As Democrats gear up to take control of both the House and Senate in January, discussions are underway to revive crypto investor protection legislation and expand it into a broader digital asset market structure bill, Crypto In America has learned.
According to four industry sources who have spoken with House Financial Services Committee Democratic staffers, the proposed bill, which has not been made public, would build on Rep. Maxine Waters’ (D-CA) Crypto Investor and Consumer Bill of Rights, an amendment she introduced during the House’s consideration of the Clarity Act in 2025. Waters is poised to chair the committee next Congress.
The plan, the sources say, is to bring back provisions she unsuccessfully pushed for in the House last year, along with measures Senate Democrats negotiated with Republicans before September’s failed cloture vote. According to Justin Slaughter, a former Democratic policy adviser now at crypto venture capital firm Paradigm, the proposal has been in the works since the summer.
A press official for Waters did not immediately respond to a request for comment.
Among the ideas under discussion are expanding the Securities and Exchange Commission’s oversight of crypto markets and giving the Commodity Futures Trading Commission a limited role. That would mark a significant departure from the Republican-led Clarity Act, which sought to give the CFTC primary oversight of digital commodity spot markets while leaving the SEC with jurisdiction over fundraising transactions and disclosures.
Additional ethics provisions are also expected, targeting crypto-related activities by President Trump and other federal officials. The issue was a major sticking point in negotiations over the Clarity Act and helped drive the legislation’s collapse in September, when all Senate Democrats voted against advancing it.
The crypto industry has spent years calling for clear rules of the road. But would it get behind what Democrats are proposing?
Waters’ original amendment called for a sweeping set of consumer protections, including 24/7 customer service, insurance or SIPC-like coverage for customer assets, stricter custody requirements, monthly proof-of-reserves attestations and restrictions on trading against customers.
While some of those measures may find support within the industry, expanding the SEC’s authority could be a tougher sell. Many in the industry haven’t forgotten what some have called former SEC Chair Gary Gensler’s “reign of terror,” when the agency pursued an aggressive enforcement campaign against crypto companies, suing major players including Coinbase, Ripple and Kraken over alleged securities law violations. The concern is that a future SEC administration could take a similarly aggressive approach, potentially armed with even greater authority over the industry.
“I don’t think industry will like it,” said another industry source familiar with the proposal, who described it as much more SEC-focused, with little to no role for the CFTC.
The treatment of decentralized finance, or DeFi, could be another major flashpoint.
One Democratic strategist who spoke with Crypto In America warned that the industry may have to revisit the fundamental question of whether DeFi should be allowed to operate at all under a future framework, or be subject to regulatory requirements imposed on traditional intermediaries. While some Democrats may be open to portions of the Clarity Act, the strategist said DeFi remains one of the biggest potential areas of disagreement.
But getting such legislation across the finish line will be an uphill battle. Trump retains veto power for the next two years, and overriding him would require significant Republican support. Republicans familiar with the effort to revive the Waters amendment are already dismissing it as a “messaging bill.”
Still, the proposal could have implications beyond Trump’s tenure. According to the strategist, it could lay the groundwork for another attempt at market structure legislation in 2029 or shape a future Democratic administration’s approach to regulating crypto.