House subcommittee opens push for comprehensive digital-asset market-structure legislation

The Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence convened a hearing titled “American Innovation and the Future of Digital Assets, Aligning the US Securities Law for the Digital Age,” opening a multiweek effort to craft market-structure legislation for digital assets.

At the hearing, Subcommittee Chairman Stile said the panel will “examine what aspects of the ecosystem are implicated by securities laws and analyze the challenges of applying these laws,” and pressed for legislation to provide clear rules for issuers and intermediaries. Ranking Member Lynch and other Democrats warned that legislative changes could lower investor protections and criticized recent agency actions and enforcement reductions.

Witnesses gave sharply different prescriptions. Rodrigo Seira, special counsel at Cooley, argued the existing securities-law framework is “not fit for purpose” for many digital assets and urged a new regulatory approach tailored to network tokens and decentralized protocols. Seira said the securities-registration regime forces projects into an unsuitable disclosure framework and “virtually no crypto projects have successfully registered their tokens under federal securities laws, and lived to tell the tale.”

Tiffany J. Smith, partner at WilmerHale, told the subcommittee that congressional action is needed for “true regulatory clarity,” describing three priorities: clarifying when federal securities laws apply, giving practical guidance on compliance when they do, and ensuring that agency patchwork does not leave important markets unregulated. Smith said the SEC’s prior guidance was inadequate and that tailored disclosure rules should account for crypto-specific features such as governance, tokenomics and cybersecurity.

Jacob Waren, chief legal officer at Polygon Labs, framed technological benefits for users and developers, asking lawmakers to consider how decentralization, self‑custody and 24/7 settlement differ from traditional markets. Waren said decentralization “is inherently democratic” and argued the U.S. risks losing developers and projects to jurisdictions that offer clearer rules.

Alexandra Thornton, senior director for financial regulation at the Center for American Progress, emphasized risks, including volatility, thefts, and frauds that she said have already caused large investor losses. Thornton urged lawmakers to preserve core capital-markets protections and to avoid creating regulatory loopholes that could destabilize traditional markets.

The hearing highlighted familiar divides the committee must reconcile: whether to treat some digital tokens as securities and subject them to existing disclosure and intermediary rules; how to adapt custody rules for native digital assets; and how to align SEC and CFTC jurisdiction for spot markets, derivatives and tokenized real‑world assets. Several members referenced FIT 21 and last week’s STABLE Act as building blocks for a broader market-structure bill.

Lawmakers pressed witnesses on practical questions—how projects form and finance, how settlements and trading hours differ from securities markets, and what a workable disclosure regime would look like. Multiple witnesses said the current Howey-based analysis is hard to apply in the digital context and called for legislative clarity or a refreshed taxonomy.

The subcommittee did not take formal legislative action at the hearing. Members said they expect continued markups and drafting to follow and gave witnesses and staff time to produce technical proposals for possible statutory language.