House Democrats are preparing a new crypto market structure bill that would expand Securities and Exchange Commission (SEC) oversight and revive provisions previously rejected in earlier legislative efforts. The proposal builds on consumer protection work led by Rep. Maxine Waters as Democrats prepare to take control of Congress in January. Its approach to market regulation, decentralized finance (DeFi) and government ethics could nonetheless put it at odds with parts of the crypto industry.

Waters Leads Democrats' Push for New Crypto Rules

Market structure legislation turns on a question that has anchored successive congressional attempts to write crypto rules: which federal regulator oversees digital asset trading. According to Crypto In America, Democratic staffers on the House Financial Services Committee have discussed the proposal with industry representatives. Four industry sources confirmed the discussions, though lawmakers have not publicly released a draft.

Waters introduced her Crypto Investor and Consumer Bill of Rights amendment during the House's 2025 consideration of the CLARITY Act. She is expected to chair the Financial Services Committee in the next Congress — the panel with jurisdiction over securities and banking legislation, whose chair controls which bills advance through the House.

The proposal would revive provisions Waters previously failed to secure and would also incorporate measures that Senate Democrats negotiated with Republicans before September's failed cloture vote — the Senate procedure required to end debate and advance a bill — which stalled the chamber's market structure effort. Justin Slaughter, a former Democratic policy adviser now at Paradigm, said development of the proposal began during the summer.

SEC Authority and Consumer Protections Divide Industry

Under the proposal, the SEC's authority over crypto markets would expand, while the Commodity Futures Trading Commission (CFTC) could receive a limited oversight role. That differs from the Republican-backed CLARITY Act, which favored CFTC oversight of digital commodity spot markets, with the SEC retaining jurisdiction over fundraising transactions and disclosures. Where that line is drawn determines which agency writes the trading rules crypto platforms must follow.

Waters' earlier amendment also proposed 24-hour customer service, asset insurance and stricter custody requirements, along with monthly proof-of-reserves attestations and restrictions on platforms trading against their customers.

Expanding SEC authority could nonetheless face industry resistance. Enforcement actions brought under former SEC Chair Gary Gensler against Coinbase, Ripple and Kraken remain a concern for crypto firms. Democrats are also weighing ethics provisions targeting crypto activities involving President Trump and other federal officials. DeFi regulation presents another potential point of disagreement, over whether decentralized platforms, which operate without a central intermediary, should be subject to traditional intermediary requirements.

Trump's Veto Power Creates Legislative Hurdles

Journalist Eleanor Terrett reported that Waters' remarks outlined Democrats' upcoming legislative priorities, and highlighted the openness of Justin Slaughter and Jen Brown to working with legitimate crypto businesses.

President Trump retains veto power for the next two years, and overriding a veto would require substantial Republican support. Republicans familiar with the proposal have already dismissed it as a messaging bill — legislation intended chiefly to stake out a position rather than become law. A Democratic strategist, however, said the effort could shape future legislation in 2029 or guide another Democratic administration's crypto policy. With no draft text public, the bill's scope — and whether any Republican support materializes for a veto override — remain open questions.