Consumer Protection Law Becomes Central Point of Controversy Around New Crypto Market Structure Legislation

The crypto industry is at a critical moment in the negotiation of US legislation in the field of digital assets. The main issue that divided lawmakers along party lines was whether to include in the draft law the comprehensive consumer protection provisions that the Democrats insist on. This latest standoff signals that the final version of the crypto market structure law could be passed without a bipartisan majority, making it difficult to pass through the Senate.

Crypto industry officials are gearing up for the new U.S. crypto market legislation to be a predominantly Republican project, according to information received from insiders familiar with the situation. The Senate Agriculture Committee, which is now leading the consideration of an alternative version of the law, is waiting for the text of the document - it was supposed to be ready by Wednesday this week. However, crypto lobbyists continue to express concern that Democrats may not support this legislative option.

Democrats’ demands: consumer protection as an inviolable condition

Democratic senators have identified several key conditions for their support for the new market structure law. At the head of these demands is a comprehensive consumer protection law that would establish clear rules for crypto platforms on disclosure, asset security, and trading transparency. In addition, Democrats are pushing for anti-corruption regulations that would prohibit high-ranking regulatory officials from personally profiting from the crypto industry.

These requirements reflect the range of concerns that Democratic lawmakers express about the potential risks to ordinary investors. Representatives of this party also demand that the White House fill commission positions in regulatory bodies by members of both parties, including the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).

Alternative versions of the law: agrarian version as opposed to banking

The Senate Agriculture Committee is preparing its own version of the crypto market structure law as an alternative to the version the Banking Committee has been working on. Although both committees try to regulate the same area, their jurisdictions are different: the banking version focuses more on securities, while the agrarian version regulates goods.

Cryptocurrencies, however, cover both of these sectors, which means that both committees must approve one version before the bill can move to a general vote. The agrarian version is more focused on regulating the commodity segment of the crypto market, touching less on the Democrats’ weighty issues of illegal finance and special requirements for stablecoins, which caused heated debates during banking negotiations.

Geo-party split: will there be support from the Democrats?

However, if the bill is taken out of committee without a bipartisan majority, it will create serious difficulties in finally passing through the entire Senate. Under House rules, the legislation requires the support of at least seven Democrats — a threshold majority that is supposedly harder to gain if party boundaries become ironclad.

Industry experts note that the crypto industry is already investing hundreds of millions of dollars in lobbying and pressuring lawmakers in the hope of passing a law on the market structure of crypto. Republican-only guaranteed votes could jeopardize the long-term regulatory goal to which crypto analysts have devoted years of planning. A general lack of bipartisan support can also weaken the credibility of any enacted regulations in court cases and in implementation.

Committee on Agriculture and Bipartisan Hope

Despite the concerns, Senate Agriculture Committee Chairman John Boozman has become famous for his reputation for bipartisan cooperation. He has repeatedly expressed his commitment to promoting the market structure law this month, praising his “great partner” — Democratic Senator Cory Booker. The timetable provides for an order and a vote by the end of January, which provides some transparency in considering the nuances of the draft law, which is designed to provide clarity and confidence to crypto markets.

“This timeline provides transparency and allows for a thorough review of all aspects as the committee moves forward with legislation that will provide clarity and certainty for the crypto markets,” Boozman stated, signaling confidence in the bipartisan outcome.

Administrative pressure and time requirements

President Donald Trump has increased pressure to pass the crypto market structure law with his statements in Switzerland, where he announced his intention to sign the bill into law as soon as it is approved by the Senate. White House crypto adviser Patrick Witt has already shared his optimism on social media, writing that the passage of the law is a matter of time, not opportunity.

“Relying on a multi-trillion-dollar industry to continue to operate without a comprehensive regulatory framework is a fantasy,” Witt said. The administration clearly understands the need to create a full-fledged regulatory framework for digital assets with sufficient consumer protection and other safeguards.

Competing priorities: committees, versions, and red lines

The Banking Committee made its first attempt to draft a law on the crypto market structure last week, however, the effort collapsed under pressure from numerous factors: dissatisfaction from Democrats, resistance from some Republicans, rebellion from the administration, pressure from bank lobbyists, and, ultimately, the failure to secure support for Coinbase — the leading American crypto exchange.

Now the helm is in the hands of the Committee on Agriculture, which intends to develop its own version. However, even within this committee, internal contradictions arise. One of its members, Senator Chuck Grassley, has called for the Justice Committee, which he chairs, to have a say on provisions to protect cryptocurrency developers from liability — a provision that many find controversial amid consumer protection requirements.

Anti-corruption norms and ethical obstacles

Banking Committee Chairman Tim Scott recently told the media that one of the Democrats’ main demands — an anti-corruption norm that prohibits high-ranking regulators from making personal profits from digital assets — should be considered separately in the House Ethics Committee. Scott noted that lawmakers from his committee are developing a standalone version of this norm for separate consideration.

This fragmentation of the consideration of the crypto market structure law reflects the broader problems of cryptocurrency regulation in the US. From consumer protection requirements to anti-money laundering, from decentralized finance (DeFi) regulation to stablecoin governance, every issue carries with it a complex of competing interests and political positions.

The Future of Market Structure Law: Uncertainty Remains

The release of the new draft legislation this week involves the start of discussions on the changes that lawmakers deem necessary. If the banking version of the law is any indicator, then this draft law will be said to contain dozens of so-called “red lines” and unacceptable conditions for various negotiators. This means that the path to the final adoption of the law on the market structure of crypto will be complex and uncertain.

In addition, the Digital Asset Market Transparency Act (a previous, significantly different version of which was passed in the House of Representatives last year) must overcome dozens of other obstacles. The process of coordination between the two committees, the integration of consumer protection requirements and anti-corruption regulations, as well as taking into account the positions of both parties — all this makes the task extremely difficult.

However, the Trump administration is showing determination to advance this initiative. The new CFTC chairman, Mike Selig, announced an ambitious crypto agenda during a joint event with SEC Chairman Paul Atkins on harmonization to demonstrate concerted efforts on digital assets. Selig has stated his intention to advance a number of CFTC policies, including definitions of cryptocurrencies and forecast markets, signaling the seriousness of the administration’s intentions.

As such, consumer law remains a key divergence in negotiations over the market structure of crypto. Its final form will determine not only the timing of the adoption of legislation, but also the level of protection for American investors in digital assets.