House Democrats have started discussing a new cryptocurrency market structure bill for the next Congress. The proposal could give the Securities and Exchange Commission (SEC) greater authority over the crypto industry while bringing back investor protection measures previously introduced by Representative Maxine Waters.
According to journalist Eleanor Terrett, the discussions involve expanding Waters’ Crypto Investor and Consumer Bill of Rights amendment into a broader market structure proposal. Her report cited three industry sources who had spoken with Democratic staff members.
The proposal would draw on Democratic amendments introduced during the House’s consideration of the CLARITY Act in 2025, along with provisions discussed by Democratic and Republican senators before September’s unsuccessful Senate vote.
Republicans have reportedly described the new effort as a messaging bill. However, discussions are continuing around regulatory authority, investor protections and restrictions on the financial activities of government officials.
One of the main ideas is to give the SEC a larger supervisory role while limiting the responsibilities of the Commodity Futures Trading Commission (CFTC).
This would differ from the Republican-backed CLARITY framework, which would give the CFTC authority over covered spot digital commodity markets while allowing the SEC to oversee securities and investment contracts.
The Republican proposal also included registration requirements for digital asset exchanges, brokers and dealers. Its sponsors said the revised version incorporated 126 substantial changes requested by Democratic negotiators.
Another important issue involves potential conflicts of interest among President Donald Trump and other federal officials.
Earlier negotiations included proposals requiring certain officials to sell significant crypto-related investments or place them in blind trusts. These restrictions were intended to cover federally elected officials, federal judges and their spouses.
Democrats are now looking to bring stronger ethics provisions back into the discussions.
The latest effort also revisits investor protection measures introduced by Waters during the House’s consideration of the CLARITY Act in 2025. Her amendment, numbered 31, failed to receive approval from the House Rules Committee, with a vote of 4–8 to prevent it from being considered.
The proposed protections included 24-hour customer service, insurance or protection similar to Securities Investor Protection Corporation coverage, fiduciary responsibilities and requirements for businesses to provide customers with the best available trade execution.
Other provisions focused on preventing front-running, protecting customer assets during bankruptcy, allowing withdrawals within 24 hours and requiring monthly proof-of-reserves reports supported by independent auditor attestations.
Waters also proposed additional funding for both the SEC and CFTC to help them carry out their responsibilities.
Her nine-page amendment included more detailed requirements for cryptocurrency businesses serving retail customers.
Under the proposal, covered companies would have to process cash withdrawals or cryptocurrency transfers within 24 hours, except when there was a documented and legitimate concern about fraud.
Businesses would also have to provide continuous human customer support through telephone or live chat, with waiting times limited to five minutes.
Another major requirement involved customer asset protection. Companies would need to keep customer funds separate from their own assets in accounts designed to protect them during bankruptcy.
They would also be prohibited from lending, staking or reusing customer assets without receiving clear permission. Customers would have the right to withdraw that permission.
The amendment further required companies holding customer assets to publish cryptographically verifiable proof-of-reserves reports every month, supported by an independent public accountant.
Companies would also have to notify authorities within 48 hours of discovering a security breach that exposed customer funds or personal information.
A separate amendment from Waters, numbered 30, included the Stop TRUMP in Crypto Act. It targeted potential cryptocurrency-related conflicts of interest involving the president, vice president, members of Congress and their immediate families.
The renewed discussions come after the CLARITY Act failed to advance in the Senate in September. The procedural vote ended 49–50, falling short of the 60 votes needed to begin debate.
Senator Thom Tillis changed his vote to no for procedural reasons, leaving open the possibility of reconsidering the measure. The vote did not amount to a final rejection of the legislation.
Following the setback, former CFTC Chairman J. Christopher Giancarlo said the SEC and CFTC could continue developing digital asset regulations using their existing authority.
The latest Democratic discussions suggest that negotiations over crypto regulation, investor protections and government ethics could continue into the next Congress.