How the new US crypto bill could finally define commodities and securities
Senate bill targets crypto’s regulatory paradox: Security vs. commodity
Since its inception, the US cryptocurrency industry has faced a regulatory challenge: determining when a digital asset qualifies as a security and when it qualifies as a commodity.
This uncertainty has hindered institutional adoption, fueled legal disputes and made it difficult for crypto companies to interpret complex rules. But a draft bill from the Senate Agriculture Committee, led by Chair John Boozman and Senator Cory Booker, proposes changes that may address this.
The bill is part of a broader effort to establish a unified framework for digital asset markets. The bipartisan discussion draft outlines how the US could classify crypto assets and assign oversight responsibilities. It marks a significant step toward settling the long-running debate over whether crypto assets are commodities or securities.
Crypto projects in the US have long been unsure whether they need to register with the Securities and Exchange Commission. Trading platforms have struggled to determine what tokens require securities licenses. Institutional investors have held back because compliance expectations are unclear. And regular crypto traders have faced a fragmented market with inconsistent protections.
The proposal aims to establish a clear federal distinction between digital commodities and digital securities.
Did you know? In 2019, when Facebook announced its Libra project (later renamed Diem), global regulators reacted quickly. G7 ministers, central banks and the US Congress raised concerns that a private company could create a global currency. The backlash became a turning point for stablecoin regulation worldwide. The project was eventually shut down in January 2022.
What is a digital commodity?
The draft bill introduces a major new concept: the digital commodity. Under this plan, coins such as Bitcoin (BTC) and Ether (ETH) would be classified as digital commodities.
A digital commodity is essentially an interchangeable token. You can fully own it and transfer it directly to someone else without an intermediary. It is recorded on a public, cryptographically secured blockchain. Under the bill, these digital commodities would fall under the Commodity Futures Trading Commission (CFTC) rather than the SEC.
Here’s how the concept of a digital commodity could change the scenario:
-
Clear rules for big investors: If certain coins are officially labeled digital commodities, banks, funds and trustees could hold them without risking federal violations.
-
Less uncertainty: Companies would no longer have to worry about the SEC unexpectedly declaring their token a security.
-
Two different markets: Digital commodities deemed “safe” would likely see higher trading volume, more derivatives activity and increased institutional participation. Tokens that do not qualify would remain under SEC oversight.
Did you know? Long before crypto went mainstream, the US classified Bitcoin as “property” for tax purposes in 2014. This means every crypto trade could trigger a capital gains event. Ironically, it became one of the earliest forms of crypto regulation worldwide, predating major adoption.
Categorization of coins and a shift in regulatory power
The bill clarifies what qualifies as a commodity, but it does not fully define what qualifies as a security. The classification of decentralized finance (DeFi) projects, governance tokens and hybrid tokens would be determined later.
If a token does not fit the “digital commodity” category, exchanges, issuers and wallet providers can expect it to fall under SEC review.
Broadly, the bill outlines three regulatory lanes:
-
Clear rules for commodities, including major assets such as Bitcoin and Ether
-
Stricter, security-style oversight for many utility tokens, governance tokens and tokenized assets
-
Tough requirements for new token issuances, including disclosures and compliance checks.
A token’s design determines how it will be regulated. Three key factors matter: how decentralized it is, what purpose it serves and how it is sold. These elements decide whether it falls under the more flexible CFTC or the stricter SEC.
A key change in the draft bill is the proposed shift in regulatory power. Historically, the SEC has held primary authority over crypto. But the new proposal significantly expands the CFTC’s role, giving it oversight of:
-
The direct trading market for digital commodities
-
Registration and supervision of exchanges, brokers and custodians that handle these assets
-
New rulemaking authority — in some cases shared with the SEC
-
The ability to collect fees to fund its expanded digital asset oversight duties.
This marks a major shift away from the SEC’s reliance on enforcement actions. The new framework favors a structured, predictable regulatory system, meaning the crypto industry could face fewer surprise legal actions and benefit from clearer, more consistent rules.
Stricter operational standards for crypto firms
Beyond classification, the draft bill sets operational and risk-management requirements intended to address vulnerabilities in the cryptocurrency sector.
-
Segregating funds and avoiding conflicts of interest: Crypto exchanges would be barred from combining trading, custody, brokerage and market-making functions within a single entity. Instead, they would need to separate these roles, similar to the structure used in traditional finance.
-
Listing only assets not “readily susceptible to manipulation”: Exchanges would be allowed to list only digital commodities that meet specific integrity standards. This could significantly reduce the number of unreliable tokens on US platforms.
-
Strengthening consumer protections: The draft proposes:
-
Safeguarding customer assets
-
Clear and complete disclosures
-
Transparent audit records
-
Mandatory reporting and compliance obligations.
If enacted, these measures would help reduce fraud, sudden project failures and exchange insolvencies.
Did you know? The EU’s Markets in Crypto-Assets (MiCA) framework, passed in 2023, became the world’s first major crypto rulebook. It sparked a surge in crypto businesses moving to Europe in search of regulatory clarity.
What the draft means for different crypto stakeholders
The proposed bill to clarify crypto regulation represents a pivotal moment. From established exchanges and institutional investors to retail traders and federal agencies, the framework would affect every major stakeholder in the digital asset ecosystem.
For token issuers
Projects would need to assess whether their tokens qualify as digital commodities. The more decentralized a network is and the fewer intermediaries it relies on, the stronger the case for commodity status.
