Overview
On Nov. 10, 2025, Senate Agriculture Committee Chairman John Boozman, R-AR, and Sen. Cory Booker, D-NJ, released a bipartisan discussion draft to establish a federal framework for regulating spot digital commodity markets under the Commodity Futures Trading Commission (CFTC). The proposal builds on the House-passed CLARITY Act from July 2025 and represents an effort to place digital asset trading under federal supervision while maintaining consumer protections and promoting innovation.
The 119-page draft is incomplete, with bracketed sections indicating unresolved policy differences. It introduces three registration categories: digital commodity exchanges, brokers and dealers. It also incorporates detailed customer protection requirements modeled on the Commodity Exchange Act. Sen. Booker has stated that the CFTC may lack the funding to fulfill these new duties, while Chairman Boozman has pledged to secure adequate resources before implementation.
Core Framework
The draft defines digital commodities as fungible digital assets that can be transferred peer to peer and recorded on distributed ledgers. It excludes securities, payment stablecoins, which is addressed in separate legislation, as well as deposits, derivatives, pooled investment vehicles and collectibles such as NFTs. This framework divides oversight among regulators: the CFTC for commodities, the Securities and Exchange Commission (SEC) for securities and federal banking regulators for custodial and payment activities.
Under the proposal:
- Digital Commodity Exchanges must register with the CFTC if they operate spot markets for U.S. customers.
- Digital Commodity Brokers that solicit orders or control customer assets must register and comply with segregation and disclosure rules.
- Digital Commodity Dealers that trade directly with retail customers outside exchanges must also register.
Banks and payment processors engaged in conventional financial activities are exempt. Entities that facilitate digital commodity trading or custody on behalf of others and serve U.S clients fall under federal supervision.
The legislation preserves state authority over trust companies and money transmitters, provided operations do not conflict with federal requirements. State licensed custodians in good standing may continue operating if they satisfy minimum federal standards.
Consumer Protections
Registered exchanges must meet 16 core principles comparable to those applied to futures markets. These include:
- Market surveillance and antimanipulation systems
- Cybersecurity and business continuity planning
- Transparent governance and recordkeeping
- Segregation of customer assets from company funds
Customer assets must be held with qualified digital commodity custodians regulated by federal or state authorities and subject to capital, cybersecurity and operational standards.
Exchanges must provide plain language disclosures describing each listed digital commodity’s technology, consensus method, issuance schedule, governance, trading volume, volatility and material risks. They must disclose conflicts of interest and update information promptly when changes occur.
The CFTC is directed to create rules on marketing practices, testimonials and endorsements to ensure consistency and accuracy in public communications.
Listing and Certification
Before listing a digital commodity, an exchange must certify to the CFTC that the asset complies with statutory standards and is not susceptible to manipulation. The certification must analyze the asset’s source code, governance, supply mechanics and trading behavior.
The CFTC has 30 business days to review a new certification, or 15 days for an already approved asset, with possible 30-day extensions if new issues arise. Entities applying for exchange registration can seek preapproval for specific commodities, allowing them to launch immediately after registration.
Exchanges and affiliates are prohibited from proprietary trading and from using self-issued digital assets as part of their regulatory capital.
Implementation and Resources
The CFTC and SEC must issue implementing regulations within 18 months. The framework becomes effective 18 months after enactment, or 120 days after publication of final rules, whichever is later. Both agencies may begin accepting registrations before the effective date, but compliance obligations will start only once rules are finalized.
The legislation affirms self-custody rights, allowing individuals to hold and transfer their own digital assets and conduct peer-to-peer transactions for personal use, provided they are not acting as custodians for others or violating sanctions laws.
Title II, Section 210 authorizes new CFTC funding to support enforcement, rulemaking, technology upgrades and oversight activities. Both sponsors agree that additional appropriations and staffing will be required before the law can take effect.
Key Differences from the House-Passed CLARITY Act
The Senate draft narrows the scope of the House-passed CLARITY Act by separating stablecoin regulation into standalone legislation and concentrating on spot digital commodity markets under the CFTC. It omits the House bill’s detailed framework for asset issuance and mature blockchain determinations, instead centering on exchange, broker, and dealer registration, customer protection standards and stronger CFTC supervisory authority. Overall, while the House bill sought comprehensive digital asset classification across regulators, the Senate draft reflects a more targeted, CFTC-led approach emphasizing market integrity and consumer safeguards.
Unresolved and Bracketed Issues
The discussion draft includes several unresolved policy areas. The treatment of blockchain developers, specifically whether noncustodial developers should fall under money-transmission rules, remains undecided.
Other bracketed items include:
- Definitions for blockchain-related terms.
- The framework for decentralized finance (DeFi) protocols and messaging systems.
- Registration of commodity pool operators in the DeFi context.
- Anti-money-laundering and sanctions provisions.
- Joint CFTC and SEC rulemaking on portfolio margining and conflicts of interest.
- Potential exemptions for institutional counterparties and eligible contract participants.
A bracketed “Sense of Congress” section would require the CFTC to be fully staffed with bipartisan commissioners and adequately funded before implementation.
Implications
Exchanges and Infrastructure
U.S. exchanges would face new registration, compliance and reporting obligations. They would need to implement surveillance, cybersecurity and transparency systems in line with CFTC requirements. The proprietary trading ban would require operational restructuring for platforms that currently trade against customers or issue their own assets.
Brokers and Dealers
Brokers and dealers would gain regulatory clarity but would have to adapt to new rules on segregation of assets, disclosure and custody. Compliance will likely require substantial internal adjustments and coordination with qualified custodians.
Custodians and Banks
Custodians supervised by federal or state regulators would play a central role as qualified custodians for digital assets. The draft sets clear baseline standards for their capital, security and operational resilience.
Institutional and DeFi Participants
Institutional traders and DeFi protocols face uncertainty pending resolution of bracketed provisions. Their regulatory status will depend on future rulemaking or additional legislation. The final treatment of institutional exemptions will determine whether sophisticated participants may operate under modified requirements or must meet the same standards as retail intermediaries.
Consumers and Investors
Retail customers would receive uniform safeguards through segregation of assets, standardized disclosures and limits on conflicts of interest. The statutory recognition of self-custody clarifies that individuals may hold assets directly. Compliance costs could narrow the field of exchanges to those with sufficient capital and infrastructure.
Path Forward
The sponsors have requested stakeholder and industry feedback before introducing formal legislation. Coordination between the Agriculture and Banking Committees will be necessary, as the measure covers both commodities and financial services jurisdiction.
Alignment with the House-passed CLARITY Act is expected to shape negotiations. The final version will depend on resolving definitional disputes, DeFi treatment and developer classification, along with securing funding for CFTC implementation.
Summary
The Bipartisan Market Structure Discussion Draft outlines a unified federal regime for digital commodity spot markets. It grants the CFTC jurisdiction, establishes registration categories for exchanges, brokers, and dealers, and enforces customer protection standards modeled on existing futures regulation. It defines qualified custodians, codifies self-custody rights and provides funding authority for expanded oversight.
Significant portions remain open to negotiation, including DeFi, developer treatment and institutional exemptions. The proposal signals Congress’s direction toward a centralized, CFTC-led structure for digital asset markets, emphasizing consumer protection, market integrity and interagency coordination.
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