Bipartisan Senate Cryptocurrency Coalition Collapses, Putting Crucial Software Developer Protections at Risk

Senate Agriculture Chair John Boozman has unveiled the revised text concerning the crypto market structure, having published the comprehensive bill PDF last night.

This release solidifies a path for Senate Agriculture to advance its discussions next week, yet simultaneously exacerbates the political fissure that may dictate whether Senate Banking receives a negotiated bridge or a competing framework for subsequent deliberations.

According to Politico’s Jasper Goodman, the draft “has not yet been shared with [Democrat] Sen. Cory Booker.” Meanwhile, independent crypto journalist Eleanor Terrett remarked that the markup “is shaping up to be partisan,” despite Senate Banking’s aspirations for a bipartisan accord to facilitate its own markup effort.

Boozman’s January 21 rollout recalibrates the prevailing dynamic: while the committee’s text is now publicly accessible, it underscores that the Boozman-Booker initiative did not coalesce into a cohesive bipartisan package.

Senate Agriculture Defines the Immediate Agenda

Procedurally, Boozman has established a definitive Senate Agriculture timeline, offering a stable foundation for markets prior to the publication of any text.

In a press release from January 13, he indicated that legislative text was slated for release by the close of business on January 21, a deadline that has been satisfactorily met with the availability of the bill PDF.

Additionally, he stated that the committee markup is set for January 27 at 3 p.m. Boozman had previously remarked that the committee required additional time “to finalize the remaining details and ensure the broad support this legislation necessitates” when he postponed a prior markup, indicating that activity would take place during the last week of January—a trajectory that now culminates in a published text leading into next week’s vote.

The Comprehensive Text: Boozman-Booker Draft

The Agriculture Committee’s objectives are delineated in two crucial documents: the earlier bipartisan discussion draft issued on November 10 by Boozman and Booker, alongside the newly posted January 21 bill text.

This package delineates a framework granting enhanced CFTC authority over “digital commodities” in spot markets, supplemented by consumer protections and a funding stream.

The January 21 update retains the CFTC-centric architecture but integrates more politically contentious definitional and operational stipulations, including the explicit incorporation of “meme coins” within the definition of “digital commodity,” unless specifically excluded by rule.

The text encompasses definitions, rulemaking, and registration stipulations for “digital commodity intermediaries” as mandated by the CFTC.

This includes registration protocols for exchanges and for brokers and dealers, along with the newly introduced expedited registration process and provisional operating regime aimed at minimizing the time lag between enactment and compliance formulation.

Moreover, the draft explicitly addresses decentralized finance and anti-money laundering considerations.

In the amended January 21 text, these previously standalone components are now encompassed within refined definitions and a novel “software developer protections” section, intended to prevent certain developers and non-custodial tools from being classified as regulated intermediaries solely due to their involvement in development, publication, or maintenance activities.

Booker’s office portrayed the November 10 document as a foundational draft following extensive negotiations.

This positioning now appears less favorable, serving more as a demarcation than a cohesive pathway: Boozman’s rollout acknowledges Booker’s participation while simultaneously asserting text that seems poised to advance through Senate Agriculture independently of a jointly branded accord.

The evolving political divide holds significance for markets, not merely as a tally but as a determinant of prospective timelines.

With the text now disclosed, attention turns to whether the January 27 markup will yield a committee-approved vehicle capable of reconciliation with Senate Banking’s postponed H.R. 3633 trajectory, or if it necessitates Banking to await a more challenging cross-committee consensus.

Scott had initially sought to facilitate that process via a January 15 markup, which was subsequently postponed.

If Agriculture proceeds on January 27 without Booker’s endorsement, as indicated on X, the committee vote could produce a negotiating vehicle, though this would likely manifest as a more pronounced partisan delineation than a pre-negotiated compromise.

This outcome may also amplify the likelihood that Banking will remain in flux until a cross-committee resolution surfaces. Notably, the only update recorded from Banking reflects the “POSTPONED” status of its executive session.

