US Democrats to draw up new Crypto Market Structure bill following midterm wins

• A broader market structure proposal being considered by US Democrats could reportedly revive Rep. Maxine Waters’ Crypto Investor and Consumer Bill of Rights.
• Greater SEC oversight of crypto markets could feature in the proposed legislation, alongside tighter ethics restrictions aimed at Trump and other federal officials.
• The move comes after a dominant performance by Democrats in the US midterm elections.

Provisions that Democrats failed to secure in the Digital Asset Market Clarity Act (CLARITY) could return under a broader crypto market structure bill. House Democrats are reportedly considering plans to introduce the legislation in the next Congress.

Democrats prepare to revive rejected crypto regulation measures

Writing in an X post on Wednesday, crypto journalist Eleanor Terrett said the proposal would build on the Crypto Investor and Consumer Bill of Rights. Rep. Maxine Waters introduced that amendment while the House was considering the CLARITY Act.

Citing three unnamed industry sources who had spoken to Democratic staffers, Terrett said the proposal could bring together Democratic provisions rejected by the House and measures negotiated between Senate Democrats and Republicans before the Clarity Act failed to progress in September.

A larger supervisory role for the Securities and Exchange Commission (SEC) in crypto markets is among the ideas being considered, alongside reduced authority for the Commodity Futures Trading Commission (CFTC). Ethics restrictions are also expected to be a Democratic priority, potentially curbing the involvement of President Donald Trump and other federal officials in crypto-related business activities.

The proposal has reportedly been characterised by Republicans as a “messaging bill,” implying that its purpose may be to outline Democratic priorities rather than win immediate bipartisan backing.

Having won control of both the House and Senate in a dominant showing at the US midterm elections on 3 November, Democrats are now holding these discussions. The party will assume control when the new Congress meets in January 2027, changing the political backdrop for crypto regulation.

Crypto policy advances were led in large part by Republicans. These included the GENIUS Act, the landmark federal framework for payment stablecoins that Republican Senator Bill Hagerty introduced and that was signed into law on 18 July.

Political uncertainty returns for the CLARITY Act

Sponsored by Rep. French Hill, the CLARITY Act was another Republican-led initiative. All 216 Republicans and 78 Democrats backed the bill when it passed the House in July 2025. Its aim was to establish how digital assets would be regulated, with oversight divided between the SEC and CFTC.

House approval was followed by months of negotiations in the Senate, covering regulatory powers, decentralised finance (DeFi), banking concerns and ethics safeguards.

In Democrats’ view, the bill offered an inadequate response to conflicts of interest involving Trump and other senior officials. Separately, banking groups cautioned that reward-paying crypto products could divert deposits from traditional lenders.

A revised draft published by Republicans in September contained what they said were 126 substantive changes requested by Democrats. Among the revisions were fresh ethics provisions, measures to address deposit risks linked to stablecoins and changes to protections for blockchain developers.

Nevertheless, a 49-50 Senate vote on 15 September blocked a procedural motion to start considering the bill, leaving it short of the 60 votes needed to proceed. Opposition to the motion included four Republicans alongside Democrats, preventing the legislation from advancing in the current Congress.

A different approach to crypto market regulation could emerge as Democrats prepare to assume control of both chambers in January 2027. The party may put greater weight on investor protections and SEC oversight, as well as limits on public officials’ crypto-related business interests.