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The Senate Agriculture Committee, led by Chairman John Boozman, R-Ariz., and Sen. Cory Booker, D-N.J., released a bipartisan discussion draft of legislation that would grant the Commodity Futures Trading Commission (CFTC) expanded authority over digital commodities. The proposal builds on the House-passed CLARITY Act and marks a further step toward establishing a federal regulatory framework for digital asset markets. The discussion draft draws clear jurisdictional boundaries around stablecoins, preserves self‑custody for individuals and includes a funding and hiring plan to stand up the CFTC’s new responsibilities.
While several elements are bracketed for further feedback, notably decentralized finance and certain developer carve‑outs, the draft discussion contemplates a CFTC-administered regime for “digital commodities” in spot markets. It does so by defining critical terms, including blockchain-related concepts, establishing CFTC jurisdiction over certain digital commodity transactions, and imposing registration and principles-based compliance requirements on trading venues and intermediaries.
The Agriculture Committee’s discussion draft comes as Congress and regulators are staking out territory for regulatory authority in the digital asset marketplace. For example, on Sept. 5, 2025, the Senate Banking Committee released a 182-page discussion draft of the Responsible Financial Innovation Act of 2025 (RFIA) outlining a proposed digital asset market structure focused mainly on SEC issues. And in prepared remarks given November 12, 2025, SEC Chairman Paul Atkins pledged to clarify which crypto transactions the SEC would regulate.
This alert summarizes the draft’s mechanics and implications for issuers, intermediaries (including brokers, dealers and futures commission merchants [FCMs]), exchanges and designated contract markets (DCMs); highlights the draft’s resource and governance provisions referenced by Booker in an accompanying press release; and provides a high‑level directional comparison to the Senate Banking Committee’s RFIA approach.
Scope and Jurisdiction Architecture
The draft would give the CFTC exclusive jurisdiction over spot and cash transactions in “digital commodities” executed on or subject to the rules of registered entities or by other CFTC‑registered firms. Here, “digital commodity” is a defined subset of digital assets: any fungible digital asset that can be exclusively possessed and transferred person to person without necessary reliance on an intermediary and is recorded on a cryptographically secured public distributed ledger. The definition contains explicit exclusions, including securities and security‑like instruments. The draft also excludes a variety of digital assets from its “digital commodity” definition, including permitted payment stablecoins, bank deposits, commodity derivatives, pooled investment vehicles and “tokenized” instruments that reference separate commodities or goods. (The CFTC would have jurisdiction over spot stablecoin transactions only when transacted on CFTC‑registered entities, and only to regulate the trading venue conduct as if the instrument were a digital commodity. The CFTC would not gain authority over stablecoin issuers or the operation of the stablecoin itself.) Savings clauses preserve the Commodities Exchange Act’s (CEA’s) existing futures and swap regime and SEC jurisdiction over securities and investment contracts, and they make clear an instrument does not change character merely because it is recorded on a blockchain ledger.
Registration and Obligations: Exchanges, Brokers, Dealers and FCMs
Exchanges
The discussion draft requires any trading facility that offers a cash or spot market in a digital commodity to register as a “digital commodity exchange.” This regulatory framework is modeled on the CEA’s designated contract market regime but incorporates several obligations tailored specifically to spot digital asset markets. Exchanges may list only digital commodities “not readily susceptible to manipulation” and must certify each listing to the CFTC, including analysis demonstrating compliance with statutory listing criteria. They must also make publicly available core project and blockchain information such as source code, governance structures, issuance schedules and on-chain data accessibility. The CFTC would retain authority to review and disapprove listings and must publish its analysis when doing so. The draft would amend the CEA to permit a private right of action against a “digital commodity exchange.”
Under the draft discussion, exchanges must maintain robust market integrity programs, including real-time surveillance, trade reconstruction, monitoring for abusive and self-dealing practices, and transparent publication of price and volume data. The draft imposes strict customer-protection requirements including: (i) segregation of customer assets; (ii) use of qualified custodians; (iii) limitations on affiliated proprietary trading; and (iv) a standardized, plain-language disclosure regime for retail users. The proposal emphasizes governance and operational safeguards, including capital and cybersecurity requirements, board independence criteria and appointment of a chief compliance officer responsible for certifying annual compliance reports to the CFTC. The CFTC’s authority over registered exchanges would preempt duplicative state regulation while preserving state antifraud enforcement, and ongoing CFTC examination authority is expressly provided.
