House Democrats are discussing a crypto market-structure bill that would replace the CLARITY Act’s regulatory framework with one led by the Securities and Exchange Commission (SEC). The outlet cited four industry sources who had spoken with Democratic staff on the House Financial Services Committee and said the bill has not been made public.
The talks follow the November 3 midterm elections, in which Democrats took control of both chambers of Congress. The new Congress convenes in January 2027, and unless lawmakers revive the CLARITY Act before the current session ends, the industry will need to start a new legislative effort with Democrats controlling both chambers.
Waters’ 2025 Amendment Forms the Base of the CLARITY Act Alternative
The proposal would build on Rep. Maxine Waters’ (D-CA) Crypto Investor and Consumer Bill of Rights, an amendment she introduced when the House considered the CLARITY Act in 2025. Waters is in line to chair the House Financial Services Committee in the next Congress. Her amendment called for 24/7 customer service, insurance or SIPC-like coverage for customer assets, stricter custody rules, monthly proof-of-reserves attestations and restrictions on platforms trading against their own customers.
Democrats would combine those measures with provisions that Senate Democrats negotiated with Republicans before the CLARITY Act’s September cloture vote failed. Justin Slaughter, a former Democratic policy adviser who now works at crypto venture firm Paradigm, wrote on X that the proposal has been in drafting since the summer. A press official for Waters did not immediately respond to Crypto In America’s request for comment.
SEC Oversight Would Replace the CFTC’s Lead Role
The House-passed CLARITY Act gives the Commodity Futures Trading Commission (CFTC) primary oversight of spot markets for digital commodities and leaves the SEC with jurisdiction over fundraising and disclosures. The Democratic plan would expand the SEC’s oversight of crypto markets and limit the CFTC’s role. One industry source familiar with the proposal told Crypto In America that the industry would not like it, describing a bill focused on the SEC with little to no role for the CFTC.
Ethics provisions aimed at crypto activities by President Donald Trump and other federal officials are also expected. That issue was a major sticking point in the CLARITY Act negotiations, and every Senate Democrat voted against advancing the bill in September. A Democratic strategist told the outlet that decentralized finance (DeFi) could become another point of conflict, since the industry may have to revisit whether DeFi should be allowed to operate at all under a future framework.
$200 Million in Crypto Spending Did Not Rescue the CLARITY Act
The CLARITY Act passed the House 294-134 in July 2025, but the Senate voted on September 15, 2026, to block it from moving forward. Earlier in the year, the bill’s Senate path had looked more promising, as Disruption Banking reported when a White House adviser signaled that its final hurdles were falling.
The crypto industry spent more than $200 million on midterm campaigns to elect lawmakers who could pass a market-structure bill. TD Cowen analyst Jaret Seiberg wrote that Democrats will investigate Trump’s crypto ventures, including World Liberty Financial, and that the resulting climate may make it “impossible to advance a version of Clarity that the crypto sector could back.” Duke University’s Lee Reiners told CNBC that “CLARITY is dead.”
A Democratic bill would face obstacles of its own. Trump keeps his veto power for the next two years, and Republicans familiar with the effort have already dismissed it as a “messaging bill.” The Democratic strategist told the outlet that the proposal could instead lay the groundwork for another attempt at a market structure in 2029 or shape how a future Democratic administration regulates crypto.
Author: Ayanfe Fakunle
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organizations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
See Also:
Democrats Sweep Congress as Kalshi Prices 6% Odds for CLARITY Act Before 2027 | Disruption Banking
CLARITY Act Falls Short in the Senate, Stalling U.S. Crypto Rules for 2026 | Disruption Banking
