The Senate has moved one step closer to regulating cryptocurrencies as commodities rather than securities—a shift that would open the door to spot trading. The move aligns with the broader trend, accelerated under the Trump administration, toward easing restrictions on crypto.
A new bipartisan discussion draft from the Senate Agriculture Committee would grant the Commodity Futures Trading Commission (CFTC), rather than the Securities and Exchange Commission (SEC), explicit authority to regulate spot market trading in digital commodities.
“It would, for the first time, create a federal regulatory regime for trading spot non-security crypto assets, define boundaries between CFTC and SEC, enhance consumer protection as it builds on the CLARITY Act, and would provide clarity and certainty to exchanges and investors,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It also has a focus on self-custody protections, developers, and infrastructure providers. Everyone knows they’re not money transmitters, so this classification would be accurate.”
The Move to Spot Trading
While crypto exchange-traded funds (ETFs) have been available for nearly two years, regulators have yet to approve spot trading, which would allow investors to buy and sell individual digital assets on the open market. Acting CFTC Chair Caroline Pham has said the agency is pushing to allow leveraged spot crypto trading, and U.S. crypto exchanges could be able to launch leveraged crypto spot products as early as next month.
Until now, the SEC has played the primary role in overseeing crypto trading, including approving and supervising ETFs that hold digital assets. However, the crypto industry has argued that digital assets are commodities—like gold and other precious metals—and should be regulated as such.
“Because the SEC has been so hostile towards the industry over the last administration’s four years, I think it provides the industry with a big sigh of relief,” said Hugentobler.
Approved by the House
The House of Representatives had already designated the CFTC as the leading regulator of digital assets in the U.S. last year. At the time, the Democrats controlled the Senate, and their skepticism toward the crypto industry meant that the bill never advanced.
With the Republicans now controlling the Senate, the draft legislation appears more likely to pass. New Jersey Democrat Cory Booker, one of the co-authors of the draft, may also bring other Democrats on board.
