The Senate Banking Committee released its long-awaited updated draft of the crypto market structure reform bill on September 5.
As per analysts The recent collapse of the Trump family-backed token project threatens to complicate passage prospects.
Committee Chairman Tim Scott’s staff spent the summer collecting feedback from industry participants and lobbyists to refine the legislation. The timing remained fluid, given Capitol Hill’s unpredictable schedule dynamics.
A full Senate vote was penciled in for November or December, depending on legislative calendar constraints and political developments.
Yet, World Liberty Financial’s (WLFI) token launch on the secondary market raised concerns among industry observers about potential political fallout that could affect bipartisan support.
WLFI Token Collapse Threatens Democratic Support
The World Liberty Financial token launch became a political liability for advocates of cryptocurrency legislation.
WLFI launched on September 1 at $0.3086 before crashing to $0.1671 three days later, representing a 46% decline that drew criticism about the project’s legitimacy and utility.
Variant Fund Chief Legal Officer Jake Chervinsky warned on X that World Liberty Financial would make Senate passage significantly harder.
The legislation required seven Democratic votes for passage, and pro-cryptocurrency positions became politically challenging for Democrats following the WLFI controversy.
Satoshi Action Fund founder Dennis Porter agreed that the situation posed bigger problems than industry participants acknowledged.
The token project’s association with the Trump family created additional political complications for lawmakers considering cryptocurrency legislation.
Critics characterized WLFI as an attempt by the Trump family to extract money from investors. The project carried a $18 Billion fully diluted valuation despite lacking straightforward utility or defined products.
The token’s rapid price collapse reinforced skepticism about the venture’s underlying value proposition.
Bipartisan Outreach Faces New Hurdles
Republican staffers reached out to Democratic counterparts to begin bipartisan discussions before the markup process.
The WLFI incident complicated these negotiations by providing ammunition for crypto skeptics within the Democratic caucus.
Senator Mark Warner, a key Democrat on the Banking Committee, told Punchbowl News that rushing to hold a markup by September 30 would significantly decrease the chances for bipartisan legislation.
The Virginia Democrat’s comments suggested growing resistance to Scott’s aggressive timeline.
Chairman Scott predicted 12 to 18 Democrats would support comprehensive cryptocurrency market structure legislation.
The Republican conducted individual meetings with Democratic members, including those outside the Banking Committee, to build support for the anticipated September introduction.
Scott’s optimism followed the House passage of the Digital Asset Market Clarity Act on July 17, which received support from 78 Democrats in a 294-134 vote.
The House legislation established jurisdictional boundaries between the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Crypto Legislative Framework Builds on House Foundation
The Senate proposal built upon the House CLARITY Act by introducing ancillary asset definitions, modernized disclosure requirements, and banking provisions.
Financial holding companies would gain authority to offer digital asset services under the expanded framework.
Scott released a discussion draft of the Responsible Financial Innovation Act of 2025 on July 22 alongside Senators Lummis, Bill Hagerty, and Bernie Moreno.
The legislation directed the SEC and CFTC to coordinate through joint registration processes for qualifying platforms.
The framework created token disclosure requirements scaling with market capitalization tiers while requiring issuers conducting US sales to submit initial information statements.
Banking supervisors received instructions to recognize qualified custodians managing stablecoins and digital assets under unified standards.
Regulation DA would exempt certain ancillary asset sales from registration requirements for annual proceeds under $75 Million over four-year periods.
The proposal refined investment contract definitions under federal law while establishing transparency requirements for digital asset issuers.
Timeline Remains Uncertain Amid Political Pressures
The Banking Committee issued a Request for Information covering more than 35 topics to support rulemaking processes.
Public comments informed the development of final legislation as staffers incorporated industry feedback into the draft text.
Senator Lummis noted the urgency of regulatory clarity to prevent American innovation from migrating overseas.
The Wyoming Republican stated the legislation would establish clear distinctions between digital asset securities and commodities while modernizing regulatory frameworks.
The WLFI controversy added uncertainty to an already complex legislative process.
Democratic response to the draft text would determine whether Scott’s ambitious timeline remained viable or required adjustments to accommodate bipartisan concerns.