Insights

Senate Ag Committee Releases Updated Crypto Market Structure Legislative Text

Updated legislative text incorporates much of Senate Ag's earlier discussion draft and focuses more narrowly on digital commodity intermediaries.

By Elizabeth Lan Davis and Stephen T. Gannon

01.28.26

On January 21, 2026, Chairman John Boozman of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry ("Senate Ag") released updated legislative text on crypto market structure entitled the "Digital Commodity Intermediaries Act." In November 2025, Senate Ag previously issued a bipartisan discussion draft building upon the Digital Asset Market Clarity Act of 2025 ("CLARITY Act") passed by the House of Representatives last July. The updated Senate Ag legislative text, while not bipartisan like the discussion draft, takes on much of Senate Ag's earlier discussion draft and focuses more squarely on digital asset intermediaries, but still leaves open the treatment of DeFi protocols. This note discusses the main differences between the updated legislative text and Senate Ag's discussion draft that we previously summarized and analyzed.

Definitions

Senate Ag's earlier discussion draft left open a number of key definitions that were bracketed and subject to further negotiations. The brackets have come off and the updated legislative text now incorporates definitions relating to blockchain and decentralized finance from the House's CLARITY Act, and includes exclusions found in the Senate Banking Committee's bill for a person or group of persons under common control or an agreement to act in concert with respect to decentralized governance systems. Additionally, the legislative text folds in network tokens and certain ancillary assets, which were in the Senate Banking Committee's recently released bill, as digital commodities. The legislative text maintains the same exclusions from the discussion draft's definition of a digital commodity, i.e., any security, security derivative, permitted payment stablecoins, banking deposits, commodities, pooled investment vehicles, and collectibles (but allows the CFTC to determine whether mass-minted series of items that are substantially similar, marketed and sold interchangeably, and speculative in nature are digital commodities). Notably, memecoins have been added to the definition of a digital commodity.

Other issues previously bracketed in the discussion draft relating to the treatment of decentralized finance protocols and noncontrolling blockchain developers, registration of commodity pool operators and commodity trading advisors, and provisions relating to the Bank Secrecy Act and anti-money laundering are not addressed by the updated legislative text.

Rulemaking

The legislative text preserves the requirement for joint rulemaking by the SEC and CFTC for exchanges and intermediaries, mixed digital asset transactions, portfolio margining transactions, and conflicts of interest (which were previously bracketed) that were in the discussion draft. However, the legislative text adds rulemaking on the process to delist an asset for trading, as well as on leveraged, margined, or financed retail digital commodity transactions. The legislative text maintains the global rulemaking timeframe for rules and regulations to be promulgated no later than 18 months after enactment.

Registration Framework

While preserving the registration regime for digital commodity exchanges, digital commodity brokers, and dealers that was set forth in the discussion draft, the updated legislative text now provides for expedited registration and provisional status with the CFTC. This expedited registration process would take no later than 180 days after enactment, with those registered entities to remain in provisional status until 270 days after the final effective date of the rulemaking. Those in provisional status would be permitted to conduct digital asset transactions before the date of registration until the rulemaking on definitions is completed and effective. Designated contract markets and futures commission merchants already registered with the CFTC would not be required to re-register as long as written notice is provided to the CFTC (and for future commission merchants, and any self-regulatory organization they are a member of). Entities contemplating becoming a digital commodity exchange, broker, or dealer should consider registering with the CFTC now before CFTC staff gets bogged down with rulemaking and registrations end up stuck in a long queue.

For digital commodity exchanges, the legislative text maintains the prohibition on digital commodity exchanges from acting as a counterparty for their own account, but now includes an exception that would allow a digital commodity exchange to trade for its own account as long as the trading is not solely for profit. The exception includes transactions entered at the direction of an unaffiliated customer, the provision of liquidity, and risk-mitigation hedging. Further rulemaking will establish the appropriate requirements for the use of these exceptions. Digital commodity exchanges would also be required to establish policies and procedures to permit trading in a digital commodity only if disclosures have been filed with the SEC and similar information relating to the ongoing development plan of the blockchain system is provided to the public. While digital commodity exchanges would be required to hold customer digital assets with qualified digital asset custodians, the CFTC would have the ability to exempt digital commodity exchanges if doing so would be consistent with the public interest and the exemption would not have a material adverse effect on the CFTC or the exchange's ability to discharge its regulatory or self-regulatory duties. Foreign digital commodity exchanges can also be exempted from registration for two years if the foreign exchange is subject to comparable, comprehensive supervision and regulation in its home country. The legislative text also contains a provision for the appointment of a trustee upon application by the CFTC to a federal district court in the event of a suspension, revocation, or withdrawal of the registration of the digital commodity exchange. This seems to be a nod toward the prior FTX bankruptcy proceeding and could raise potential overlap for digital commodity exchanges who find themselves in bankruptcy. The legislative text also keeps the federal preemption section providing the CFTC with exclusive jurisdiction over any registered digital commodity exchange with respect to its activities and transactions.

Similarly, the federal preemption provision in the legislative text gives the CFTC exclusive jurisdiction over any registered digital commodity broker or dealer, and enables the CFTC to exempt digital commodity brokers or dealers if the exemption would be consistent with public interest and not have a material adverse effect on the CFTC to discharge its self-regulatory duties, or if the digital commodity broker or dealer is subject to comparable, comprehensive supervision and regulation in its home country. Additionally, the legislative text provides that digital commodity brokers and dealers can hold digital commodity customer assets in a portfolio margining account carried as a futures account or cleared swaps account, or an SEC-approved securities account. The legislative text also addresses participation in "blockchain services," which presumably encompasses staking and the provision of liquidity, by digital commodity brokers and dealers. Policies and procedures should be implemented to address this additional responsibility.

Developer Protections and Resources

While the discussion draft's bracketed section relating to the treatment of noncontrolling blockchain developers is excluded from the legislative text, a software developer protection section has been added. Software developers engaging in activities in connection with the operation of a blockchain system or decentralized finance trading protocol, such as compiling network transactions, providing computation work, and/or providing a user-interface enabling a user to read and access data about a blockchain system, are excluded from coverage. However, those developers still may be subject to the anti-fraud, anti-manipulation, or false reporting enforcement.

In the "Resources for Implementation" section, the legislative text now specifies that fees are to be collected from registered digital commodity brokers and dealers, digital commodity exchanges, and qualified digital asset custodians on the filing of their initial registration application and then annually. This specification is especially notable as it distinguishes those digital asset registrants from market participants in the agricultural and energy sectors, who are also within the CFTC's jurisdictional mandate.

Conclusion

The updated legislative text relies heavily upon Senate Ag's discussion draft and maintains its focus on digital asset intermediaries. While the legislative text shies away from the treatment of decentralized trading protocols as compared to the recent Senate Banking Bill, the legislative text shows some initial signs of incorporating portions of the Senate Banking Bill. The legislative text also provides a nod to the House's CLARITY Act by providing for expedited registration and provisional status for digital commodity brokers, dealers, and exchanges.