U.S. Senator proposes crypto regulation bill: CFTC gains dominance, SEC's authority faces transfer

In early November 2025, U.S. Senate Agriculture Committee Chairman John Boozman (Republican from Arkansas) and Senator Cory Booker (Democrat from New Jersey) jointly announced a bipartisan draft bill for cryptocurrency regulation, proposing to transfer the authority over digital asset market structure regulation from the U.S. Securities and Exchange Commission (SEC) to the Commodity Futures Trading Commission (CFTC).

The draft classifies most cryptocurrencies as digital commodities, requiring issuing companies to register certain activities and establish new disclosure rules, while also authorizing the CFTC to impose fees on certain transactions. Although the Trump administration supported a regulatory framework led by the smaller CFTC, Democrats expressed concerns about the agency’s lack of sufficient resources and expertise. The draft also contains disagreements over decentralized finance (DeFi) and anti-money laundering (AML) provisions. If ultimately enacted, this would represent a significant overhaul of the U.S. cryptocurrency regulatory framework, providing clearer compliance pathways for the industry.

Core Content of the Draft and Redistribution of Regulatory Power

The Boozman-Booker draft marks a key development in U.S. cryptocurrency legislation, primarily redefining the jurisdiction over digital assets. Under the draft, the CFTC would be granted comprehensive oversight of the crypto market structure, including registration management of trading platforms, brokers, and custodians. Most tokens would be classified as digital commodities rather than securities—this classification directly diminishes the SEC’s authority based on the Howey test.

The draft also requires issuers to submit registration statements to the CFTC before token sales and to establish disclosure systems similar to those for traditional securities, covering project background, technical risks, and tokenomics. Notably, the draft authorizes the CFTC to levy a 0.02% transaction fee on exchanges with over $5 billion in annual trading volume, potentially raising $120-150 million annually to bolster enforcement capabilities. This shift in regulatory authority reflects longstanding industry lobbying efforts favoring a rulemaking body more familiar with derivatives and commodities—namely, the CFTC—over the enforcement-focused SEC.

Political Landscape and Legislative Process Analysis

Advancing this draft faces complex political negotiations, requiring approval from both the Senate Agriculture Committee and the Banking Committee. Currently, Senate Banking Committee Chair Tim Scott (Republican from South Carolina) has prioritized market structure legislation this year and welcomed the Boozman-Booker draft, but Democratic support remains uncertain.

Given that the CFTC currently has only Acting Chair Carolyn Maloney (Republican), the draft calls for bipartisan nominations and ensuring the agency is “appropriately staffed” to carry out new responsibilities. Based on voting math, if all 49 Republican senators support the bill, at least 7 Democrats would need to vote in favor to prevent filibuster, indicating Democrats’ influence in Senate negotiations is greater than in the House, which passed a similar bill earlier this summer with support from over 70 Democrats. The final fate of the draft may hinge on compromises over DeFi and AML provisions, with some Democrats advocating for stricter regulation, while industry groups and Republicans favor minimal intervention.

Key Elements of the CFTC Regulatory Power Shift

• Regulatory Agency Shift: SEC → CFTC
• Token Classification: Mostly as Digital Commodities
• Registration Requirements: Issuers must submit statements to CFTC
• Transaction Fees: 0.02% (for exchanges with >$5 billion annual volume)
• Estimated Funding: $120-150 million/year
• CFTC Composition: Bipartisan nominations required
• DeFi & AML: No consensus yet

CFTC Capacity Building and Industry Response

The CFTC’s regulatory capacity is a focal point of debate. Currently, the agency has only one commissioner and an annual budget of $320 million, far below the SEC’s $2.4 billion. Senator Booker explicitly expressed concerns about the “lack of resources and bipartisan commissioners” at the CFTC, prompting the draft to propose adding 200 full-time crypto regulators and establishing a $50 million technology modernization fund.

Industry groups are optimistic about the draft’s progress. Kim Ji-hoon, CEO of the Crypto Innovation Council, stated, “The bipartisan discussions in the Senate Agriculture Committee mark meaningful progress toward establishing a comprehensive, fit-for-purpose digital commodities market framework.” However, consumer advocacy groups warn that the CFTC’s traditional commodity oversight model may be ill-equipped to handle the unique risks of crypto markets, such as algorithmic stablecoin collapses or cross-chain bridge hacks. Historically, since classifying Bitcoin as a commodity in 2015, the CFTC’s main regulatory actions have focused on futures markets, with limited experience overseeing spot trading.

Disputes and Challenges over DeFi and AML Provisions

The most contentious parts of the draft involve DeFi and AML provisions, which could pose major obstacles to legislation. DeFi protocols utilize blockchain smart contracts to provide financial services without intermediaries, but some Democrats argue that their anonymity could facilitate money laundering and sanctions evasion, demanding greater compliance responsibilities for protocol developers. Conversely, Republicans and industry representatives advocate preserving DeFi innovation, suggesting regulation should target only front-end user interfaces rather than underlying protocols.

In late October 2025, crypto industry leaders lobbied Congress, engaging mainly with Democratic senators on balancing DeFi and AML provisions. Regarding AML, the draft currently does not specify whether self-custodied wallet owners must undergo identity verification, which diverges from Financial Action Task Force (FATF) recommendations. Overly strict provisions could push some DeFi projects offshore, while overly lax rules might draw opposition from the Financial Crimes Enforcement Network (FinCEN).

Market Impact and Future Outlook

If the Boozman-Booker draft becomes law, it could have profound effects on the crypto market. Clear regulatory guidance is expected to attract more institutional investors, especially pension funds and insurance companies deterred by current uncertainties. Structurally, CFTC oversight could promote standardization among crypto exchanges, such as segregating customer funds, implementing real-time trading surveillance, and conducting periodic stress tests.

In the short term, the draft’s progress may boost market sentiment, especially for tokens currently classified as securities by the SEC. Long-term, a unified federal regulatory framework could reduce state-level regulatory fragmentation and lower compliance costs. Investors should monitor three key points: the Senate Agriculture Committee hearings, negotiations in the Banking Committee, and the confirmation of Trump’s nominee for CFTC Chair. Despite uncertainties, this draft signals a strategic shift by the U.S. in the global digital asset race, aiming to balance innovation with investor protection.

Conclusion

The Boozman-Booker draft represents a milestone in U.S. cryptocurrency regulation, primarily shifting oversight authority from the SEC to the CFTC and establishing a unified market framework for digital commodities. While political disagreements, capacity building at the CFTC, and DeFi regulation remain challenges, the process underscores industry’s urgent demand for clear rules. If successfully enacted, it could reshape America’s position in the global digital asset landscape and lay the groundwork for broader institutional adoption.