House Democrats Plan New Crypto Bill With Greater SEC Oversight
House Democrats are considering a new crypto market structure bill that would revive parts of their previously rejected proposals and give the Securities and Exchange Commission (SEC) a larger role in overseeing the digital asset industry.
The plan could take shape next Congress, with lawmakers looking to combine provisions from Rep. Maxine Waters’ Crypto Investor and Consumer Bill of Rights with sections of the Democratic Clarity Act proposal. The effort could also include measures that Senate Democrats previously discussed with Republicans before negotiations over crypto legislation broke down in September.
The discussions involve Democratic staffers and industry representatives, although lawmakers have yet to release an official draft of the proposed legislation.
The potential bill is also expected to include tougher ethics restrictions targeting President Donald Trump and other government officials involved in crypto-related businesses or projects. Republicans have criticized the initiative as a political messaging effort rather than a serious attempt to pass legislation.
Democrats seek a bigger role for the SEC
The proposal could mark a significant change from the Republican-backed Clarity Act, which passed the House in July 2025 with a 294-134 vote.
The existing Clarity Act framework gives the Commodity Futures Trading Commission (CFTC) authority over most digital commodity markets, including exchanges, brokers and dealers. It also provides exemptions from certain SEC registration requirements for tokens operating on sufficiently mature blockchain networks.
The crypto industry has largely supported this approach, as it would place much of the market under the CFTC rather than the SEC.
A Democratic proposal could move in the opposite direction by expanding the SEC's supervisory powers and reducing the CFTC's role. Such a change could create fresh disagreements between lawmakers and crypto companies over how digital assets should be classified and regulated.
Waters' consumer protection proposal could return
Waters introduced her Crypto Investor and Consumer Bill of Rights as an amendment to H.R. 3633 in July 2025. However, the House Rules Committee rejected the proposal in an 8-4 vote, preventing it from reaching the House floor.
The amendment included several measures aimed at strengthening consumer protections across the crypto industry.
Among its proposed requirements were 24-hour customer support, insurance coverage or protections similar to those offered by the Securities Investor Protection Corporation (SIPC), fiduciary duties and best-execution standards for crypto platforms.
It also called for restrictions on front-running, bankruptcy-protected custody arrangements, withdrawals within 24 hours and monthly proof-of-reserves reports verified by independent auditors.
The proposal also sought additional funding for both the SEC and CFTC to support their oversight responsibilities.
A separate Democratic amendment would have prohibited members of Congress, presidents and vice presidents from issuing or endorsing digital assets. That proposal was also rejected by the committee in an 8-4 vote.
These ethics provisions could return as part of the broader Democratic effort, particularly given concerns surrounding crypto ventures connected to Trump and his family.
Clarity Act faces a tougher path
The political situation changed following Tuesday's Democratic sweep of Congress, giving the party greater influence over the future of crypto legislation.
Waters, currently the top Democrat on the House Financial Services Committee, is expected to take over as chair in January from Republican Rep. French Hill, who sponsored the Clarity Act.
The original legislation passed the House but failed to advance in the Senate after a September 15 cloture vote ended 49-50. A motion to reconsider preserved the possibility of another vote, but the bill will expire when the current Congress ends on January 3 unless lawmakers revive it before then.
Democrats now have greater leverage to reshape the legislation, including by pushing for stricter rules around government officials' crypto activities.
The change in political control could also make it harder for the crypto industry to secure the regulatory framework it previously supported.
Any new market structure bill would still need enough support from Republicans to pass Congress and receive Trump's signature. Whether lawmakers can reach that agreement remains uncertain.
For now, the proposed Democratic legislation has no published text, and its final provisions remain unclear. The next Congress could therefore bring a fresh debate over the balance of power between the SEC and CFTC, consumer protections and ethics rules governing the crypto industry.