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On January 21, Senate Agriculture Committee Chair John Boozman unveiled a revised version of a bill concerning the structure of the crypto market and scheduled a committee markup for January 27.
The proposed legislation, named the “Digital Commodity Intermediaries Act,” aims to provide the Commodity Futures Trading Commission (CFTC) with a clear framework to oversee aspects of the spot crypto market when transactions occur through brokers, dealers, exchanges, and custodians.
This bill represents the AC’s effort to institutionalize responses to failures. The most significant retail issues in crypto often manifest as operational breakdowns: account freezes, delayed withdrawals, outages during volatile periods, unclear paths for complaints, and conflicts over how platforms manage liquidations or limit access.
Boozman’s proposal seeks to transform these persistent challenges into a regulatory feedback mechanism, while also addressing the ongoing concern among lawmakers about whether the CFTC has the necessary resources and personnel for the task.
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A regulatory body tasked with transforming outages into regulatory amendments
One of the bill’s most evident provisions aimed at retail participants is found in Section 211, which creates an “Office of the Digital Commodity Retail Advocate” within the CFTC. This section also clarifies who qualifies as a retail participant: an individual who is not an eligible contract participant, who engages in a spot or cash digital commodity market, and who has conducted a digital commodity transaction with a person or entity registered with the CFTC.
The retail advocate would directly report to the CFTC chair and be selected from individuals experienced in representing retail participants.
In contrast to many market structure proposals that merely outline broad mandates, this office comes with a detailed list of responsibilities that align with how retail harm typically arises in practice.
The advocate would assist retail participants in resolving “significant issues” with the CFTC or with a registered futures association, monitor areas where retail participants could gain from regulation or rule modifications, and identify challenges retail users encounter with CFTC-registered firms.
The office is also responsible for assessing how proposed CFTC regulations and registered futures association rules could impact retail participants, subsequently advising both the Commission and Congress on necessary changes.
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The real benefit this bill would provide is not merely the establishment of a new office that will magically prevent freezes or outages, but the legislation that creates an internal unit tasked with gathering evidence, identifying patterns, and incorporating those patterns into the rulemaking process.
If a recurring failure mode appears across several registered venues, the advocate’s scope is designed to translate that into regulatory amendments rather than allowing it to remain unnoticed.
The bill also enforces confidentiality limitations that function in both directions. The advocate can access documents from the CFTC and registered futures associations as necessary, but the text does not permit the advocate or staff to access or disclose proprietary or sensitive market data, whether publicly or internally within the Commission.
The office is required to report to Congress biannually, with an objectives report due by June 30 and an activities report by December 31. If adequately funded and staffed, these reports could serve as an ongoing record of which retail issues persist at registered firms and how the CFTC is addressing them.
Boozman’s proposal also directly tackles the capacity critique, and it does so with figures. It instructs the CFTC to evaluate and collect fees from registered digital commodity brokers, dealers, exchanges, and qualified digital asset custodians, depositing those funds as offsetting collections into the CFTC’s appropriations account.
The Commission would establish fee rates designed to align with the annual appropriation for covered activities, and the bill specifies that fee rates are not subject to judicial review. To bridge the gap before this fee structure is implemented, the bill authorizes an initial $150,000,000 appropriation “to remain available until expended” until the Commission establishes and begins to collect registration fees.
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It also empowers the CFTC chair to appoint individuals with “specialized knowledge” of the crypto sector without the usual constraints of competitive service.
This language is significant: oversight in spot crypto would hinge on understanding how market operations, custody infrastructure, and risk controls operate under stress.
The execution risk here is clear. Even with financial resources, supervision necessitates monitoring, investigative capabilities, and operational readiness when a venue quickly alters its behavior.
A fee structure can finance personnel, but it must survive the political process, and a hiring exemption still relies on the agency acting swiftly enough to assemble a team capable of keeping pace with a market structure that evolves within days rather than years.
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DeFi’s critical distinction: who can access funds, and who can execute actions
Retail users aren’t the only ones who should be wary of the new draft of the bill. It could disproportionately impact builders and protocols as well, as it establishes its DeFi boundary primarily through definitions rather than through comprehensive exemptions.
The text differentiates between software that merely transmits user instructions and systems where an individual or coordinated group maintains significant control over custody, execution, or regulations.
A “decentralized finance messaging system” is characterized as software that enables a user to generate or submit an instruction to a DeFi trading protocol, alongside an exclusion that functions as a control test: the system must not allow anyone other than the user to control user funds or have the authority to execute the user’s transactions.
In simple terms, the legislation poses two questions for projects: can anyone else access the funds, and can anyone else execute the transactions?
The definition of a DeFi trading protocol follows similar reasoning. It describes a blockchain-based system that executes transactions based on predetermined automated rules, without relying on anyone other than the user to maintain custody or control of the involved assets.
The bill then narrows that definition through exclusions that draw a protocol back into regulatory oversight if an individual or coordinated group can control or materially modify functionality or rules, if operations are not based solely on transparent, pre-established code, or if a group has unilateral authority to limit or censor access.
This framing shifts compliance discussions away from marketing terminology and toward operational realities: admin keys, upgrade authority, governance concentration, and access controls.
It also establishes a future enforcement record that documents who held the power to alter the system, who could restrict user access, and who could transition transactions from automatic to permissioned in practice.
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The Senate Agriculture crypto legislation is pursuing two simultaneous objectives: establishing a CFTC-centered framework for spot activity routed through intermediaries, and creating an internal structure designed to keep retail failures in focus through mandated reporting and rule evaluation.
Whether it evolves beyond a theoretical framework will hinge on capacity and political alignment as the committee approaches the January 27 markup while the concurrent Senate Banking track continues to extend into late February or March.
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