House Democrats Propose Crypto Bill Granting SEC More Power, Including Trump Ethics Rules

House Democrats Eye Comprehensive Crypto Market Structure Bill for New Congress

House Democrats are reportedly in discussions to introduce a broad cryptocurrency market structure bill when the new Congress convenes on January 3, 2027. The proposed legislation could build upon Representative Maxine Waters’ earlier Crypto Investor and Consumer Bill of Rights, potentially incorporating ethics provisions aimed at restricting crypto business activities involving federal officials, including those connected to former President Trump.

According to crypto journalist Eleanor Terrett, these discussions are gaining momentum following the recent U.S. midterm elections. The plan involves expanding Representative Waters’ existing framework for investor protection and industry regulation. The new bill is also expected to integrate Democratic provisions that were previously considered during negotiations for the CLARITY Act.

Terrett, citing three industry sources who shared details of the talks with Democratic staff, reported that the proposed legislation could merge Waters’ investor protection rules with changes that Senate Democrats had explored with Republicans before the CLARITY Act stalled in September. Waters initially introduced her bill in 2025 with the aim of enhancing protections for crypto investors and establishing clearer guidelines for the industry. Democrats are now considering this proposal as a foundational element for a more expansive regulatory approach.

Dividing Regulatory Authority: SEC vs. CFTC

A significant point of contention within the proposed bill centers on the division of oversight authority between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Under the current discussions, the SEC could be granted increased power to regulate crypto trading and market activities, while the CFTC’s role might be diminished. This potential shift diverges from the preferences of many in the crypto industry, which has largely advocated for the CFTC to hold greater control over digital asset markets. This disagreement is anticipated to be a key area of debate when Congress begins deliberating the new bill.

Ethics Provisions and Conflicts of Interest

Another critical component of the ongoing discussions involves the implementation of ethics requirements for elected officials and their immediate families. The proposed rules could prohibit senior government officials from launching, promoting, or profiting from cryptocurrency businesses while in public office. This focus has been amplified by reports detailing significant earnings from Trump’s crypto ventures, estimated at around $1.4 billion. Democrats have expressed a desire to scrutinize his family’s cryptocurrency interests and potential conflicts of interest more closely.

Republicans have reportedly characterized the planned bill as a “messaging bill,” suggesting it is primarily aimed at targeting Trump’s crypto businesses rather than fostering bipartisan consensus on regulatory measures. With Democrats poised to control both chambers of Congress, the proposal is expected to signal the new administration’s approach to cryptocurrency regulation.

The timing of this legislative push coincides with a notable recovery in the cryptocurrency market, with Bitcoin trading above $81,000. Over the past 24 hours, the broader crypto market has experienced liquidations totaling nearly $987.33 million, with short positions accounting for $566.59 million, or 57.4% of the total.