Brokers and Dealers
The discussion draft obligates digital commodity brokers and dealers to register with the CFTC and become members of a registered futures association. Registrants would be subject to capital, recordkeeping, reporting, business-conduct and daily trading-record requirements aligned with existing CFTC regulation of intermediaries. Brokers and dealers are expected to provide fair and objective pricing to customers. Customer protections closely track those applicable to exchanges, including segregating customer assets, using qualified custodians and ensuring that customer assets are attributed to customers and do not become part of a broker or dealer bankruptcy estate. Associated persons would also be required to register. The CFTC is directed to harmonize obligations that apply to firms registered in multiple regulatory categories and to adopt conflict-management rules addressing affiliate transactions and vertically integrated business models.
Futures Commission Merchants
Futures commission merchants that custody digital assets for customers would be required to hold those assets with “qualified digital commodity custodians.” The draft defines “qualified” custodians by reference to entities subject to banking or comparable functional regulation or entities registered with the CFTC under custody-specific standards. The proposal provides a pathway for state-chartered trust companies to qualify when subject to adequate supervisory regimes, with transitional relief available to support continuity of operations during implementation.
Decentralized Finance
The draft signals that decentralized finance (DeFi) will be addressed in the final legislative framework but leaves key definitional and scope questions open for comment. Proposed definitions for “decentralized finance messaging systems,” “decentralized finance trading protocols” and “decentralized governance systems” are bracketed for stakeholder input. A safe harbor for developers and service providers that do not exercise control over a protocol is also bracketed and identified as intersecting with the jurisdiction of the Senate Banking Committee. The draft therefore seeks feedback on how to distinguish regulated intermediaries from entities that simply develop or maintain noncustodial, rules-based networks. That distinction will be critical for regulators to exercise jurisdiction over those appropriately subject to market-participant regulation, while exempting First Amendment-protected computer code authorship and communication services and potentially exempting other categories such as provision of blockchain infrastructure services and products.
Implications for Issuers
The draft does not establish a separate registration regime for digital commodity issuers. Instead, issuers would be indirectly regulated through exchange listing requirements and intermediary conduct standards. Because exchanges may list only digital commodities supported by specified, accurate and current public information (and must validate that information and provide standardized risk and governance disclosures), issuers seeking broad market access would, in practice, need to maintain robust documentation and make that available to venues and intermediaries transacting those assets. This includes detailed technical and economic descriptions of the asset, transparent governance mechanisms, and ongoing updates to reflect material changes relevant to listing certifications or customer disclosures. Importantly, the draft does not alter existing securities-law boundaries: Assets that constitute investment contracts or other securities remain outside “digital commodity” status. Tokenized claims on external assets or cash flows would likewise fall under existing SEC, CFTC derivatives or banking regulatory frameworks depending on their structure.
Emerging Markets and Regulatory Themes
Tokenization
The draft discussion draws a clear distinction between native digital commodities and tokenized representations of external assets. Digital assets that “reference, represent an interest in, or are functionally equivalent to” another commodity, security, deposit or tangible good are excluded from the definition of a “digital commodity.” As a result, most “real-world asset” tokenization structures (e.g., tokenized securities, commodity-backed tokens, reference tokens, and pooled or derivative tokens) would remain subject to existing securities and derivatives regimes rather than the spot digital commodity framework. The draft also provides the CFTC with authority to further define excluded categories through rulemaking, signaling ongoing regulatory development in this area.
