Senate Agriculture Committee Proposes Crypto Market Structure Bill
Senate Agriculture Committee Chairman John Boozman has released an updated text for a crypto market structure bill, which sets a committee markup for January 27. The bill, titled the Digital Commodity Intermediaries Act, aims to provide the Commodity Futures Trading Commission (CFTC) with a defined framework to oversee portions of the spot crypto market as activities pass through brokers, dealers, exchanges, and custodians.
The bill addresses the vulnerabilities of cryptocurrency retail, which often manifest themselves in operational outages, such as account suspensions, delayed withdrawals, outages during volatility, unclear complaint channels, and disputes over how platforms handle liquidations or restrict access. By establishing a regulatory feedback loop, the bill seeks to turn these recurring problems into rule changes.
Establishing an Office of the Digital Commodity Retail Advocate
One of the key provisions of the bill is the establishment of an “Office of the Digital Commodity Retail Advocate” within the CFTC. This office will be responsible for helping retail participants resolve significant issues with the CFTC or a registered futures association, tracking areas where retail participants would benefit from regulation or rule updates, and identifying issues faced by retail users with CFTC-registered entities.
The office will be headed by a Retail Representative who reports directly to the CFTC Chairman and is appointed from individuals with experience representing retail participants. The office will also analyze how proposed CFTC rules and registered futures association rules might affect retail participants and recommend changes to both the Commission and Congress.
Practical Value and Confidentiality Limits
The practical value of the bill lies in its ability to create an internal unit with instructions to collect evidence, look for patterns, and force those patterns into the rulemaking process. The office must report to Congress twice a year, with a goals report by June 30 and an activity report by December 31. The bill also sets confidentiality limits that affect both sides, with the Proponent able to access documents from the CFTC and registered futures associations as necessary, but without authorizing the Proponent or its employees to access or disclose proprietary or sensitive market data.
Addressing Capacity Criticism and DeFi Boundary
The bill addresses the capacity criticism directly by directing the CFTC to charge and collect fees from registered digital commodity brokers, dealers, exchanges, and qualified digital asset custodians. The commission would establish fee rates consistent with annual appropriations for covered activities, and the bill states that fee rates are not subject to judicial review. The bill also gives the CFTC chairman the authority to appoint people with “specialized knowledge” of the crypto industry without the usual competitive service restrictions.
The bill draws its DeFi boundary almost entirely through definitions rather than blanket exceptions, separating software that simply transmits user instructions from systems in which an individual or coordinated group retains significant influence over management, execution, or rules. A “decentralized financial messaging system” is defined as software that allows a user to create or submit an instruction to a DeFi trading protocol, coupled with an exclusion that acts as a test of control.
Conclusion and Next Steps
The Senate farm crypto bill seeks to establish a CFTC-centric system for spot activity routed through intermediaries, as well as an internal structure aimed at keeping retail outages on the agenda through mandatory reporting and rules review. Whether this is more than just a paper framework will depend on capacity and policy direction, as the committee focuses on the January 27 markup and the parallel Senate banking track continues through late February or March.
For more information, visit https://cryptoslate.com/boozman-senate-agriculture-crypto-bill-150m-cftc-spot-oversight-retail-complaints/
