The Clarity Act’s CFTC-first design may not survive a Democratic rewrite of crypto market structure legislation. One detail from the earlier fight shows how far the debate could reach: a Democratic amendment proposed 24-hour withdrawals and monthly auditor-attested proof of reserves. The House Rules Committee blocked it by a 4-8 vote.
Industry sources who spoke with Democratic staffers say House Democrats are discussing a bill that would give the SEC more authority and the CFTC less. No draft text has been released, so the proposed agency split is the clearest reported difference from the industry-backed Clarity Act. It is not a settled plan.
The agency split would reverse the Clarity Act’s core design
The House-passed Clarity Act directs the CFTC to regulate most digital commodity trading, including exchanges, brokers and dealers. It also exempts tokens on mature blockchains from SEC registration under certain conditions.
Those provisions assign different roles to the two agencies: the CFTC would oversee most digital commodity trading, while the SEC registration exemption would apply to qualifying tokens. A bill that shifts supervision toward the SEC would change the first part of that arrangement. It could still carry over other parts of the Clarity Act or add consumer protections.
Industry sources say the Democratic plan could combine several strands of earlier proposals. These include provisions in Rep. Maxine Waters’ Crypto Investor and Consumer Bill of Rights, Democratic provisions she offered for the Clarity Act but that were not adopted, and provisions Senate Democrats had agreed on with Republicans before a September cloture vote failed.
Waters is in line to become chair of the House Financial Services Committee in January, replacing Clarity Act sponsor Rep. French Hill. The change would give Democrats a stronger role in setting the committee’s agenda. It does not establish the proposed bill’s terms or show that the bill can pass.
Consumer rules and ethics restrictions could travel with the rewrite
The House Rules Committee’s record says Waters’ amendment would have required round-the-clock customer service and insurance or SIPC-like coverage. It also proposed fiduciary and best-execution rules, along with protections against front-running.
The amendment included custody and withdrawal requirements as well. It proposed bankruptcy-remote custody, withdrawals within 24 hours and monthly proof-of-reserves checks attested by auditors. Together, those details would have set specific operating requirements for customer service, custody and reserves.
The committee rejected Waters’ amendment 4-8 along party lines, after a motion from Rep. Mary Gay Scanlon. A separate amendment from Rep. Joe Neguse also failed 4-8. It would have barred members of Congress, presidents and vice presidents from issuing or endorsing digital assets.
According to the industry sources, further ethics provisions targeting crypto activity by President Donald Trump and other federal officials are also likely to be part of the discussions. That would bring restrictions on officials’ crypto activity into the same legislative debate as the agency role assigned to trading oversight.
The original bill also faces a difficult path. The Clarity Act passed the House 294-134 in July 2025, then failed a Senate cloture vote 49-50 on September 15. Sen. Thom Tillis filed a motion to reconsider, leaving open the option of another vote. The bill dies when this Congress ends on January 3 unless the lame-duck session revives it.
What holders and builders can check before treating the bills as equivalent
Holders can check whether a future bill includes protections such as 24-hour withdrawals, custody safeguards and proof-of-reserves checks. Those were specific terms in Waters’ rejected amendment. They are not confirmed terms of the Democratic proposal, which has no released text.
Exchange and broker builders can compare which agency would oversee trading. The House-passed Clarity Act puts most digital commodity trading under the CFTC, while the Democratic discussions point toward a larger SEC role. That difference matters when checking whether a draft assigns oversight to the same agency as the House bill.
Until lawmakers publish a draft, operators cannot assume the proposed bill would preserve the Clarity Act’s treatment of exchanges, brokers, dealers or tokens on mature blockchains. The House bill’s exemption for those tokens also applies only under certain conditions, so a comparison would need to check whether a new draft retains the exemption and its conditions.
Republicans have called the effort a “messaging bill,” and any Democratic market structure bill would still need President Trump’s signature to become law. The next concrete deadline is January 3, when the Clarity Act expires unless the lame-duck session revives it.
