Senate Banking Committee Unveils Proposed Market Structure Blueprint

The Responsible Financial Innovation Act of 2025, a bipartisan bill introduced by a group of senators led by Senate Banking Chair Tim Scott, aims to bring much-needed legal clarity to the crypto industry. The updated draft, a significant expansion from the initial 35-page version, was introduced amid renewed efforts by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to work in collaboration.

The 182-page draft, released by the U.S. Senate Banking Committee, aims to provide a clear legal distinction, excluding assets that are obviously securities, in the new language regarding ancillary assets (Section 101). The bill also offers a crucial carve-out for tokens issued before the date of enactment, known as pre-enactment tokens, which cannot be subject to enforcement actions or private lawsuits, provided they are not fraudulent.

The bill takes a clear stance on Non-Fungible Tokens (NFTs), explicitly stating that offering, selling, or transferring an NFT does not constitute a securities offering or sale of an investment contract. Furthermore, the draft includes a dedicated section titled "protecting software developers and software innovation," which maintains several critical protections for decentralized finance protocols and developers.

One of the key protections in this section is self-custody protections, which shield network validators from anti-money laundering and anti-fraud compliance requirements. The section also provides protections for decentralized finance protocols and developers from certain securities laws. Additionally, the draft creates a new exemption for Decentralized Physical Infrastructure Networks (DePIN) from securities laws (Section 504).

The bill also establishes a formal process for the SEC and the CFTC to work together through a Joint Advisory Committee (Section 701). This committee will outline a framework to resolve any disputes that may arise between the two regulatory bodies. The bill also includes a provision that provides a legal safe harbor for thousands of existing crypto projects through a carve-out for tokens issued before the date of enactment.

The updated draft was the culmination of extensive feedback from industry stakeholders and lobbyists. The bill aims to get a unified crypto market structure bill to the President's desk by Thanksgiving, building on the momentum of the CLARITY Act, which passed the House with bipartisan support.

The Responsible Financial Innovation Act of 2025 seeks to create a formal regulatory framework for the crypto industry, providing legal clarity and fostering innovation. The draft comes at a crucial time, as the crypto market continues to grow and evolve, and regulatory clarity is increasingly important for both industry participants and investors.