Senate subcommittee hearing urges rapid action on digital-asset market-structure law

A Senate Banking Committee subcommittee hearing on digital‑asset market structure on Oct. 1, 2025, centered on calls for fast congressional action to clarify which federal agencies regulate different categories of tokens and to modernize rules for custody, bankruptcy and anti‑money‑laundering enforcement.

Chair Cynthia Lummis, chair of the Senate subcommittee on digital assets, opened the hearing by saying lawmakers had released a set of principles earlier in the day intended to guide bipartisan market‑structure legislation and noted the recent passage of the Genius Act addressing payment stablecoins. "Legislation should clearly define the legal status of digital assets," Lummis said, listing jurisdictional allocation, modernization of custody and recordkeeping, consumer protections and targeted illicit‑finance measures as priorities.

The panel of four witnesses — Sarah Hammer, executive director at the Wharton School and founder of the Wharton Cipher Accelerator; Greg Zitalis, general counsel of Multicoin Capital; Ryan Van Grack, vice president of legal at Coinbase; and the Hon. Russ Benham, former chair of the Commodity Futures Trading Commission — told senators that lack of statutory clarity was driving entrepreneurs, developers and capital offshore, increasing litigation and leaving retail customers exposed.

"Regulatory clarity does not hinder innovation. It enables it," Sarah Hammer said in her opening testimony, summarizing a comparative analysis she presented that shows other jurisdictions moving ahead with comprehensive frameworks. Greg Zitalis described an "invisible tax" from ambiguous rules that raises compliance costs and discourages U.S. builders, while Ryan Van Grack said, "Today, more than 52,000,000 Americans, that's 1 in 5 adults, own digital assets," and warned that a patchwork of state and federal claims of authority leaves consumers without consistent protections.

Former CFTC Chair Russ Benham told the panel that under current law there is "a gap in regulation for the nonsecurity digital asset market" and urged lawmakers to adopt a market‑structure approach modeled on established securities and derivatives markets. He recommended funding regulators for technology and staff, establishing a reliable self‑regulatory organization, and providing comprehensive authority for anti‑money‑laundering and customer‑segregation rules to protect assets in a bankruptcy.

Senators from both parties pressed witnesses on specific issues. Lawmakers asked about international examples; Hammer said Singapore's framework offered clear compliance obligations focused on anti‑fraud and anti‑terrorist financing goals. On jurisdictional lines, witnesses repeatedly urged statute to distinguish between (a) tokens that are securities because of the transaction and rights attached, and (b) tokens that function as commodities or network‑access tools — a distinction witnesses said courts are currently resolving by applying the Howey framework.

Panelists also recommended practical tools to support innovation while reducing market risk: new registration pathways for token fundraising, rules to ensure customers have priority in bankruptcy, modernized custody and recordkeeping requirements that account for distributed‑ledger technology, and use of sandboxes and no‑action letters to speed decisions. Several witnesses said the U.S. risks losing developer share and firm formation to jurisdictions already adopting bespoke licensing regimes such as the EU's Markets in Crypto‑Assets regime, Singapore and the UAE.

Chair Lummis invited continued bipartisan engagement and requested witnesses submit further written views on ancillary assets and self‑regulatory organization placement between the SEC and CFTC. No formal votes or legislative actions were taken at the hearing; senators and witnesses emphasized the urgency of completing market‑structure legislation to reduce fraud, encourage investment and preserve U.S. leadership in financial technology.

The hearing closed with bipartisan agreement among witnesses and many senators that Congress should act promptly to provide a clear statutory taxonomy, allocate jurisdiction between regulators, and adopt customer‑protection and AML/KYC standards designed for distributed‑ledger markets.