Senate Banking Committee Releases Draft Bill on Crypto
Commentary by Gage Raju-Salicki
The Senate Banking Committee released the "Responsible Financial Innovation Act of 2025," a draft bill to create a comprehensive regulatory framework for digital assets, including defining oversight regulatory responsibilities and token classification.
The draft legislation follows House passage of the Digital Asset Market Clarity Act of 2025 (the "CLARITY Act") (see previous coverage) and incorporates elements from the 2023 Lummis-Gillibrand proposal.
The draft bill would, among other things:
- define "ancillary assets" to clarify which digital assets are not securities and separate them from traditional investment contracts;
- require issuers of ancillary assets to meet tailored disclosure obligations regarding their operations, tokenomics, governance, and source code;
- direct the SEC to promulgate "Regulation DA," exempting certain ancillary asset offerings (up to $75 million annually over four years) from full registration;
- mandate rulemaking to modernize and clarify the definition of "investment contract" under existing securities laws;
- authorize the SEC to tailor or update existing securities regulations—including recordkeeping, custody, broker-dealer rules, and disclosure standards—to reflect the unique characteristics of digital assets;
- ensure that financial institutions, such as national banks and financial holding companies, may engage in permissible digital asset activities, including custody, staking, lending, and payment processing, without new regulatory barriers;
- establish safeguards and limitations on sales of ancillary assets by insiders and related persons to prevent manipulation and ensure market integrity;
- preclude treating non-controlling software developers and service providers as money transmitters under federal or state law solely due to publishing code or supporting distributed networks;
- direct the creation of examination standards and risk-based oversight to protect against illicit finance involving digital assets, including the formation of public-private partnerships and working groups, and
- promote international coordination and allow the SEC to engage in cross-border sandbox programs, while preserving innovation, privacy, and lawful self-custody of digital assets.
The Banking Committee also issued a Request for Information to solicit feedback on (i) regulatory clarity and tailoring; (ii) investor protection; (iii) trading venues and market infrastructure; (iv) custody; (v) illicit finance; (vi) banking; (vii) innovation; and (viii) preemption.
Commentary
While this market structure bill is very much a draft, it is important to note that it diverges from the CLARITY Act, which was passed by the House last week. This draft moves away from the “mature blockchain system” concept provided for in CLARITY. It is unclear how much this draft bill is intended to replace language from CLARITY as opposed to supplementing it—notably, the draft bill still retains CLARITY-like language around “digital commodities.”
The “ancillary asset” definition is curious; the idea appears to be similar to CLARITY in that the underlying tokens are not considered securities. Where this draft turns away from CLARITY, however, is in its direction to make the SEC responsible for promulgating a rule that defines an “investment contract.” The bill would ultimately require that mostly all of the Howey test be integrated into such a rulemaking. It’s a particularly interesting choice to vest the SEC with the authority to promulgate such a rule in a post-Chevron world.
It is still not clear what the President’s Working Group on Digital Assets will have in its recommendations—forthcoming on July 30. Consequently, it is likely that the draft bill is a starting point which will be rewritten based on this input and additional feedback from the Committee's Request for Information.
It’s crucial that digital asset protocols, issuers, and providers engage with this RFI and draft language to help craft something workable for all parties.
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