Senate's Crypto Bill Proposes SEC-CFTC Alliance for DeFi and Tokenized Assets

- Lawmakers unveil sweeping crypto reforms to harmonize SEC and CFTC oversight. - Proposed safeguards aim to protect DeFi developers and clarify tokenized asset rules. On September 6, 2025, Senate lawmakers unveiled a sweeping crypto policy update that clarifies SEC and CFTC oversight and proposes major safeguards for DeFi developers. The Senate Banking Committee has advanced a draft of the Responsible Financial Innovation Act of 2025, which seeks to establish comprehensive regulatory frameworks for digital assets and resolve jurisdictional disputes between the two agencies. A cornerstone of the draft legislation is the proposed Joint Advisory Committee on Digital Assets. This committee, which will include representatives from both government and industry, will provide non-binding recommendations to harmonize standards between the SEC and CFTC, directly addressing longstanding conflicts between the agencies over cryptocurrency oversight. In addition, a major provision introduces safe harbors for participants in decentralized finance (DeFi). Under these rules, developers and contributors will not be classified as financial institutions or money transmitters for activities such as running validator nodes, contributing liquidity, or publishing open-source code. This section responds to heightened concerns following the August Tornado Cash case verdict. The draft also tackles regulatory gray areas in crypto activity by demystifying the treatment of staking rewards, airdrops, and liquid-staking outputs. The bill explicitly categorizes these as “gratuitous distributions” and excludes them from securities offerings. The legislation also extends exemptions to Decentralized Physical Infrastructure Networks (DePINs) that meet defined decentralization thresholds. For tokenized real-world assets on blockchain platforms, the text clarifies that these assets do not automatically qualify as securities. Moreover, the legislation mandates a joint SEC-CFTC study to develop standards for the custody, verification, and auditing of these assets. The Senate Banking Committee plans to vote this month on the bill's SEC-related provisions, as lawmakers aim to finalize the legislation for Presidential approval by year-end. However, the bill must first be reconciled with the CLARITY Act, which the House of Representatives cleared in July. Lawmakers are pursuing bipartisan efforts to secure Democratic support to ensure the bill passes the full Senate.