US market structure debate back on; CFTC welcomes MiCA licensees?

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The U.S. Senate is again discussing digital asset market structure legislation, and the regulator most responsible for crypto oversight wants to roll out the welcome mat for European-licensed operators.

• GOP expands market structure bill
• Dems issue cautious response
• CFTC opens door to MiCA exchanges
• House spending bill talks BTC/crypto reserves
• Trump Media starts buying CRO
• WLF v Justin heats up
• Eric Trump out as ALT5 director

On September 5, Republicans on the Senate Banking Committee issued a 182-page update on the discussion draft of crypto market structure legislation, which they released in July. The latest version of the Responsible Financial Innovation Act of 2025 (RFIA) incorporates some of the language from the CLARITY Act passed by the House of Representatives in July, adding a few new wrinkles.

Among the new clauses is one stipulating that tokenized stocks and other securities “shall not cease to be a security” just because they’re on a blockchain, thereby keeping them under the Securities and Exchange Commission (SEC) oversight. Conversely, tokenizing a real-world asset (RWA) that isn’t a security doesn’t make said RWA a security.

The draft calls for the SEC to form a joint advisory committee with the Commodity Futures Trading Commission (CFTC), ending the so-called ‘turf war’ between the two federal agencies over who regulates what in the digital asset space.

(Neither agency appears to have any issue with this direction, with SEC chair Paul Atkins and CFTC acting chair Caroline Pham issuing a joint statement on September 5 saying they’re considering ways of “harmonizing product and venue definitions; streamlining reporting and data standards; aligning capital and margin frameworks; and standing up coordinated innovation exemptions using each agency’s existing exemptive authority.”)

The RFIA says so-called ‘gratuitous distributions’ (airdrops, staking rewards, liquid-staking proceeds, etc.) don’t qualify as securities, so that’s one less thing the SEC has to worry about.

The RFIA also contains explicit protections for decentralized finance (DeFi) developers working on non-custodial platforms. Basically, devs would have to ‘knowingly’ exercise control over digital assets for illicit purposes to be found liable for prosecution. Similar protections would apply to transaction validators, node operators, contributing to liquidity pools, etc.

While the Department of Justice (DoJ) recently signalled that it won’t prosecute DeFi devs who aren’t demonstrably seeking to break the law, the crypto sector sought to enshrine this view in law rather than risk having a new administration adopt stricter policies.

A new section offers a similar safe harbor for ‘decentralized physical infrastructure networks’ (DePINs) that meet the necessary decentralized criteria (basically, anything that can’t be unilaterally controlled by any single individual or entity). Tokens issued by DePINs also wouldn’t be classified as securities.

The RFIA’s latest draft will require markup sessions and hearings by the Senate Banking and Agriculture committees. Assuming it gets to the Senate floor for a vote—and the government doesn’t shut down—the bill will require unanimous support from GOP senators plus another seven Dems. And while enough Dems sided with the GOP to pass the stablecoin-focused GENIUS Act this summer, Dems have some thoughts on how they want to see market structure play out.

Dems respond

This week, a dozen Senate Democrats—including Sen. Ruben Gallego (D-AZ), ranking member of the Banking Committee’s Subcommittee on Digital Assets—issued their response to the latest RFIA draft via a six-page Framework for Market Structure Legislation. The Dems envision handing the CFTC “exclusive jurisdiction over markets for digital assets that are not securities,” granting the CFTC authority to regulate spot commodity markets and platforms (which it currently lacks).

The Dems want to revive the practice of having “commissioners from both parties sit at the SEC and CFTC to create a quorum for digital asset rulemakings.” The Dems seek to reverse the purge of Dem-appointed individuals at federal agencies that President Trump has engaged in since returning to the White House in January.

Dems also want crypto platforms to register as ‘financial institutions’ under the Bank Secrecy Act (BSA), something that won’t go down well with these platforms, given the added compliance costs this will impose. Brian Armstrong, CEO of the Coinbase (NASDAQ: COIN) digital asset exchange, has publicly declared his desire to see “a constitutional challenge to BSA/AML [anti-money laundering] laws.” 

The Dems also want to undo the dismantling of the Consumer Financial Protection Bureau (CFPB), another Coinbase antagonist, while preserving the ability of states to observe their own antifraud, consumer, and securities laws. And the recently voiced prospect of international exchanges being allowed to serve U.S. customers shouldn’t exempt them from observing AML, counter-terrorist financing, and sanctions compliance.

