In a pivotal move shaping the future regulatory landscape of digital assets, the Senate Banking Committee has unanimously released a discussion draft outlining comprehensive cryptocurrency market-structure legislation. This development follows the House’s passage of the CLARITY Act and complements the recently signed GENIUS Act, focusing on stablecoin regulation. The new draft aims to clarify the distinction between digital commodities and securities, streamline SEC registration protocols, and establish consistent disclosure standards for banks utilizing distributed ledger technology. It also seeks to define “ancillary assets” that would be exempt from stringent registration, better manage custody and trading venue oversight, and furnish banks with guidelines to integrate blockchain systems—all while strengthening anti-illicit finance safeguards.
Senators Tim Scott, Cynthia Lummis, Bill Hagerty, and Bernie Moreno spearheaded the drafting effort. Scott and Lummis recently introduced a seven-point principles framework, underscoring statutory distinctions between commodities and securities, jurisdictional boundaries, consumer protections, and support for innovation. Senator Lummis, chair of the Senate Digital Assets Subcommittee, emphasized the Senate’s intent to use the House’s CLARITY Act as a legislative foundation.
Chairman Scott has announced a September 30 target to finalize the legislation, including markup, committee approval, and floor action. That timeline has received support from key stakeholders in the digital asset industry, including several crypto firms and regulatory advisors. House Majority Whip Tom Emmer expressed confidence in the Senate’s ability to pass a reconciled version later this year, despite the pressures of upcoming budget debates. These efforts build on the House’s passage of three crypto-related bills last week, including the GENIUS Act, which mandates reserve backing, regular audits, and anti-money laundering compliance for all stablecoin issuers.
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Meanwhile, markets responded swiftly to the regulatory shift. Shares of Circle Internet Group (NYSE: CRCL), issuer of the USDC stablecoin, dropped more than 8% following a downgrade from investment firm Compass Point. Analyst Ed Engel cited sustainability concerns and increased competition, noting Circle’s profit-sharing agreement with Coinbase as a potential limiter on future growth. He reduced his price target from $205 to $130, warning that Circle could lose market share as rival stablecoins gain traction.
ARK Invest, led by Cathie Wood, also reportedly exited a large position in Circle, selling over $110 million in stock earlier this summer. The move marked a reversal from ARK’s bullish stance during Circle’s IPO in June, when the company briefly traded near $299 per share. The stock has since declined, falling into the low $180s by early July, raising questions about investor appetite for crypto-adjacent equities.
Despite volatility in individual crypto-linked stocks, broader digital asset markets remain strong. Bitcoin is trading near $119,700, and Ethereum recently touched a 2025 peak at $3,798. Mining companies and spot Bitcoin ETFs have benefited from renewed investor optimism surrounding regulatory clarity. Firms like Riot Platforms and Bitfarms have seen upward movement, reflecting bullish sentiment tied to upcoming legislative certainty.
Equity markets remained cautious, with Wall Street futures slipping due to investor jitters ahead of a major slate of second-quarter earnings reports. While the Nasdaq experienced minor declines due to profit-taking in the tech sector, the S&P 500 continued inching toward record highs. Corporate earnings strength and resilient macroeconomic indicators have underpinned confidence across many sectors. Coca-Cola’s stronger-than-expected revenue, reported ahead of its Q2 earnings release, also helped bolster market sentiment.
The GENIUS Act, signed into law by President Trump on July 18, set a new benchmark for stablecoin oversight in the United States. The law mandates that all stablecoins be fully backed by cash or equivalents, subject to monthly independent audits, and compliant with strict AML rules. It marks one of three bills passed by the House during what lawmakers dubbed “Crypto Week.” Alongside the GENIUS Act and the CLARITY Act on market structure, a third bill banning a central bank digital currency also cleared the chamber.
The Senate’s new market-structure proposal expands upon the House’s foundation. By defining digital asset categories, limiting SEC overreach, and creating a road map for blockchain integration into banking infrastructure, the draft legislation aims to bring lasting legal clarity. Industry stakeholders, including Anchorage Digital and various fintech lobbying groups, have praised the proposal for offering regulatory certainty while preserving space for innovation.
The path forward now hinges on the Senate Banking Committee’s ability to maintain its September deadline. If successful, the market-structure bill will head to the Senate floor, then return to the House for reconciliation. With bipartisan backing and strong industry support, many see a realistic pathway toward final enactment by the end of 2025.
As digital asset legislation takes clearer shape, investors are recalibrating their approach to crypto equities and blockchain-linked stocks. The dual forces of policy stability and market revaluation are likely to remain central themes for both regulators and financial markets in the weeks ahead.
Source: Investors.com – July 22, 2025
