Senate Republicans Unveil Crypto Market Draft To Clarify Regulation

• Proposal introduces definitions, SEC mandates, and consumer protection measures.
• Industry stakeholders praise the effort as a necessary step toward resolving regulatory uncertainty.

On July 12, 2025, Reuters reported that Senate Republicans introduced a draft bill to resolve gaps in crypto regulation. Spearheaded by Senator Tim Scott, Ranking Member of the Senate Banking Committee, the proposal offers clear definitions and consumer protection measures while focusing on regulatory clarity and fostering innovation. The initiative builds upon the House-passed Financial Innovation and Technology for the 21st Century Act (FIT21) and reflects a growing bipartisan interest in addressing these regulatory gaps.

On July 12, Senator Cynthia Lummis, a co-sponsor of the draft legislation along with Senators Mike Crapo and French Hill, stated in an announcement that the proposal takes a "pragmatic and balanced approach" to end regulatory uncertainty. A key provision introduces an "ancillary asset" definition to clarify which digital assets do not qualify as securities under federal law. The proposal also instructs the Securities and Exchange Commission (SEC) to modify existing regulations to account for the unique characteristics of digital asset activities.

The draft also requires digital asset firms to provide consumer financial disclosures, mandates the separation of customer funds from corporate funds, and establishes standards to mitigate illicit financial activities. Furthermore, the legislation outlines responsible practices for banks and financial institutions that engage with crypto-related products and services.

This legislative effort follows notable lawmaking in the House, which passed the Financial Innovation and Technology for the 21st Century Act (FIT21), and industry leaders have welcomed the Senate proposal. For example, on July 12, Anchorage Digital CEO Nathan McCauley called it a "necessary step forward" in a statement. However, significant negotiations lie ahead, as Senate Democrats have signaled they will advocate for stricter safeguards, particularly targeting volatile digital assets like "stablecoins" and measures against illicit finance.

The Senate draft serves as a starting point for discussion, and lawmakers plan to gather input from stakeholders through a Request for Information. Bipartisan negotiations will likely shape the final legislation, which Senate Republicans aim to advance before the August recess.

According to CoinMarketCap on July 12 at 15:00 UTC, Bitcoin (BTC) was trading at $57,100, with its 24-hour trading volume having decreased by 3.5%. Meanwhile, Ethereum (ETH) was trading at $3,250, reflecting a 2.1% decrease within the same period.