Finally, in what is sure to be a non-starter on the GOP side of the aisle, Dems still aren’t wild about Trump’s ability to use “digital asset projects to enrich himself and his family, abusing his office for corruption with no modern precedent.” The proposed solution is limiting elected officials’ (and their families) ability to issue, endorse, or profit from digital assets while in office. Good luck with that.

Sen. Elizabeth Warren (D-MA), the Banking Committee’s ranking member and a noted crypto critic, issued a statement on Tuesday saying the GOP has ignored the market structure framework she released in July, choosing instead to release “two partisan drafts—including a recent proposal that reportedly reflects secret feedback from industry and other stakeholders that Republicans refuse to share with Committee Democrats, or the public.”

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CFTC acting chair tells Europe to come on over

Last month, the CFTC issued an advisory clarifying that its foreign board of trade (FBOT) framework would permit “non-U.S. entities legally organized and operating outside the United States” to provide U.S. customers with “direct market access to their trading platforms.”

On September 8, acting chair Pham was in the U.K. addressing the All-Party Parliamentary Group on Blockchain Technologies regarding the Trump administration’s ‘crypto roadmap.’ Pham told the APPG that the CFTC will “explore whether trading platforms authorized under the EU Markets in Crypto-Assets Regulation (MiCA), or similar virtual asset or crypto asset regimes, would also qualify under the CFTC’s current cross-border frameworks.”

In keeping with the CFTC’s newfound ‘move fast and approve things’ approach, Pham said “it is critical for the U.S. to evaluate the most pragmatic path forward” to figuring out how to “legally onshore trading activity efficiently and safely under CFTC regulations and open up U.S. markets to the rest of the world.”

Pham is currently the only sitting member of the CFTC’s five-member leadership panel, but the Senate Agriculture Committee reportedly remains keen on approving Trump’s nominee Brian Quintenz as the new head of the CFTC. The problem is, they’re unsure whether Trump still has faith in Quintenz.

John Boozman (R-AR), who chairs the Ag committee, told Politico last week that the panel wants to “go forward” with Quintenz’s hearing but is “waiting on what the administration wants to do.”

Quintenz had not one but two Ag committee dates cancelled at the last minute, apparently due to lobbying by the Winklevoss twins, co-founders of the Gemini exchange, who told the president that Quintenz was “not in line with [Trump’s] stated goals and policy.” A coalition of other crypto execs/associations then went to bat for Quintenz, but it’s anyone’s guess how Trump might choose to proceed.

As a Democratic aide noted to Politico, with the CFTC “a bit of a hot mess” at present, getting Dems to approve market structure legislation that hands the CFTC the bulk of crypto oversight seems unwise. At least, not without some sign that the CFTC’s ranks are due to be replenished (and not just with GOP yes-men/women).

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House bill seeks BTC reserve clarity, Sacks seeks to prolong White House stay

The bill also requires a second report from Treasury detailing “the custody architecture, legal authorities, cybersecurity protocols, and interagency procedures for transferring and holding digital assets.”

David Sacks, the Silicon Valley investor turned White House AI & Crypto Czar, helped produce the 166-page report released this summer by the President’s Working Group on Digital Assets that failed to provide clarity on the Reserve/Stockpile questions. But something tells us Sacks is still working behind the scenes to complete this.

According to a Semafor report, Sacks has real sway with Trump in part due to Sacks having hosted Trump’s first Silicon Valley fundraiser, long before the rest of the tech sector hopped on the bandwagon. An ally said Sacks “goes out of his way to [show] his loyalty, and the president knows that.” Sacks has also reportedly established good working relationships with Trump’s other senior aides.

However, Sacks’ designation as a ‘special government employee’ who didn’t require Senate confirmation allows him to serve only for a maximum of 130 days in any consecutive 365-day period. Sacks is said to be tracking his days working in D.C. like a pre-Ozempic “dieter on Weight Watchers” tracks their calories. A White House colleague put it this way: “He has no intention of leaving.”

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Trump Media buys CRO

Finally, there are obligatory updates on the Trump family’s crypto ventures.

Trump Media & Technology Group (TMTG) (NASDAQ: DJT) announced last Friday that it had closed an agreement to purchase 684.4 million Cronos (CRO) tokens at a price of 15.3¢ apiece—a significant discount from their ~27¢ value at the time—from CRO’s issuer, the Crypto.com exchange. The purchase, which totaled ~$105 million, was made on a 50/50 stock/cash basis.

