- The proposal would revive Maxine Waters’ consumer protections, including stricter custody rules, monthly proof-of-reserves reports and 24-hour customer service.
- Democrats favor expanded SEC authority, contrasting with the Republican-backed CLARITY Act’s emphasis on CFTC oversight of digital commodity spot markets.
- Industry resistance, disagreements over DeFi regulation and Trump’s veto power could complicate passage, potentially making the proposal a blueprint for future legislation.
House Democrats are preparing a new crypto market structure bill that could expand SEC oversight and revive rejected provisions. The proposal builds on Rep. Maxine Waters’ consumer protection efforts as Democrats prepare to control Congress in January. However, its approach to regulation, decentralized finance and government ethics could create disagreements with the crypto industry.
Waters Leads Democrats’ Push for New Crypto Rules
According to Crypto In America, Democratic staffers on the House Financial Services Committee have discussed the proposal with industry representatives. Four industry sources confirmed the discussions, although lawmakers have not publicly released the draft.
Waters introduced her Crypto Investor and Consumer Bill of Rights amendment during the House’s 2025 consideration of the Clarity Act. She is expected to chair the Financial Services Committee next Congress.
The proposal would revive provisions Waters previously failed to secure. It would also incorporate measures Senate Democrats negotiated with Republicans before September’s failed cloture vote. Former Democratic policy adviser Justin Slaughter, now at Paradigm, said development began during the summer.
SEC Authority and Consumer Protections Divide Industry
The proposal would expand the Securities and Exchange Commission’s authority over crypto markets. Meanwhile, the Commodity Futures Trading Commission could receive a limited oversight role.
This differs from the Republican-backed Clarity Act, which favored CFTC oversight of digital commodity spot markets. The SEC would retain jurisdiction over fundraising transactions and disclosures.
Waters’ earlier amendment also proposed 24-hour customer service, asset insurance and stricter custody requirements. Other measures included monthly proof-of-reserves attestations and restrictions on platforms trading against customers.
However, expanding SEC authority could face industry resistance. Former SEC Chair Gary Gensler’s enforcement actions against Coinbase, Ripple and Kraken remain a concern.
Democrats are also considering ethics provisions targeting crypto activities involving President Trump and other federal officials. DeFi regulation could create another disagreement over whether decentralized platforms should face traditional intermediary requirements.
Trump’s Veto Power Creates Legislative Hurdles
Journalist Eleanor Terrett reported that Waters’ remarks outlined Democrats’ upcoming legislative priorities. She also highlighted Justin Slaughter and Jen Brown’s openness to working with legitimate crypto businesses.
Nevertheless, Trump retains veto power for the next two years. Overriding him would require substantial Republican support.
Republicans familiar with the proposal have already dismissed it as a messaging bill. Meanwhile, a Democratic strategist said the effort could shape future legislation in 2029 or guide another Democratic administration’s crypto policy.
