilities, and targeted safeguards for consumers and innovation.
This initiative, running alongside the House’s Digital Asset Market Clarity (CLARITY) Act, could set the stage for the first unified U.S. digital-asset market structure law.
On June 24, U.S. Senate Republicans, including Tim Scott, Cynthia Lummis, Thom Tillis, and Bill Hagerty, released their crypto market structure principles, for the first time offering a glimpse of how the Senate Banking Committee members envision a fully laid-out regulatory architecture for digital assets. It follows the Senate Banking Committee's bipartisan GENIUS Act, setting out a framework to regulate stablecoins. Read on for a dive into what market structure means in crypto, the details of the proposed Senate framework, and how it stacks up to House legislation, as well as what lies ahead.
Financial Markets’ Legal Plumbing
In traditional finance, market structure refers to how trading venues, participants, and mechanisms are organized: the roles of exchanges and dealers, clearing systems, and rules ensuring fairness, transparency, and price formation. But in crypto, the concept of market structure has taken on a newer, more legislative meaning, with the boundaries of regulatory jurisdiction and classification of various assets front and center – along with the idea that clarity around these key elements can be achieved by passing a comprehensive piece of market-structure legislation.
Over the past few years, turf battles ensued in the U.S.: The Securities and Exchange Commission (SEC) attempted to assert authority over most tokens that it saw as securities, while the Commodity Futures Trading Commission (CFTC) claimed jurisdiction over assets with commodity-like properties, such as bitcoin. Crypto exchanges and DeFi platforms operated under this ambiguity, often facing selective enforcement rather than clear rule-making.
With the new presidential administration ending the era of crypto regulation by enforcement and pushing for a more rules-based approach, legislators in the House introduced the CLARITY Act, mandating jurisdictional allocation, registration paths, consumer safeguards, and infrastructure rules. The Senate Banking Committee principles for market structure are not yet a detailed regulatory framework – instead, it is the Committee's response to guide the development of comprehensive market structure legislation.
Similar to the stablecoin legislative proposals developed by the House and the Senate, this latest development will need to be reconciled with the House CLARITY Act to get the Act to the President’s desk and signed into law.
What the Senate’s Principle Set Actually Says
The Senate Republicans unveiled six core areas meant to underpin forthcoming market structure legislation.
Clear Legal Classifications. The future bill must statutorily define which digital assets are securities (under the SEC) and which are commodities (under the CFTC), removing ambiguity on what rulebook applies to what asset.
Explicit Regulator Roles. Oversight should be allocated based on entity type: centralized exchanges, custodial intermediaries, DeFi protocols, and software developers should each fall under appropriate jurisdiction. The proposal also emphasizes protecting self-custody and excluding non-financial blockchain use cases from financial regulation.
Innovation-Friendly Regulation. The legislation would introduce fresh registration pathways and exemptions, such as fundraising carve‑outs for tokens, clear secondary market rules, and safe harbors or sandboxes. Smart contract protocols would not be regulated as though they were centralized firms.
Consumer Protection & Safeguards. Centralized platforms must follow risk management protocols similar to existing financial systems, including AML/KYC, custody segregation, capital thresholds, and customer fund protections in bankruptcy.
Targeted Illicit Finance Measures. Rather than imposing broad financial rules over the top, the Senators favor a streamlined approach to anti-money laundering and sanctions compliance, extending obligations to foreign actors with U.S. connections and harnessing blockchain’s transparency for enforcement.
Proactive Regulator Engagement. The proposal encourages agencies to implement no-action letters, sandboxes, safe harbors, and inter-agency coordination. It urges banks and financial institutions to receive clarity on permissible crypto activities.
House vs. Senate: A Tale of Two Frameworks
While both chambers of U.S. Congress – the Senate and House – aim to craft a comprehensive crypto market structure, their starting points differ.
House’s CLARITY Act, passed out of Financial Services and Agriculture Committees earlier in June, establishes definitions for “digital commodities” vs “securities,” giving primary oversight to the CFTC with a carve-out for the SEC on investment-contract-based tokens. It creates registrations for digital commodity exchanges, brokers, and dealers, alongside exemptions and reporting frameworks.
The Senate's principles are less prescriptive but broader. These principles will guide discussions and negotiations as Chairman Scott and his colleagues engage with industry participants, legal and academic experts, and government stakeholders on the bill text.
While the House's CLARITY Act is already bill-detailed, the Senate’s framework is principle-based. Both advocate a split jurisdiction between the SEC and CFTC, but differ on how decentralized protocols should be treated.
What Happens Next?
U.S. digital-asset market structure legislation is entering a decisive phase. On the Senate side, the Banking Committee has scheduled hearings and is likely to release a draft bill in the coming weeks. Meanwhile, the House is preparing for a floor vote on CLARITY, potentially merging it with stablecoin legislation to accelerate its passage.
Consistent with this momentum, industry voices suggest that the GENIUS Act, which focuses on stablecoin regulation, could be signed into law as early as July. Concurrently, the CLARITY Act is advancing to the Senate floor, with key procedural steps, including mark-ups and final votes, expected before the end of September. This timeline suggests a concerted push to finalize a crypto framework before the congressional recess.
While these developments signal accelerating progress toward a unified regulatory framework, it is important to temper expectations. Legislative processes can be complex, and details will continue to evolve as the House and Senate work to reconcile their respective bills. Nonetheless, the growing bipartisan support and clear timelines reflect a significant shift toward establishing clearer, innovation-friendly rules for the crypto market.
Final Thoughts
The Senate principles, alongside ongoing legislative initiatives like the House CLARITY Act and the Senate GENIUS Act, reflect a growing maturity in U.S. crypto policy. Instead of piecemeal enforcement, lawmakers are leaning into constructive regulation built for digital markets rather than force-fitted rules from traditional finance. They signal an intention to balance clarity, innovation, and consumer protection.
For the global crypto ecosystem, it’s a pivotal moment. A well-designed, sensible market structure law will unlock capital, clarify responsibilities, and drive adoption, laying the foundation for U.S. leadership in blockchain innovation.