Tokens that do not meet the criteria would remain under SEC oversight and face potentially stricter requirements.
For exchanges and brokers
Firms would need to:
Although these changes could raise costs, they are expected to improve institutional confidence and support a more mature market structure.
For institutional investors
Institutional investors stand to benefit the most.
Large asset managers have long cited the lack of clear federal rules as the biggest obstacle to adding crypto to portfolios. With defined classifications and federal oversight, fiduciaries may be more willing to pursue large-scale adoption.
For retail users
Retail users could see fewer fraudulent schemes, higher operational standards and greater trust in regulated assets. However, the range of unconventional tokens available for trading may shrink.
The prime minister has acknowledged Britons’ cost-of-living struggles in his Christmas message – and vowed that helping with the issue is his “priority”.
Sir Keir Starmer also urged members of the public to “each do our bit” and “reach out” to friends, relatives and neighbours during the festive period.
His message comes at the end of a difficult year for his government, with economic growth stuttering and Chancellor Rachel Reeves facing criticism over tax rises in the budget.
In a message recorded inside 10 Downing Street, Sir Keir said: “I know many across Britain are still struggling with the cost of living. Helping with that is my priority.
“But at this time of the year, which celebrates love and abundance, loss or hardship can feel even more acute.
“So call around to a neighbour. Check in on a friend or a relative who you haven’t heard from for a while. Reach out. It can make a huge difference.
“That is what Christmas is about.”
Sir Keir Starmer delivers his Christmas message from inside Downing Street. Pic: Downing Street
The prime minister thanked NHS workers along with members of the military and the emergency services who will be on duty on Christmas Day.
“Just as so many put their feet up, some truly special people will be pulling on their uniforms and heading out to work,” he said.
“Our NHS staff emergency services and the brave men and women of our armed forces, all playing their part, doing their bit to care for the nation and to keep us safe.
“Many volunteers will be out there as well. Serving food. Reaching out to help those lonely or in need.
“So on behalf of the whole country, I want to say a big thank you.
“As a nation, we should raise a glass to you this Christmas. But more than that, we should each do our bit as well.”
Read more from Sky News:
How does your Christmas compare to rest of UK? Take our quiz
The famous faces we said goodbye to this year
Conservative leader Kemi Badenoch used her Christmas message to talk about “Christian values” and thanked “everyone who has supported me during my first year as leader of the opposition”.
“It’s been the biggest challenge of my life,” she said. “But it’s also been a wonderful year. I can’t wait to get back to work next year to create a better United Kingdom.”
Liberal Democrat leader Sir Ed Davey spoke about the Christmas tree in London’s Trafalgar Square – an annual gift from Norway to thank the UK for its support during the Second World War – in his message.
While saying the tree may “look a little underwhelming” on first glance, the Liberal Democrat leader said it was a reminder of “friendship and loyalty”.
He added: “It makes me think about people standing together in tough times – whether against the Nazis in the 1940s, or right now in Ukraine.
“And yeah, it might not be perfect, but this tree in Trafalgar Square makes me think about families and friends looking out for one another right here at home.
“I can’t think of a better symbol of the Christmas spirit of generosity, love and hope. Of light in the darkness.”
The International Monetary Fund’s mission chief for El Salvador issued a statement confirming that government authorities were proceeding with negotiations for the sale of the country’s Chivo Bitcoin wallet.
In a Monday statement, the IMF said El Salvador’s government was continuing to discuss its Bitcoin (BTC) project with the fund’s officials, and “negotiations for the sale of the government e-wallet Chivo are well advanced.” The announcement signaled that the government may be preparing to sell some or all of its crypto holdings in the Chivo wallet.
The statement followed a May deal with El Salvador in which the IMF would pay $120 million as part of a 2024 loan agreement for $1.4 billion. As part of the deal, the government would stop acquiring Bitcoin.
It’s unclear whether El Salvador is abiding by the terms of the deal. Though the IMF reported in July that the country’s government had not purchased any BTC since December 2024, El Salvador’s Bitcoin Office continues to announce crypto buys, including 1,090 Bitcoin worth about $100 million in November.
Related: CFTC changes guard as Selig takes reins, Pham departs
According to the terms of the IMF-El Salvador deal made public, the government would make public sector engagement of BTC-related economic activity “confined,” the private sector’s acceptance of Bitcoin would be voluntary, and it would wind down involvement in the Chivo wallet. Cointelegraph reached out to the IMF for comment but had not received a response at the time of publication.
El Salvador recognized Bitcoin as legal tender in 2021 and began acquiring the cryptocurrency as part of a strategy largely pushed by President Nayib Bukele. According to data provided by the country’s Bitcoin Office, the government held 7,509 Bitcoin as of Monday, worth about $659 million at the time of publication.
‘It’s not stopping,’ says Bukele on Bitcoin buys
Despite the reported deal between the IMF and El Salvador, Bukele said in March that the government would continue its Bitcoin investment strategy, purchasing at least one BTC daily. It’s unclear how the president’s statement could affect the IMF agreement.
Magazine: When privacy and AML laws conflict: Crypto projects’ impossible choice
-
Sports2 years agoStory injured on diving stop, exits Red Sox game
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports3 years agoButton battles heat exhaustion in NASCAR debut
-
Sports3 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment3 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment1 year agoHere are the best electric bikes you can buy at every price level in October 2024