Main Points:
- Release of a digital asset regulation discussion draft by House Financial Services and Agriculture Committees
- Draft largely aligns with last year’s FIT21, with minor adjustments
- May 6 joint hearing to focus on defining U.S. crypto market structure
- Separate stablecoin legislation remains under active consideration
- Political dynamics under the new administration heighten industry expectations and uncertainties
1. Background: Committee Collaboration on Digital Asset Regulation
In early May 2025, senior Republican members of the U.S. House Financial Services Committee and the House Agriculture Committee announced plans to release a discussion draft detailing a proposed regulatory framework for digital assets, including cryptocurrencies and tokens. This bipartisan effort marks the first time these two influential committees have coordinated on comprehensive crypto legislation, signaling Congress’s increasing urgency to clarify regulatory boundaries in the rapidly evolving digital asset sector.
The announcement comes just days before a joint public hearing scheduled for May 6, 2025, where committee members will solicit expert testimony on market structure, oversight responsibilities, and potential gaps in current regulations. Official notices for the hearing confirm its primary focus: establishing clear definitions for digital asset market participants and delineating the respective roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
2. FIT21 Revisited: Similarities and Key Distinctions
According to industry sources and committee briefings, the forthcoming draft is approximately 90% similar to the “Financial Innovation and Technology for the 21st Century Act” (FIT21) that passed the House in 2024 but stalled in the Senate. Core provisions retained include:
- Clarification of “security” vs. “commodity” status for digital assets
- Jurisdictional boundaries for the SEC and CFTC
- Safe-harbor provisions for token issuers meeting specified decentralization criteria
However, the new draft introduces a subtly different “control” test for determining whether a digital asset should be regulated as a commodity under CFTC authority. Where FIT21 focused on percentage ownership and recent code modifications, the updated approach emphasizes the degree of ongoing control by any single individual or entity over a blockchain project’s governance, drawing on frameworks proposed by thoughtful regulators like SEC Commissioner Hester Peirce.
3. The May 6 Hearing: Setting the Stage for Debate
The joint hearing on May 6 will feature panels of industry experts, regulators, and legal scholars who will address:
- Market structure: How current trading venues, broker-dealers, and decentralized platforms fit within U.S. financial law
- Consumer protection: Measures to prevent fraud, ensure transparency, and safeguard retail investors
- Innovation balance: Ensuring regulations accommodate new technologies without stifling growth
Witness lists and committee memos have been made available on the Financial Services Committee’s website, reflecting a concerted push to gather diverse perspectives before markup sessions later in May.
4. Stablecoin Regulation: A Parallel Track
In parallel with the market structure draft, Congress continues work on stablecoin-specific legislation. Separate bills under consideration would:
- Mandate reserve requirements and regular audits for issuers
- Clarify issuer liability and ensure redemption guarantees
- Coordinate with banking regulators to align stablecoin reserve practices with existing deposit insurance frameworks
During a March White House crypto summit, President Trump publicly endorsed lawmakers’ efforts to draft and pass stablecoin legislation by August 2025, further underscoring the administration’s pro-crypto stance.
5. Political Dynamics and Industry Expectations
The election of a crypto-friendly administration under President Trump has injected fresh momentum into regulatory reform efforts. Industry stakeholders, who historically viewed Washington through a lens of cautious skepticism, are now optimistic that clear, predictable rules may emerge by year-end. Yet, concerns persist that close ties between key political actors and prominent crypto investors could complicate negotiations and fuel perceptions of regulatory capture.
Moreover, the SEC under new leadership has indicated a willingness to engage constructively with legislative proposals, though its final position on jurisdictional adjustments remains to be seen. Market participants are watching closely for:
- Definition thresholds that determine token classification
- Enforcement transition periods for legacy projects
- International alignment, especially given evolving frameworks in the EU and Asia
6. Market Reaction and Next Steps
Since the draft announcement, major exchanges and institutional investors have engaged with committee staff, offering technical feedback and expressing support for provisions that enhance legal certainty. Price movements in crypto markets have been modest, reflecting anticipation rather than immediate reaction. Analysts predict:
- Short-term volatility as stakeholders parse draft language
- Increased lobbying activity, particularly around control tests and decentralized governance definitions
- Potential amendments during the Financial Services Committee markup session later in May
Following the May 6 hearing, committee members are expected to convene markup sessions by late May, aiming to finalize both market structure and stablecoin bills before the summer recess.
Conclusion
The forthcoming discussion draft represents a pivotal moment in U.S. crypto regulation, building on FIT21’s foundation while introducing targeted refinements to balance innovation with oversight. As the May 6 hearing approaches, stakeholders across the ecosystem—from DeFi developers to legacy financial institutions—will vie to shape the contours of America’s digital asset framework. With dual tracks addressing both market structure and stablecoins, Congress has signaled its intention to deliver comprehensive regulatory clarity by August 2025, potentially setting a global benchmark for digital asset governance.
