House Democrats are discussing legislation for the next Congress that would expand the SEC’s role in cryptocurrency oversight. The approach could challenge the Republican-backed CLARITY Act’s
House Democrats are discussing a new cryptocurrency market structure bill that would give the Securities and Exchange Commission (SEC) greater oversight while narrowing the Commodity Futures Trading Commission’s (CFTC) role, according to journalist Eleanor Terrett.
SCOOP: House Democrats are discussing plans to expand the Crypto Investor and Consumer Bill of Rights, @RepMaxineWaters’ amendment to the Clarity Act in 2025, into a broader crypto “market structure” bill next Congress.
The proposal would fold in Democratic Clarity Act provisions originally offered by Waters in the House (which were not adopted), as well as provisions Senate Democrats were able to agree to with Republicans before the September cloture vote, according to three industry sources who have spoken with Democratic staffers.
Some of the proposals under discussion are said to include giving the @SECGov more of a role in supervising the crypto markets, and a more limited role for the @CFTC. Additionally, it’s likely that further ethics provisions will be offered to restrict the crypto activities of President Trump and other federal officials.
Republicans are calling this a “messaging bill.”
— Eleanor Terrett (@EleanorTerrett) November 4, 2026
The initiative would build on Representative Maxine Waters’ 2025 Crypto Investor and Consumer Bill of Rights and could include restrictions on cryptocurrency activities involving President Donald Trump and other federal officials.
Republicans have reportedly dismissed the discussions as an effort to produce a messaging bill, suggesting that the proposal may face significant opposition before formal negotiations begin.
No finalized legislative text has been made public. The reported discussions therefore indicate Democratic priorities rather than confirmed statutory provisions.
The existing CLARITY Act (H.R. 3633) provides the clearest comparison.
The Republican-backed legislation establishes a regulatory framework distinguishing digital commodities from digital asset securities. It would expand CFTC authority over qualifying digital commodity markets while preserving SEC oversight of securities-related transactions.
A Democratic alternative favoring the SEC could narrow that division, although the precise changes remain unknown.
The distinction matters because token classification and intermediary regulation are separate legal questions.
For cryptocurrency exchanges, the treatment of secondary-market transactions determines which assets can be traded under particular registration requirements. A token initially distributed through an investment contract does not necessarily make every subsequent transaction a securities transaction.
For staking providers, the legal treatment may depend on how customer assets are pooled, whether rewards are promised and what responsibilities the service provider assumes.
Decentralized finance introduces another complication. Legislation must determine whether developers, interface operators or governance participants qualify as regulated intermediaries before imposing registration and compliance obligations.
Ethereum and Solana illustrate why these distinctions matter commercially. Their ecosystems include spot trading, staking services and decentralized applications, each involving different activities and potential regulatory responsibilities.
An expanded SEC mandate would not automatically classify ETH, SOL or every associated protocol as a security.
The Congressional Research Service has examined the market structure framework and the proposed allocation of regulatory responsibilities. The practical consequences of any Democratic alternative will depend on the actual statutory definitions and exemptions.
Waters previously sought to amend the CLARITY Act with additional consumer protections.
Her Crypto Investor and Consumer Bill of Rights proposed safeguards covering customer assets, exchange conduct, custody arrangements and transparency.
Among the proposed measures were stronger restrictions on front-running, requirements for customer support and additional protections intended to reduce the risk that customers lose access to assets during an exchange bankruptcy.
These provisions address operational risks rather than token classification alone.
An exchange could satisfy the requirements for listing a digital commodity while still facing separate obligations governing custody, conflicts of interest and customer disclosures.
That distinction creates potential room for bipartisan negotiations. Lawmakers may disagree over whether the SEC or CFTC should supervise a particular market while supporting similar safeguards for customer funds.
However, Waters’ earlier proposals faced opposition during the legislative process.
According to the official House Financial Services Committee report on H.R. 3633, relevant amendments were rejected by votes of 21 to 30.
Those results demonstrate the difficulty of securing agreement on the proposed protections, although they do not determine how a new Congress would respond.
U.S. Crypto Regulation: Two Approaches Republican CLARITY Act vs. reported Democratic priorities Policy CLARITY Act Democrats* Oversight Expanded CFTC role Greater SEC authority Token rules Statutory commodity and securities framework Classification details not disclosed Exchanges Registration and market surveillance Additional investor safeguards under discussion Ethics Existing legislative ethics provisions Tighter limits on officials’ crypto activities Status Published legislative text Preliminary discussions; no finalized bill Sources: CLARITY Act (H.R. 3633) and House committee report. *Democratic positions reflect reported discussions and earlier proposals, not finalized legislation.The emerging proposal could also revive a dispute over cryptocurrency-related conflicts of interest among federal officials.
In May 2025, Waters introduced the Stop TRUMP in Crypto Act, seeking to restrict cryptocurrency activities involving the president, vice president, members of Congress and certain family members.
The legislation targeted activities such as issuing or promoting digital assets, receiving compensation connected to cryptocurrency ventures and trading using material nonpublic information.
The proposal reflected Democratic concerns about financial relationships between public officials and digital asset businesses.
It is not yet established whether the new market structure initiative would incorporate the Stop TRUMP in Crypto Act, adopt narrower restrictions or introduce a different ethics framework.
Nevertheless, the issue could complicate negotiations.
Republicans have generally favored advancing market structure legislation that provides clearer operating rules for exchanges and token issuers. Democrats seeking additional ethics restrictions may view those safeguards as necessary conditions for supporting a broader agreement.
Combining both issues in one bill would make compromise more difficult if lawmakers agree on market regulation but remain divided over political conflicts of interest.
The reported discussions do not change existing federal cryptocurrency rules.
Exchanges, staking providers and other digital asset businesses remain subject to applicable securities, commodities and financial regulations. No additional registration requirements arise simply because lawmakers are considering new legislation.
The next important development will be publication of draft language.
Three questions will determine the proposal’s significance: whether it changes the legal definition of digital commodities, whether it expands SEC authority over specific intermediaries, and whether ethics provisions become a condition for bipartisan support.
Its prospects will also depend on congressional leadership, committee consideration and negotiations with the White House. Even a bill supported by House Democrats would need to clear the remaining legislative and presidential approval requirements.
For cryptocurrency businesses, the most consequential distinction is between legislation that changes which agency supervises a market and legislation that changes which transactions or businesses fall under federal securities law.
The first would alter supervisory responsibilities. The second could reshape exchange listings, staking services and compliance obligations across the industry.
Until Democrats publish legislative text, the reported initiative represents an alternative negotiating position rather than a new regulatory regime.
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