Senate Republicans Release Updated Crypto Market Structure Text

On July 22, 2026, Senate Republicans released their latest version of the Digital Asset Market Clarity Act ("Senate version"), marking another step in Congress's effort to establish a comprehensive federal regulatory framework for digital assets. The Senate version merges the work of the Senate Banking Committee substitute text and the Senate Agriculture Committee's Digital Commodity Intermediaries Act, and largely preserves the core frameworks from both committees. This note sets forth the notable changes and additions from the committee bills. The Senate version largely preserves the Senate Banking Committee framework while adding new provisions on ancillary assets, AI innovation labs, law enforcement, and investor protection; expands the Commodity Futures Trading Commission (CFTC) registration framework to digital commodity pool operators, digital commodity trading advisors, and their associated persons; replaces the prior provisional registration approach for digital commodity exchanges, brokers, and dealers, with a notice of intent process; and includes new ethics restrictions.

Senate Banking Committee Framework Largely Preserved with New Additions

Much of the Senate Banking Committee's substitute text is included in the Senate version, most notably with regard to stablecoin yield, DeFi risk management, protection for software developers and customers, and tokenization. However, the Senate version includes additional provisions relating to the ancillary asset structure, artificial intelligence (AI) innovation labs, law enforcement and consumer protection, and other rulemaking areas.

The network token and ancillary asset structure set forth in the Senate Banking Committee's substitute text remains intact in the Senate version. It also adds protections for decentralized governance systems by directing the Securities and Exchange Commission (SEC) to focus on activities relevant to actual control of a distributed ledger system when determining whether persons are acting in concert. The Senate version would also require the SEC to adopt rules addressing insider trading involving ancillary assets, including trading by control persons, persons acting on behalf of an ancillary asset originator, and those possessing material nonpublic information.

New provisions relating to AI innovation labs were also added to the Senate version. This section requires the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, the National Credit Union Administration, and the Federal Housing Finance Agency to establish or identify a division of their agency that will serve as an AI innovation lab. The labs are to enable regulated entities to experiment with AI test projects without unnecessary or unduly burdensome regulation or enforcement. After one year of enactment, a regulated entity can apply to the appropriate financial regulatory agency to engage in an AI test project. Applicants would have to demonstrate that their respective projects promote innovation while maintaining appropriate safeguards for Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) compliance, consumer protection, and financial stability. This provision may be important for banks, fintech companies, and other regulated financial entities seeking to test AI-enabled financial products or compliance tools as it creates a process for regulators to consider alternative compliance strategies while preserving AML/CFT, consumer protection, and financial stability safeguards.

Finally, the Senate version sets forth an investor and consumer protection provision preserving existing private rights of action and federal and state enforcement authority for fraud, manipulation, deceptive practices, and similar misconduct. Separately, the Senate version adds several law enforcement focused provisions, including measures addressing elder fraud, grants for state and local digital asset enforcement programs, law-enforcement training initiatives, a digital asset cyber innovation center, and compliance with lawful orders requiring stablecoin reissuance. These provisions address concerns that a federal digital asset regulatory framework could weaken existing anti-fraud, consumer protections, or law enforcement tools.

Expansion of CFTC Framework for Digital Commodity Intermediaries

The Senate version also expands upon the Senate Agriculture's bill by addressing digital commodity pool operators and digital commodity trading advisors, moves registration from a provisional regime to a notice of intent process, and includes explicit federal preemption provisions.

The Senate version creates a new regulatory framework for digital commodity pool operators and digital commodity trading advisors, as well as their associated persons. The Senate version defines a "digital commodity pool" as any investment trust, syndicate, or similar form of enterprise that is operated for the purpose of trading in a digital commodity but does not include eligible contract participants or decentralized governance systems. It also creates a registration category for digital commodity pool operators and associated persons, while excluding persons whose digital commodity activity is solely incidental to a commercial enterprise, such as payments, custodial services, or to hedge commercial risk. Digital commodity trading advisors, who are generally persons who, for compensation or profit, advise others regarding digital commodity trading, and their associated persons, are also required to register. The CFTC is to promulgate rules to provide appropriate exemptions for digital commodity pool operators and digital commodity trading advisors to provide relief from duplicative, conflicting, or unduly burdensome requirements or to promote responsible innovation. This change is notable because it extends the registration requirements beyond trading platforms and intermediaries to those managing digital commodity trading vehicles or providing compensated trading advice. Firms operating in, or adjacent to, those business models should assess whether they fall within these new registration categories or quality for an exemption.

