House Democrats eye own crypto market structure bill with bigger SEC role

Democratic plan would shift power from CFTC to SEC

House Democrats are discussing a plan to turn Rep. Maxine Waters’ Crypto Investor and Consumer Bill of Rights into their own crypto market structure bill next Congress.

The reported plan would give the Securities and Exchange Commission (SEC) a bigger role and the Commodity Futures Trading Commission (CFTC) a smaller role. Reporter Eleanor Terrett cited three industry sources who have spoken with Democratic staffers.

No text for the bill has been released. The details so far come from industry sources, not from lawmakers.

What the reported plan would include

• Provisions from the Democratic Clarity Act that Waters offered in the House and that were not adopted.
• Provisions Senate Democrats agreed on with Republicans before a September cloture vote failed.
• Further ethics provisions that would restrict the crypto activities of President Donald Trump and other federal officials.
• Republicans are calling the effort a “messaging bill.”
• Waters, the top Democrat on the House Financial Services Committee, is in line to take the gavel in January from Chairman French Hill.

What other reports add

Bloomberg Law reported that the new majorities give Democrats leverage over the Clarity Act, described in the source as the industry’s top legislative priority. It also reported that Democrats plan tougher ethics rules aimed at Trump’s ventures.

Sen. Ruben Gallego of Arizona, a Senate Banking Committee member, was quoted as saying: “The industry and the Republicans screwed up. That was the best bill they were going to get.”

TD Cowen’s Jaret Seiberg wrote that the sweep closes the door on Clarity for two years. He also wrote that Democratic investigations of the Trump family’s crypto ventures may make it impossible to advance a version of Clarity that the crypto sector could back.

What the Waters amendment would have done

Waters offered the bill of rights as amendment #31 to H.R. 3633 in July 2025. The House Rules Committee blocked it 4-8 along party lines. Making an amendment “in order” lets the full House debate and vote on it, so the result kept the package off the floor.

The committee record lists requirements for 24/7 customer service, insurance or SIPC-like coverage, fiduciary and best-execution rules, anti-front-running rules, and bankruptcy-remote custody with 24-hour withdrawals and monthly auditor-attested proof of reserves. It would also have sent more funding to the SEC and CFTC.

The committee also rejected a second Democratic amendment by the same 4-8 margin. That amendment, from Rep. Joe Neguse of Colorado, would have barred members of Congress, presidents and vice presidents from issuing or endorsing digital assets.

How it differs from the Clarity Act

The House-passed Clarity Act directs the CFTC to regulate most digital commodity trading, including exchanges — platforms where crypto is traded — brokers and dealers. It also exempts tokens on mature blockchains, which are long-running digital ledgers, from SEC registration under certain conditions.

That design is the one the industry backed, according to the source. A bill that moves supervision back toward the SEC would reverse it.

The Clarity Act passed the House 294-134 in July 2025 and failed a Senate cloture vote 49-50 on Sept. 15. Sen. Thom Tillis entered a motion to reconsider, which preserves the option of another vote. The bill dies when this Congress ends on Jan. 3 unless the lame-duck session revives it.

What is still unclear

It is not clear whether a Democratic bill built around the SEC could draw enough Republican votes to pass. It is also not clear whether it would remain what Republicans call a messaging bill.

A Democratic crypto market structure bill would still need Trump’s signature to become law.

Why the agency split matters

The split between the SEC and CFTC is where a Democratic bill would break most sharply from the Republican one. The Clarity Act gives the CFTC the main role for most digital commodity trading. The reported Democratic plan would move that role back toward the SEC.

Sources

• Bitcoin Magazine

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