Compliance Timelines and Market Sensitivity

A staggered approach maintains compliance planning concentrated on the preparations firms can undertake absent finalized statutory boundaries.

This is particularly pertinent for registration mechanics and operational controls akin to those of existing CFTC market intermediaries.

The updated text endeavors to mitigate uncertainty by outlining an expedited registration pathway and provisional operating conditions rather than deferring the entire ramp-up to subsequent rulemaking.

The Agriculture discussion draft’s focus on definitions, rulemaking, and registration implies that post-enactment, the initial binding constraints would revolve around the cadence of CFTC rulemakings and the regulatory throughput for new registrants.

The revised text introduces more explicit timing mechanics: it mandates that the CFTC establish an expedited registration process within 180 days, subsequently tying ongoing operations to registration within a 90-day window post-establishment of the expedited procedure, with provisional status extending until later effective dates materialize.

This capacity query emerges against a backdrop where the CFTC reported over $17.1 billion in monetary relief and 58 new enforcement actions in FY2024, illustrating an enforcement scale that does not equate to executing routine spot-market examinations and ongoing oversight for an expanded roster of registered entities.

The new expedited registration initiative raises the stakes regarding whether resources and throughput can align with the bill’s accelerated timeline.

Simultaneously, the SEC has downplayed prominent “registration/status” disputes involving major crypto platforms (often sidelining legacy cases), while continuing to address retail-harm and fraud concerns.

In 2024, the SEC initiated 33 crypto-related enforcement actions, reflecting a 30% decrease from 2023. Last year, that figure further declined, with only a few SEC releases pertaining to crypto.

This backdrop provides an enforcement context for tokens still mired in disputes over their classification under securities laws, even as the Agriculture draft progresses toward a commodity-oriented spot framework that now explicitly includes meme coins unless otherwise excluded.

Market positioning has also exhibited sensitivity to policy shifts and macroeconomic repricing, which can exacerbate the impact of the committee calendar risk, even prior to the finalization of statutory language.

CoinShares reported a substantial $454 million in weekly outflows in its January 12 review, attributing the shift primarily to diminishing expectations of a March Federal Reserve rate cut in the wake of macroeconomic data.

One week later, CoinShares noted $2.17 billion in weekly inflows—the highest since October 2025—while indicating that sentiment had waned toward the end of the week amid geopolitical tensions, tariff threats, and uncertainty in policy; included were $1.55 billion flowing into bitcoin products and $496 million into ether products.

Stablecoins, AML Considerations, and the Upcoming Market

For legislators, the liquidity linked to stablecoins and the integrity of AML practices constitute pivotal concerns influencing the focal points of trading, custody, and settlement once federal regulations transition from draft text to compliance frameworks.

The Agriculture initiative’s earlier discussion-draft included definitive DeFi and AML provisions; however, the high-signal enhancements within the revised text manifest elsewhere, most prominently within the expanded definitional architecture (encompassing meme coins) and software developer protections, leaving AML challenges to be negotiated through alternative supervisory and statutory measures.

The results hinge on whether obligations are inscribed directly into statute or deferred to future rulemaking. International policy trends continue to endorse tighter regulatory frameworks.

The Bank for International Settlements has posited that stablecoins “fall short” as viable forms of currency and could incite risks in the absence of regulation.

It has advocated for a “tokenised unified ledger” concept for settlement and tokenization, suggesting increased formal integration with regulated financial frameworks over time.

With the deadline for the Senate Agriculture text’s release now lapsed and a markup scheduled for January 27, the next formal benchmark for U.S. crypto market structure rests on whether the published bill can navigate through committee channels and reestablish a viable bipartisan trajectory, or if the divergence from Booker’s previous bipartisan stance relegates software developer protections and interim registration mechanisms to bargaining chips in a prolonged cross-committee negotiation.

The market’s forthcoming assessment will similarly hinge on how any released text contrasts with Booker’s earlier bipartisan draft.

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