The Senate version also replaces the earlier provisional registration approach set forth by the Senate Agriculture Committee with a notice of intent to register process. This may provide a more streamlined path to registration and reduce the need for duplicative registration processes. Digital commodity exchanges, brokers, and dealers can file a notice of intent with the CFTC while the CFTC develops rules for filing notices of intent to register. Firms operating under a notice of intent would be required to disclose information relating to their management and operations and would have to comply with specified customer protection, financial responsibility, cybersecurity, and operational resilience requirements during the transition period. Firms that file a notice of intent to register may continue to offer, solicit, trade, execute or otherwise deal in any digital asset before filing a notice until 180 days after the effective date of the CFTC's final rules for registration of digital commodity exchanges, brokers, or dealers. Firms already registered with the CFTC as a designated contract market, futures commission merchant, or swap dealer, shall be registered as a digital commodity exchange, broker, or dealer provided that it files written notice with the CFTC. However, if a digital commodity broker or dealer is already registered with the CFTC as a digital commodity exchange, the National Futures Association's (NFA) authority will not extend to the business or obligations as a digital commodity exchange.

The Senate version also requires the NFA to conduct rulemaking within 180 days after enactment relating to conflicts of interest, customer disclosures, financial responsibility, operational resilience, cybersecurity, and protection of customer assets. The CFTC will be required to propound rules on the minimum requirements for disclosure, recordkeeping, margin financing arrangements, rehypothecation, capital, reporting, business conduct, documentation, and supervision of employees and agents. Additionally, the CFTC would be required to propound rules on the mitigation of financial stability risks arising from the extension and maintenance of credit on digital assets. The CFTC is also to engage in joint rulemaking with the SEC on ancillary asset manipulation rulemaking, disqualification provisions, dual-registered entities, and to enter a Memorandum of Understanding with the SEC to ensure non-duplicative supervision and enforcement of dually registered entities and to allow for appropriate information sharing between the two agencies.

Explicit federal preemption sections are also included in the Senate version, which provides the CFTC with exclusive jurisdiction over registered digital commodity intermediaries. State or local authorities would still be able to bring enforcement action against a registrant or non-registrant for fraud, deceit, manipulation or other violation of the Commodity Exchange Act or state or local law. This provision is likely to be important to those firms seeking a more uniform federal regulatory framework for digital assets.

New Ethics Restrictions

The Senate version also includes a new ethics package that prohibits covered public officials, employees, and their spouses from issuing or sponsoring a digital asset in exchange for consideration during the covered period. A covered individual would not be deemed to violate these provisions if the individual places any direct interest in a digital asset issued or sponsored before the applicable period is placed in a qualified blind trust, divests the direct interest, or both. Enforcement would rest with the U.S. attorney general rather than state attorney generals. The ban set forth in these ethics provisions sunsets after January 20, 2029.

For market participants, the ethics provisions may affect token listing diligence, internal policies, and risk assessments involving digital assets associated with covered individuals. The ethics package is also likely to be one of the most politically sensitive portions of the Senate version and may affect whether the bill can obtain sufficient bipartisan support.

The most controversial part of the ethics package appears to be the inclusion of enforcement authority by state attorneys general. Because such language creates the possibility of state enforcement of a federal statute and would almost certainly result in litigation against the Administration, it is difficult to see how such language could form the basis for a compromise. Senate leadership has been working to get a vote on the bill before the August recess and some commenters have pointed to a 1989 Opinion from DOJ's Office of Legal Counsel justifying the president calling the Senate back into session during the August recess.

At the same time, SEC Chair Paul Atkins has noted that the SEC is "ready, willing and able" to issue rules that touch on the same issues covered by the CLARITY Act, but that CLARITY is needed in order to "future proof" the digital markets so that they have clear direction going forward.

What Comes Next

The Senate version provides for effective date of 360 days after enactment, with certain rulemaking-linked provisions taking effect 360 days after enactment or 60 days after publication in the Federal Register. The ethics provisions have their own timing provision with the ban sunsetting on January 20, 2029. The Senate version is significant because it reflects continued movement toward a comprehensive federal regulatory framework while leaving several important issues subject to further negotiation. The legislation must still be considered by the full Senate and, if passed, reconciled with the House's CLARITY Act. The ethics provisions, however, may remain one of the biggest hurdles to overcome, especially given the limited amount of time before the midterm Congressional elections.

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Elizabeth Davis and Stephen Gannon are partners in the financial services group in the Washington, D.C., office of DWT. For any questions or more insights, please reach out to the authors or another member of our financial services team and sign up for our alerts.