On November 20, U.S. Senate Agriculture Committee Chairman John Boozman (R‑AR) and Senator Cory Booker (D‑NJ) released a new bipartisan discussion draft to create a federal spot‑market regime for “digital commodities” under the Commodity Futures Trading Commission (CFTC). The proposal, which expands upon the CLARITY Act approved by the House in July, would give the CFTC exclusive jurisdiction over cash and spot trading in covered non‑security crypto tokens, establish registration frameworks for exchanges, brokers, and dealers, impose listing and public‑information standards, require qualified custody and strict segregation of customer assets, enhance retail protections, and clarify bankruptcy treatment of customer property.

A log of the changes between the original and new discussion drafts can be found here and a side-by-side redline can be found here.

Scope and Jurisdiction
At the center of the draft is a new definition of “digital commodity”: a fungible digital asset that can be exclusively possessed and transferred peer‑to‑peer without necessary reliance on an intermediary and is recorded on a cryptographically secured public distributed ledger. The definition expressly excludes digital assets that are structured as more traditional financial products, including securities and security‑derivatives, banking deposits and credit‑union accounts, and pooled‑investment‑vehicle interests, among others. Permitted payment stablecoins (defined in and governed by separate law) are also excluded. For assets meeting the definition — which would encompass the majority of non-stablecoin crypto tokens — the CFTC would have exclusive jurisdiction over spot and cash transactions executed on or by CFTC‑registered entities. “Mixed” trades of a digital commodity for a security would be addressed through joint Securities and Exchange Commission (SEC)–CFTC rules.

Registration Framework for Market Participants
The draft requires spot‑market intermediaries to register with the CFTC. Digital Commodity Exchanges must register if they offer markets in one or more digital commodities (with a limited single‑state venue carve‑out). Registered exchanges cannot act as counterparties and must satisfy core principles reminiscent of existing CFTC market structures for futures and swaps — market access, fair trading, surveillance, conflicts of interest controls, system safeguards, governance, and adequate financial resources. Digital Commodity Brokers and Digital Commodity Dealers must also register (with a possible de minimis and single‑state exemption) and satisfy capital, execution, pricing fairness, disclosure, recordkeeping, business‑conduct, and conflicts‑management standards. Associated persons of brokers and dealers would be subject to registration and fitness requirements.

Listing Standards and Public Information
Exchanges would only be able to permit trading in digital commodities “not readily susceptible to manipulation.” Before listing, exchanges must ensure standardized, plain‑language disclosures are publicly available and kept current, including source‑code availability, how to access and verify on‑chain transaction history (where feasible), token economics (issuance and supply, consensus mechanism, burn mechanics), governance processes, and trading volume/volatility. The CFTC must adopt rules that standardize and simplify these disclosures so that they can be understood by retail investors.

Custody, Segregation, and Conflicts
Digital Commodity Brokers and Digital Commodity Dealers receiving a customer’s digital assets must hold them with a “qualified digital commodity custodian.” That status can be met by federally- or state‑supervised banks and trust companies that satisfy minimum standards, or by a Commission‑registered custodian subject to comparable rules. The draft imposes strict segregation and misuse prohibitions; customer assets cannot be commingled with firm assets or used for the firm’s trades. It also contemplates opt‑in customer permissions (with enhanced disclosures) for using customer assets in yield-generating blockchain services such as staking, while barring firms from conditioning service on such permissions and preserving the customer’s right to decline.

Bankruptcy Clarifications
To reduce ambiguity seen in recent crypto insolvencies, where there has been extensive litigation over ownership of customers’ deposits, the draft expressly treats customer digital assets held by registered exchanges, brokers, and dealers as “customer property” under the Bankruptcy Code’s commodity‑broker provisions, with the goal of prioritizing customer recoveries and clarifying treatment of digital‑asset accounts and assets held in inventory.

Self‑Custody and Peer‑to‑Peer Protections
The draft preserves individuals’ rights to maintain hardware or software wallets and to engage in lawful, peer‑to‑peer transactions for personal use, subject to anti-money-laundering (AML) laws and sanctions. It also prohibits intermediaries from unilaterally using customer assets for blockchain participation absent express, informed opt‑in.

Stablecoins and the Securities Line
Certain “permitted payment stablecoins” are excluded from the digital‑commodity definition. When such stablecoins are traded on CFTC‑registered entities, the CFTC’s authority would be limited to regulating the offer, execution, solicitation, or acceptance of those spot transactions as if the instrument were a digital commodity, but without broader jurisdiction over the issuer or the operation of the stablecoin itself. Securities (and tokens that function as pooled investment vehicles) remain outside the CFTC’s purview and within the securities laws.

Implementation, Funding, and International Coordination
Most new obligations would be implemented through CFTC rulemakings on an approximate 18‑month schedule after enactment, with some provisions becoming effective later based on final rules. The CFTC would receive fee authority tied to registration and oversight of digital‑commodity entities, plus expedited hiring authority to build crypto market expertise. The draft encourages international coordination and information‑sharing while providing federal preemption over registered entity activities, preserving state authority to enforce fraud and deceptive‑practices laws.

Implications
For non‑security crypto assets, the latest discussion draft would put the spot market under a clear federal regulatory umbrella with a single primary regulator, the CFTC, while setting out a disclosure‑heavy, surveillance‑driven, and custody‑centric regime. Exchanges and intermediaries should anticipate rigorous listing diligence, standardized retail disclosures, enhanced surveillance and audit‑trail capabilities, strict segregation and qualified custody, governance separation with a dedicated chief compliance officer, and robust conflicts‑management, especially for vertically integrated groups. Token projects should expect listing decisions to hinge on manipulability risk and the availability of transparent, verifiable technical and economic information. Several important issues remain open for debate in the bracketed provisions of the draft (including decentralized finance (DeFi) coverage and certain AML text), and the SEC–CFTC line‑drawing for mixed transactions will require joint rules.

In July, Senate Banking Committee Chairman Tim Scott (R-SC), along with Senators Cynthia Lummis (R-WY), Bill Hagerty (R-TN), and Bernie Moreno (R-OH), released a discussion draft of the “Responsible Financial Innovation Act of 2025,” covering issues under the Banking Committee’s jurisdiction, along with a broad Request for Information. Senate Republicans on the Banking Committee have indicated they may hold a vote on the GOP-only proposal next week with the intention of trying to get it to the Senate floor early 2026, while Senate Agricultural Committee Chair Boozman has recently indicated a hearing is unlikely to occur until 2026. After each Committee completes its markup of their portions, the two drafts will be combined and reconciled into a single bill before any unified package moves to the Senate floor.