Crypto Legislation Debate: Senate vs. House Bills
As discussions intensify in the US Congress regarding crypto legislation, industry experts are divided over which proposed bill will best clarify the digital asset market structure. The debate centers on two competing versions, each with its own approach to regulating the burgeoning sector.
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Paradigm Advocates for Senate’s Crypto Proposal
Recently, industry stakeholders gathered to deliberate the distinctions between the House and Senate versions of a pivotal crypto bill. Following the enactment of the GENIUS Act, attention has shifted to this market structure legislation, anticipated to bring the much-needed clarity and security to the cryptocurrency industry.
The House of Representatives has introduced and approved the Digital Asset Market Clarity (CLARITY) Act of 2025. This legislation aims to establish a clear regulatory framework for cryptocurrencies in the US, promote innovation within crypto projects, and safeguard consumer interests.
Meanwhile, the US Senate began outlining its principles for a comprehensive market structure bill in June. The Senate Banking Committee released a draft detailing six core principles, which have been well-received by the Decentralized Finance (DeFi) sector.
Dan Robinson, General Partner at Paradigm, expressed the firm’s support for the Senate’s draft during the Banking Committee’s discussion. He noted that this version presents a more straightforward approach compared to the Howey-based regime, avoiding the need for decentralized tokens and protocols to conform to a rigid legislative framework.
The draft focuses on defining ancillary assets, distinguishing typical crypto assets from securities based on their intrinsic nature. This approach, according to Paradigm and other supporting firms like Chainlink Labs and Galaxy Digital, offers a robust test to protect decentralized assets while preventing traditional security issuers from exploiting the framework.
Disagreement Among Industry Leaders
Despite consensus among various crypto venture capital firms, a16z crypto stands apart. Miles Jennings, Head of Policy and General Counsel at a16z crypto, refuted claims of industry alignment, asserting that major crypto hedge funds, not venture capitalists, have backed the token maturity framework proposed in the CLARITY Act.
Jennings emphasized the Decentralization Research Center’s (DRC) comparative analysis of the Senate and House proposals. He argued that undermining the CLARITY Act’s transfer restrictions could incentivize short-term strategies detrimental to decentralization and innovation.
Earlier, the DRC submitted feedback to the Senate Banking Committee, advocating for the strong foundation laid by the CLARITY Act. The organization believes the House’s robust, control-based decentralization test offers a superior approach.
Last month, the DRC, along with 50 other industry entities, endorsed the CLARITY Act in a letter to Congress leaders, marking the largest coalition in agreement on a decentralization test.
Gabriel Shapiro, an attorney, concurred with the sentiment, criticizing the Senate’s test as a “race to the bottom” that neglects policy coherence. He argued that reduced regulation in the absence of rights leads to perpetual conflicts, highlighting the need for a balanced approach to regulation.
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