House Democrats are discussing a broader crypto market structure bill that could expand Securities and Exchange Commission (SEC) oversight and revive investor protections the House previously rejected, including customer fund segregation, 24-hour withdrawal processing, and monthly proof-of-reserves reports.

The proposal would build on Maxine Waters' 2025 Crypto Investor and Consumer Bill of Rights amendment. Journalist Eleanor Terrett reported the discussions via X, noting that they involve provisions from earlier House and Senate negotiations. No finalized draft, agreement, or legislative timetable currently exists.

Democrats Seek to Expand Waters' Crypto Protections

According to Terrett, three industry sources familiar with discussions involving Democratic staffers described the proposal. Lawmakers have not introduced a new bill. Waters put forward her investor protections during the House debate over the CLARITY Act in 2025.

Her amendment included customer fund segregation, 24-hour withdrawal processing, and monthly proof-of-reserves reports from auditors. It also sought protection against front-running and round-the-clock customer support. The House did not adopt those provisions. Fund segregation and auditor-verified reserve disclosures became focal points for U.S. lawmakers after the 2022 collapse of the FTX exchange, which left customer assets entangled in bankruptcy proceedings.

The broader proposal could also incorporate measures that Senate Democrats negotiated with Republicans before September's failed cloture vote. That legislation needed 60 votes to advance toward debate — a threshold that requires support from at least some senators of both parties.

Proposal Could Shift SEC and CFTC Responsibilities

The discussions include giving the SEC a larger role in supervising crypto markets, while the Commodity Futures Trading Commission (CFTC) could receive more limited authority. That approach reverses the House-passed CLARITY Act, which assigned the CFTC primary jurisdiction over digital commodities and intermediaries. The CLARITY Act cleared the House in July 2025 with votes from both parties, and how the two agencies divide oversight determines which regulator supervises digital-asset trading platforms and the rules those platforms must follow to operate.

Democrats are also considering additional ethics restrictions involving President Donald Trump and other federal officials. Waters previously proposed the Stop TRUMP in Crypto Act, which sought limits on certain digital-asset transactions involving lawmakers and their relatives. Republicans have reportedly dismissed the latest effort as a “messaging bill.” No complete draft or finalized agreement on the oversight and ethics provisions has emerged.

Next Congress Faces Renewed Crypto Legislation Debate

The discussions concern legislation for the next Congress, which begins in January 2027. The report identifies November 3 election victories as part of the political backdrop. Ripple CEO Brad Garlinghouse said pro-crypto candidates won across both parties and called for clear rules developed in the United States. Ripple Chief Legal Officer Stuart Alderoty also urged bipartisan cooperation on digital-asset regulation.

Lawmakers have not announced a timetable for the proposed bill, and the CLARITY Act also lacks a scheduled Senate vote. The near-term signals to watch are whether Democratic staffers convert these discussions into legislative text, whether any bipartisan agreement surfaces in the Senate, and whether the CLARITY Act receives a floor vote.

Source: Cryptofrontnews