By Hannah Lang Jan 13 (Reuters) – U.S. senators late Monday night unveiled draft legislation that would create a regulatory framework for cryptocurrency that, if signed into law, would clarify financial regulators' jurisdiction over the burgeoning sector, potentially boosting digital asset adoption. The crypto industry has long pushed for such legislation, oftentimes arguing that it is existential to the future of digital assets in the U.S. and necessary to fix core, longstanding problems for crypto companies. Among other things, the legislation would define when crypto tokens are securities, commodities or otherwise, giving the industry long-hoped-for legal clarity. It would also give the U.S. Commodity Futures Trading Commission — the industry's preferred regulator, as opposed to the U.S. Securities and Exchange Commission — authority to police spot crypto markets. The banking industry is seeking fixes to 2025 crypto legislation that created a federal regulatory framework for dollar-pegged crypto tokens called stablecoins. At the time, bank lobbyists had urged Congress to close what they deemed a loophole in the bill that allowed intermediaries to pay interest on stablecoins. Banks have argued this would lead to a flight of deposits from the insured banking system, potentially threatening financial stability. "Trillions of dollars could be displaced from community financial institutions, weakening the financial fabric of towns and neighborhoods nationwide," the American Bankers Association, the country's largest lobby group, and other financial trade groups warned in a letter to Congress on Monday. Crypto companies have fought back against that assertion, contending that prohibiting third parties — such as crypto exchanges — from paying interest on stablecoins would be anti-competitive. Trump courted industry cash pledging to be a "crypto president," and his family's own crypto ventures have helped to propel the sector into the mainstream. The crypto industry spent heavily in the 2024 elections to promote pro-crypto candidates in the hopes of getting this landmark market structure bill across the line. The House of Representatives passed its version of the bill in July, but talks stalled in the Senate last year, with lawmakers divided over provisions on anti-money-laundering and requirements for decentralized finance platforms, which allow crypto users to buy and sell tokens without an intermediary, according to three sources familiar with discussions. With Congress already pivoting to focus on the 2026 midterm elections, in which the Democrats could take the House, some lobbyists are skeptical that the crypto market structure bill could make it into law. That would leave crypto firms to rely on regulatory guidance that could be overturned under a future administration, industry executives have said. (Reporting by Hannah Lang in New York; editing by Michelle Price)
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