Democrats Consider New Bill for Crypto Market after Winning Midterms

Democratic lawmakers are considering a comprehensive cryptocurrency market regulation proposal when the next U.S. Congress begins, potentially bringing back several measures that were excluded from earlier negotiations over the CLARITY Act.

Crypto reporter Eleanor Terrett disclosed the discussions in a post on X, saying the proposed legislation would build on a consumer and investor protection amendment previously put forward during House deliberations on the bill.

According to Terrett, the initiative could bring together Democratic proposals rejected during House proceedings and provisions developed through negotiations between Senate Republicans and Democrats before the legislation stalled in September.

Among the measures being considered is an expanded supervisory role for the SEC, potentially reducing the regulatory responsibilities assigned to the CFTC. Lawmakers may also introduce tighter ethics requirements aimed at preventing President Trump and other government officials from conducting private commercial activities connected to digital assets.

Republican lawmakers have reportedly dismissed the proposed bill as a potential messaging exercise, indicating that its primary purpose could be to communicate Democratic policy priorities rather than achieve immediate agreement across party lines.

The move comes after Democrats secured victories in the Nov. 3 midterm elections, gaining majorities in both chambers of Congress. The party is scheduled to assume control in January next year, opening the door to a substantial shift in the direction of federal crypto policy.

Under Republican leadership, Congress had advanced several significant digital asset initiatives, including the GENIUS Act.

Republicans also drove the CLARITY Act through the House, with Representative French Hill serving as its sponsor. The measure secured approval in July last year, receiving support from all 216 GOP members and 78 Democratic votes. Its central objective was to establish clearer regulatory boundaries for digital assets and determine how responsibilities should be divided between CFTC and the SEC.

However, discussions in the Senate encountered disagreements over decentralized finance, regulatory jurisdiction, banking industry concerns, and safeguards against conflicts of interest.

Democrats maintained that the proposal lacked sufficient protections against potential financial conflicts involving senior public officials. Additionally, banking organizations raised concerns that cryptocurrency platforms offering customer rewards could encourage consumers to move money away from conventional financial institutions.

Republicans subsequently published an updated version in September, claiming it incorporated 126 substantial modifications requested by Democrats. Despite those changes, the Senate rejected a procedural motion on September 15 by a 49-50 vote.

With Democrats preparing to lead both congressional chambers, their next legislative effort could prioritize stronger consumer safeguards, broader SEC supervision, and stricter rules governing financial interests held by public officials.

Industry players like Marathon Digital Holdings Inc. (NASDAQ: MARA) will be watching to see whether next year ushers in progress in enacting enabling laws for the crypto industry.

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