US Senate Ag committee releases market structure draft

The Senate Agriculture Committee has finally released a draft of its digital asset market structure legislation. The U.S. taxman says it’s cool with crypto ETF staking, and the courts threw the book at a DeFi dev.

The fiat prices of many digital assets soared Sunday, November 9, as word spread that the longest government shutdown in U.S. history appears to be coming to an end. Senate Republicans convinced enough Democrats to join them in ending the shutdown, which still requires similar approval in the House of Representatives before everyone officially gets back to work.

Token prices also got a boost from a Truth Social post by President Donald Trump indicating his desire to send “dividend” checks “of at least $2000 a person (not including high income people!)” to all Americans. These ‘dividends’ will come from the “trillions of dollars” allegedly (not really) collected via revenue generated by Trump’s economic tariffs on other nations.

However, Treasury Secretary Scott Bessent almost immediately qualified Trump’s largesse, telling ABC’s George Stephanopoulos that he hadn’t spoken to the president regarding this plan. Bessent added that the ‘dividends’ “could come in lots of forms and lots of ways,” and might simply mean “the tax decreases that we are seeing on the president’s agenda.”

In an interview with Fox News, Kevin Hassett, director of Trump’s National Economic Council, was also asked about the president’s pledge. Hassett hedged, saying only that Trump “will discuss with congressional leaders whether, because of all the extra tax revenue, there isn’t more room to get checks back to people.” Pressed for specifics, Hassett simply said that any plan to issue checks “will have to be passed by Congress.”

Regardless, major tokens reversed their steeply negative trajectory of the past few weeks, with BTC rising from below $100,000 on November 7 to nearly $106,000 on November 9 and briefly touching $107,000 on Monday. It remains to be seen whether the rally will prove fleeting as the realization grows that this might not be a repeat of the COVID-era stimulus checks that had so much to do with the surge that ‘crypto’ enjoyed during that period.

Senate market structure progress

Tokens may have also been buoyed by expectations that the shutdown’s end would accelerate the Senate’s progress in advancing digital asset market structure legislation. Both the Banking and Agriculture committees have separate versions of this legislation in the works, and while Banking is firmly in the lead, Ag finally released its initial 155-page ‘discussion draft’ on Monday.

We’ll have a deeper dive on the bill later, but for now, the main focus of the draft is for the Commodity Futures Trading Commission (CFTC)—over which the Ag committee has authority—to bear the brunt of digital asset oversight, while the Securities and Exchange Commission (SEC)—over which the Banking committee has authority—would take a lesser role.

In a statement accompanying the draft, Ag committee chair John Boozman (R-AR) said it was “essential” to ensure that the CFTC “has the tools, personnel and resources necessary to carry out this new mission, along with its current responsibilities.”

The statement quoted Banking member Cory Booker (D-NJ) saying it was important to ensure “bipartisan commissioners at the CFTC,” in keeping with the tradition that the five-commissioner agency features two members of the minority party. The CFTC currently lacks a permanent chair, and while Trump has nominated a permanent chair, the other four seats remain empty.

One bracketed section of the bill—indicating areas of ongoing disagreement between the parties—seeks to have the CFTC “fully constituted” with “not fewer than two members” of the minority party. This section also aims to ensure the CFTC is “appropriately staffed” before market structure legislation takes effect.

The bill’s bracketed sections extend to the definitions, including what constitutes a decentralized finance (DeFi) protocol, and even what’s meant by the term ‘blockchain.’ In fact, once you get beyond the contested definitions, the entire section (208) devoted to DeFi simply states “seeking further feedback,” signalling the deep divisions between the parties on this subject.

Recall that Dem members of the Banking committee sparked an uproar among crypto operators last month after daring to propose tightening guardrails around DeFi platforms and developers. While the Dems later met with crypto CEOs to mend some fences, it’s clear there’s a lot more work to be done on this front.

Another bracketed section (107) involves Treatment of Certain Noncontrolling Blockchain Developers. While the text exempts both the developers who design noncustodial crypto services and the infrastructure providers of those services from requiring money transmission licenses, the brackets indicate this is anything but a done deal.

Booker’s statement also expressed the desire to rein in “the ongoing corruption of public officials and whether Congress has created the correct guardrails to prevent those misdeeds.” This includes the president and his family, who have come to rely on its various crypto ventures for nearly all of the Trump Organization’s revenue and profits.

A bracketed section of the draft would require the CFTC to issue rules “establishing requirements for the identification, mitigation, and resolution of conflicts of interest among and across registered entities … and persons … including conflicts of interest related to market regulation functions and vertically integrated market structures and their varying responsibilities.”

Suffice it to say, any proposal to limit Trump-related crypto profiteering is likely a nonstarter with congressional Republicans. Previous efforts of this type have never made any headway, given that Dems control neither legislative chamber. But the Dems keep trying nonetheless.

Boozman and Booker had a call with White House ‘AI & Crypto Czar’ David Sacks last week, and Politico quoted Boozman saying post-meeting that he came away feeling like he and the administration were “95%” aligned on their legislative objectives.

However, the shutdown’s delays mean the original goal of each Senate committee holding markup sessions, merging their respective bills, and getting a final draft to the Senate floor by year’s end could prove too tough a lift. The Senate is in recess next week for the Thanksgiving holiday, leaving only a single week of activity before the December holiday break begins.