Custody, Including Self-Custody
Across exchanges, brokers, dealers and FCMs, the draft establishes uniform qualified-custodian requirements, customer-asset segregation obligations and permitted-investment rules for customer cash. Digital assets held by registered firms for customers would receive explicit bankruptcy “customer property” treatment. The draft broadly restricts the “use” of customer digital assets by intermediaries and addresses participation in on-chain activities such as staking: Intermediaries may engage in such activities only with affirmative, opt-in customer consent and standardized disclosures, subject to future CFTC rulemaking on risk controls and insolvency treatment. The SEC is also directed to evaluate conflicts of interest and governance separation when affiliated entities provide custody services.
The draft discussion also affirms an individual’s right to maintain personal, lawful self-custody of digital assets using hardware or software wallets and to transact directly on a peer-to-peer basis. This protection is limited to personal use and does not extend to custodial, fiduciary or intermediary activities performed on behalf of others. All such activity remains subject to applicable sanctions, anti-money-laundering and anti-terrorism requirements.
Agriculture Committee Draft vs. Senate Banking Committee’s RFIA
The Agriculture Committee draft builds a full CFTC regime for spot/cash digital commodity markets and their intermediaries, giving the CFTC exclusive jurisdiction over registered spot entities, and setting detailed market, custody and customer‑protection rules. The SEC remains the securities regulator, with limited joint rulemaking touchpoints.
The RFIA draft centers on the SEC’s authorities to define and regulate when digital assets are securities, creates an SEC “regulation crypto” disclosure/exemption pathway, modernizes securities rules for digital assets and establishes formal CFTC-SEC coordination and preemption frameworks. It recognizes “digital commodities” for CFTC purposes but does not replicate Agriculture Committee draft’s CFTC spot‑market registration regime.
The drafts reflect two complementary but distinct approaches: the Agriculture Committee draft primarily empowers the CFTC to supervise cash markets in nonsecurity tokens through a tailored registration regime, and the RFIA primarily empowers the SEC to clarify, tailor and modernize the securities perimeter and oversight while coordinating with the CFTC and other regulators.
What to Expect Moving Forward
The Senate Agriculture discussion draft represents a comprehensive, bipartisan approach to establishing a federal regulatory framework for spot digital commodity markets. It imposes detailed obligations on exchanges, brokers, dealers and FCMs while signaling expectations for issuers, tokenized assets, DeFi participants and stablecoins. By drawing clear boundaries around securities, derivatives and real-world asset tokenization, the draft aims to provide legal clarity while preserving existing regulatory regimes when appropriate.
In a press release announcing the draft, Booker emphasized the need for sufficient resources to implement the proposed framework. This is unsurprising, given that the CFTC had fewer than 175 enforcement employees prior to recent attrition. Scaling up to oversee a new spot digital commodity market will require careful planning, rapid recruitment, and development of sophisticated surveillance and monitoring capabilities to ensure market integrity and protect participants.
Booker also highlighted the need for strong bipartisan collaboration at agencies responsible for adopting rules implementing proposed market structure legislation. This may be a callback to a statement of principles issued by 12 Democratic senators (including all but one who supported the GENIUS Stablecoins Act) that advocated for a five-person CFTC structure (three majority-party and two minority-party commissioners) as specified by law. As of now, neither the CFTC nor the SEC has five commissioners, and the only sitting Democratic commissioner at the SEC is scheduled to leave the agency in January 2026 at the expiration of her term.
This discussion draft sets the stage for potential legislative action and ongoing regulatory coordination across the Senate, House and the CFTC. Crypto asset market participants, including issuers, intermediaries and exchanges, should anticipate further consultation and rulemaking as the CFTC builds capacity, finalizes definitions (notably around DeFi and tokenized instruments), and implements the operational and compliance obligations outlined in the draft. Interested parties should consider submitting comments and meeting with regulators who have expressed a desire for consultation with industry.
For questions about this alert, contact the authors or your McGuireWoods contact.
McGuireWoods’ Securities Enforcement & Regulatory Counseling (SERC) Practice Group is a national leader in securities enforcement defense and broker-dealer and investment adviser regulatory counseling. Anchored by former SEC and FINRA attorneys from enforcement and trading and markets as well as prominent federal prosecutors, the team manages complex securities investigations at every stage — from informal inquiries and routine exams through investigations, litigation and appeals — all while staying at the forefront of developing issues confronting the securities industry.