Negotiating the Structure of the U.S. Crypto Regulation Text: Agriculture Committee Presents Latest Proposal

The structure of the negotiating text regarding the supervision of the crypto market in the United States is entering a new phase. The Senate Agriculture Committee has released their own regulatory proposal that is separate from the version previously developed by the Banking Committee, creating two lines of complex legislative negotiations over how the cryptocurrency industry should be overseen by federal agencies.

Wednesday night, the working text of the Senate Agriculture Committee appeared public, with plans to hold a markup session—a chance for members to propose amendments—in the coming weeks. The move brings new hope to the crypto industry that has been lobbying for years for a clear regulatory framework, although the dreamed cross-party support has not yet fully materialized.

Two Versions of the Crypto Market Regulation Framework in the Senate

The ongoing legislative process features two different proposals that reflect different perspectives on the structure of the oversight text. The Agriculture Committee presented a more friendly version of the crypto industry, while the Banking Committee previously developed a more stringent approach with a focus on consumer protection.

The fundamental difference between these two versions lies in their regulatory priorities. The proposal from the Agriculture Committee takes a more coordinated approach to industry interests, particularly in determining how federal regulators can oversee the sector without burdening technological innovation. Instead, the Banking Committee’s proposal emphasizes more traditional financial protection and consumer security.

Agriculture Committee Chairman John Boozman stated in his official statement: “I appreciate Senator Cory Booker and his team for collaborating with us, providing careful input as we develop consumer protections and grant new authority to the CFTC.” He added, “While there are still differences on fundamental policy issues, this bill is an extension of our bipartisan discussion draft.”

In this context, the structure of the negotiating text has become an important instrument for bridging the gap between various interests—the crypto industry, banking institutions, and federal regulators.

Developer Protection and the CFTC’s Role in the Regulatory Architecture

One of the key features of the Agriculture Committee’s proposal is the protections afforded to cryptocurrency developers. According to the released text, prominent cryptocurrency developers will not be treated as fully regulated financial companies, as long as they do not control customer assets directly.

This decision reflects an effort to differentiate between developers of decentralized protocols and traditional financial service providers. However, to achieve this protection, developers must meet certain conditions that are still in the process of being negotiated in detail.

The proposal also increases the role of the Commodity Futures Trading Commission (CFTC) as the primary watchdog for spot markets such as Bitcoin—which is currently trading at $84.82K—that do not fall into the securities category. This shift marks a significant shift in the regulatory architecture, with the CFTC gaining broader authority to oversee the broader crypto ecosystem.

With this new supervisory structure, the CFTC will be responsible for ensuring the integrity of the spot market and protecting investors from manipulation or unfair practices, while the Securities and Exchange Commission (SEC) retains jurisdiction over assets categorized as securities.

Political Challenges: Barriers to Bipartisan Support in the Course of Legislation

Despite the desire from both sides to reach an effective regulatory agreement, this legislative process is moving forward without the substantial bipartisan support expected by the industry. The bill is increasingly seen as a Republican-driven initiative, with Democratic involvement limited to the desired level.

Democrats face some concerns about this proposal. First, they are concerned about the government’s unwillingness to appoint Democratic officials to key regulatory positions at the CFTC and SEC. Second, there are efforts to introduce an ethics ban that would prevent senior federal officials from personally benefiting from crypto investments.

Boozman acknowledged this challenge in his statement: “While it is unfortunate that we have not been able to reach an agreement, I am grateful for the collaboration that has made this legislation even better. It’s time for us to continue this bill.”

To pass the Senate, this final proposal would need the support of at least seven Democratic members. If such an achievement can be realized, predictions suggest that this proposal will be easily approved by the House of Representatives, given that it had previously passed a similar Digital Asset Clarity Act last year.

DeFi Perspectives and Consumer Concerns in Supervisory Structures

One of the biggest controversies regarding the structure of this negotiation text is its impact on decentralized finance (DeFi). From the beginning, one of the fundamental missions of the crypto industry has been to create a legal space for DeFi to operate without the regulatory burden that is difficult for such platforms to comply with.

However, Democrats are very concerned that DeFi entities will not provide adequate consumer protections. They argue that DeFi protocols and platforms should be regulated in a similar way to traditional financial firms—a requirement that DeFi proponents say is practically impossible to meet.

Coinbase, one of the largest crypto exchanges, has shown support for this proposal in certain aspects, particularly related to the topic of stablecoins. The controversy over stablecoins—whether they can provide returns to holders—has been a major battle within the Banking Committee, with banking lobbyists arguing that the feature would threaten the foundations of traditional deposit-taking in the United States.

The Agriculture Committee’s proposal avoids some of these most controversial topics, including stablecoin regulation and the question of how illegal finance should be managed in the crypto ecosystem, which is more suited to the Banking Committee’s responsibility.

Opportunities for Further Amendments and Negotiations

The scheduled markup session brings an opportunity for Democrats to propose amendments to amend the proposal before the primary vote. Additional opportunities will arise when the two versions of the bill—both from the Agriculture Committee and the Banking Committee—are brought together into one comprehensive draft for consideration by the entire Senate.

This process shows that the structure of the negotiation text in crypto legislation is very complex, involving a wide range of stakeholders with conflicting interests. The crypto industry will study the Agriculture Committee’s proposal in depth in the coming days to understand the detailed implications of each provision.

Patrick Witt, a senior crypto adviser to the White House, provided an optimistic perspective in his new statement: “It’s not a matter of if, but of when. Assuming that the multi-trillion dollar crypto industry will continue to operate without a comprehensive regulatory framework is just fantasy.”

Global Trends: Russia and the International Regulatory Framework

While legislative negotiations are underway in the United States, other countries are developing their own regulatory approaches to cryptocurrencies. Russia, for example, plans to introduce a comprehensive crypto market regulatory framework on July 1, 2027.

Under Russia’s regulatory plan, both qualified and unqualified investors will be allowed to buy cryptocurrencies, but with different rules. Qualified investors will have to undergo mandatory risk testing but will not be restricted in most purchases, while unqualified investors face stricter restrictions.

Russia’s central bank is expected to approve a shortlist of major cryptocurrencies—such as Bitcoin and Ethereum—for broad trading. At the same time, privacy coins such as Monero and Zcash will be banned, and unlawful crypto activities will be sanctioned on par with illegal banking.

These international developments show that the global trend is moving towards more structured and comprehensive regulation for the cryptocurrency industry. The structure of the negotiating texts being developed in various countries reflects efforts to balance technological innovation with consumer protection and financial stability.

Recent phenomena in the crypto industry also reflect the evolution of the broader ecosystem. Pudgy Penguins, for example, evolved into one of the most powerful NFT brands in this cycle, transforming from a speculative “digital luxury” to a multi-vertical consumer IP platform. Their strategy includes acquiring users through mainstream channels first, followed by onboarding to Web3 through games, NFTs, and PENGU tokens. The ecosystem now includes phygital products with retail sales of over $13 million and more than a million units sold, games that have been downloaded more than 500K times in two weeks, as well as tokens widely distributed to more than 6 million wallets.

A clear regulatory structure will be an important foundation for the industry’s sustainable growth in the future.