The tokens represent ~2% of the total CRO supply, the initial installment of the $6.4 billion deal TMTG struck last month with Crypto.com and Yorkville Acquisition Corp. That deal will establish a CRO-based ‘treasury’ firm called Trump Media Group CRO Strategy, aiming to acquire $1 billion worth of CRO, representing ~19% of the total CRO supply.

On September 9, TMTG announced that it had updated its Truth Social app to allow ‘Patriot Package’ subscribers to Truth+ (the platform’s ‘non-woke’ streaming service) to convert their activity-based reward points (‘gems’) to CRO. This conversion will be facilitated by Crypto.com’s digital wallet infrastructure.

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WLF v Justin heats up

Meanwhile, controversy continues to swirl around last week’s launch of public trading of the WLFI token issued by the Trump-linked DeFi project World Liberty Financial (WLF). Not long after trading commenced, some users complained that WLF had frozen their wallets, prohibiting them from trading or selling their WLFI.

The irony here is high, as WLF co-founder Eric Trump has claimed his WLF involvement is based in part on his family having been ‘debanked’ by traditional financial institutions. It seemed to many that WLF was now doing the debanking. 

As the brouhaha intensified, WLF tweeted that it “only intervenes to protect users, never to silence normal activity.” WLF said it had “blacklisted” 272 wallets, of which 215 were “tied to a phishing attack,” while another 50 were owners who “reported compromise via support.” Five wallets were “flagged for high-risk exposure (security risk under review)” and one wallet was “suspected of misappropriation of other holders’ funds.”

Among these frozen wallets was one affiliated with Justin Sun, founder of the TRON blockchain, owner of the HTX exchange, and a prominent WLFI whale. A WLFI wallet linked to Sun engaged in transfers of millions of dollars’ worth of WLFI to exchanges around the time of the token’s public debut.

Cynics pointed to HTX’s offer of an outsized 20% ‘yield’ for users who staked their WLFI long-term with the exchange. The allegation was that Sun—who’d publicly promised not to sell his WLFI—was looking to sell these users’ WLFI so he could cash in while the public feeding frenzy was still on, while making it appear as if he was honoring his public pledge not to sell his own tokens.

Following WLF’s explanatory tweet, Sun tweeted to the WLF team and “the global community” that his tokens had been “unreasonably frozen.” Sun called on WLF to “respect” the principle that tokens are “sacred and inviolable” and unlock his tokens ASAP. Sun even promised to “market buy $10 million worth of [WLFI treasury firm ALT5 Sigma Corporation (NASDAQ: ALTS)] and $10 million worth of WLFI.”

Some onlookers wondered why Sun appeared to be conducting this negotiation in public via X, given his previous purchase of $75 million worth of WLFI, which had earned him a role as a WLF advisor. Sun has yet to follow up with additional tweets on the matter.

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Eric Trump no longer on ALT5 board

Shifting back to ALT5 Sigma, back when the $1.5 billion deal between ALT5 and WLF was announced in mid-August, Eric Trump was named a new member of ALT5’s board of directors. However, on August 25, the company quietly informed the SEC that Eric was no longer a director, merely an ‘observer.’ ALT5 says the change followed “discussion” with Nasdaq officials, “and in order to comply with Nasdaq’s listing rules.”

According to the filing, the other previously announced appointments—WLF co-founder/CEO Zach Witkoff as ALT5’s new chairman, and WLF co-founder/COO Zach Folkman as both a director and observer—will stand, pending shareholder approval.

Neither ALT5 nor WLF has yet to comment publicly on the matter, and the ‘leadership team’ section of ALT5’s website continues to list Eric as a director. Late Tuesday, Eric responded to a tweet by a ‘WLFI enthusiast’ who claimed Eric’s shift from director to observer was no big deal. Eric tweeted that this view was “correct” and that he was “1000% committed” to WLF and “all in.”

ALT5 closed Tuesday down nearly 3% to $4.01, and TMTG fell nearly 1% to $16.90, while the Trump-linked treasury/block reward mining outfit American Bitcoin Corp (ABTC) (NASDAQ: ABTC) bucked the downward trend by shooting up 11.6% to $9.31, its best close since making its Nasdaq debut a week ago.

To be clear, nearly all miners enjoyed double-digit gains—many larger than ABTC’s—on Tuesday after Microsoft (NASDAQ: MSFT) announced a major expansion of its high-performance computing efforts.

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