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CFTC keeps moving fast and breaking things

Pham has been aggressively testing the limits of her acting authority. The previous Democratic-appointed CFTC chair, Rostin Behnam, maintained that the CFTC required explicit authorization from Congress to oversee crypto commodity spot-trades by CFTC-regulated designated contract markets (DCM), including the Coinbase (NASDAQ: COIN) exchange.

Pham initially announced plans to permit leveraged spot trading back in August, part of the CFTC’s ‘crypto sprint’ (and the SEC’s corresponding ‘Project Crypto’) to implement proposals put forward by the White House’s Presidential Working Group on Digital Assets.

It’s perhaps worth noting that those most negatively impacted by last month’s crypto crash were those with highly leveraged positions on DeFi platforms. Those who profited from these leveraged losses were suspected of having connections to the federal government, as the carnage commenced shortly after President Trump announced his (since walked back) plan to impose new 100% tariffs on China.

Pham also told CoinDesk she was “working to ensure a smooth transition for President Trump’s nominee for the permanent CFTC chairman.” Pham, who previously announced her intention to step down once a permanent chair was confirmed, is rumored to have secured a position at crypto fintech Moonpay that she’ll pivot to once Selig is confirmed. Pham didn’t confirm these rumors when talking to Coindesk.

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Treasury, IRS give thumbs-up to staking-based ETFs

The SEC will also look to make up for time lost during the shutdown. SEC chair Paul Atkins previously stated that, before the year is through, he wants to enact an ‘innovation exemption’ that will further expand the boundaries of what’s legally permissible by crypto companies.

The SEC is also reportedly gearing up to issue a flurry of new approvals for crypto-based exchange-traded funds (ETFs), and it seems other federal agencies/departments are equally eager to broaden the scope of ETF approvals.

On November 10, Treasury’s Bessent tweeted that his department and the Internal Revenue Service (IRS) had “issued new guidance giving crypto exchange-traded products (ETPs) a clear path to stake digital assets and share staking rewards with their retail investors. This move increases investor benefits, boosts innovation, and keeps America the global leader in digital asset and blockchain technology.”

The IRS guidance details “a safe harbor for trusts that otherwise qualify as investment trusts under § 301.7701-4(c) and as grantor trusts to stake their digital assets without jeopardizing their tax status as investment trusts and grantor trusts for Federal income tax purposes. This revenue procedure also provides a limited time period for an existing trust to amend its governing instrument (trust agreement) to adopt the requirements of the safe harbor.”

In June, the SEC pumped the brakes on ETF issuer REX-Osprey’s pursuit of approval for two staking-friendly ETFs. And yet, the SEC’s last official guidance on ETF staking in May stated that “participants in Protocol Staking Activities do not need to register with the Commission transactions under the Securities Act.”

‘Protocol staking’ covers tokens staked on a network with a proof-of-stake (PoS) consensus mechanism (like Ethereum). The SEC says these tokens are “intrinsically linked to the programmatic functioning of a public, permissionless network,” including confirming transactions and maintaining the network’s technological operation and security.

Bill Hughes, an attorney at Ethereum-focused software developers Consensys, tweeted that the new guidance “provides long-awaited regulatory and tax clarity for institutional vehicles such as crypto ETFs and trusts, enabling them to participate in staking while remaining compliant.” The change “aligns tax treatment with evolving SEC disclosure and exchange liquidity standards, reinforcing staking as a legitimate, conservative yield-generation strategy within U.S. financial products.”

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Samourai Wallet dev gets five years

In a blow to those who maintain that DeFi developers aren’t legally responsible for how their tools are used, Keonne Rodriguez, co-founder of the Samourai Wallet BTC-focused coin mixing platform, was sentenced to five years in prison last Friday after he and co-founder William Lonergan Hill pleaded guilty earlier this year to operating an unlicensed money transmitting business.

Rodriguez and Hill entered their plea in exchange for the Department of Justice (DoJ) dropping money laundering charges filed against them in April 2024. However, if they expected this to carry weight with U.S. District Judge Denise Cote, they were wrong, as Cote gave Rodriguez the maximum sentence allowable under the law.

According to live coverage from the Manhattan courtroom by Inner City Press, Rodriguez said he was “truly sorry” for his actions and claimed to “understand the seriousness of my crimes.” His attorneys asked for a sentence of just over a year based on his lack of prior convictions and his alleged good intentions in building a legitimate privacy-focused business.

But Judge Cote felt that Rodriguez was still operating with “moral blinders” and had failed to accept responsibility for his actions. Samourai actively marketed its services to individuals conducting “illicit activity” including laundering tokens stolen from others. Cote said Rodriguez “chose to use your considerable talents to make it harder to recoup those stolen funds.”

Rodriguez has been ordered to begin serving his sentence on December 19, and Cote also imposed a $250,000 penalty (on top of the nearly $238 million he and Hill agreed to forfeit as part of their plea). Hill’s sentencing is scheduled for November 19, and he’s likely not expecting much in the way of leniency when he shows up to take his medicine.

However, in August, Acting Assistant Attorney General Matthew Galeotti gave a speech in which he appeared to suggest that cases like Samourai were now the exception, not the rule. Galeotti said the DoJ would “continue to prosecute those who knowingly commit crimes—or who aid and abet the commission of crimes.”

But “if a developer merely contributes code to an open-source project, without the specific intent to assist criminal conduct, aid or abet a crime, or join a criminal conspiracy, he or she is not criminally liable.” The DoJ “will not charge regulatory violations in cases involving digital assets,” including unlicensed money transmitting, “in the absence of evidence that a defendant knew of the specific legal requirement and willfully violated it.”

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