House subcommittees press for clear federal rules for digital assets after objection halts joint hearing

Ranking Member Waters objected to convening a formal joint hearing on digital assets, calling attention to alleged conflicts of interest involving the president and crypto businesses, and the committees proceeded with a joint roundtable that focused on regulatory clarity for digital-asset markets.

The roundtable, convened by leaders of the House Financial Services Committee and the Agriculture subcommittee on commodity markets, digital assets and rural development, centered on a newly released discussion draft of digital-asset market-structure legislation and whether Congress should grant spot-market authority primarily to the Commodity Futures Trading Commission (CFTC) to close regulatory gaps.

Why it matters: lawmakers and witnesses said uncertainty about whether tokens are securities or commodities has driven startups and capital offshore, left investors exposed and complicated compliance. Witnesses and former regulators urged Congress to create fit-for-purpose rules that preserve innovation while adding customer protections such as registration, custody standards, AML/KYC and reporting.

Industry and former regulators described practical problems under current law. James Rathmell, general counsel at Haun Ventures, told the panel, "A digital asset is not inherently a stock, currency, or investment contract," and argued for a graduated framework that adapts as a project matures. Alex Miller, chief executive officer of HERO Systems, said trying to follow existing Securities and Exchange Commission pathways has been costly for developers: he told members his company’s Regulation A offering raised about $15 million and incurred roughly $3 million in related compliance costs.

Several witnesses and committee members argued the CFTC is the natural regulator for many spot-market digital-asset activities because it already oversees derivatives and many related market functions. Dan Davis, former general counsel of the CFTC, pointed to the agency’s existing enforcement and surveillance of derivatives tied to crypto and said the Commodity Exchange Act’s principle-based approach could accommodate innovation.

Panelists urged that Congress write explicit lines between SEC and CFTC authority. Former CFTC Chairman Austin Benham recommended that registrant licensing remain exclusive to the appropriate agency rather than creating notice or deferral regimes that could leave gaps for bad actors. Greg Toussar, vice president of institutional products at Coinbase, told the committee that harmonizing market and custody standards across regimes would limit consumer confusion when products integrate both security-like and commodity-like features.

Members pressed witnesses on specific guardrails: anti–money-laundering and know-your-customer requirements, custody rules that protect customer assets in insolvency, examination and surveillance capabilities, and funding for any new regulator mandate. Witnesses repeatedly said token classification and custody were the two most important issues to resolve so entrepreneurs, developers and investors can operate with certainty in the United States.

The roundtable also featured repeated warnings that failure to pass a clear federal framework risks moving innovation and related jobs overseas. "If we don't act, innovation won't wait. It will simply move elsewhere," Rathmell said. Several witnesses said the discussion draft released by committee leaders was a strong step forward but required careful drafting to avoid jurisdictional gaps and unintended consequences.

No formal legislative action was taken at the meeting. The ranking member's objection prevented the session from running as a formal joint hearing that requires unanimous consent; the chairman stated "the objection is heard," and the committees continued the session as a roundtable so members could hear testimony and ask questions. Committee leaders said they expect further markup and invited witnesses to submit follow-up comments to the committees.

The roundtable drew officials and industry witnesses with legal and operational experience in digital markets, including former CFTC chair Austin Benham and representatives from venture investors and trading platforms. Members emphasized the need for legislative text to be precise about jurisdictional lines to reduce litigation and enforcement-by-litigation in courts.

Looking ahead: members said they intend to move toward drafting and markup of market-structure legislation that clarifies token classification, defines the CFTC and SEC roles, and prescribes customer-protection requirements; no timetable was announced at the roundtable.