June 24, 2025

Scott, Lummis, Tillis, Hagerty Release Principles for Market Structure Legislation

Washington, D.C. – Today, Senate Banking Chairman Tim Scott (R-S.C.), Subcommittee on Digital Assets Chair Cynthia Lummis (R-Wyo.), Senator Thom Tillis (R-N.C.), and Senator Bill Hagerty (R-Tenn.) released a set of principles for the development of comprehensive market structure legislation. These principles will guide discussions and negotiations as Chairman Scott and his colleagues engage with industry participants, legal and academic experts, and government stakeholders on the bill text.

“Since taking over as Chairman, I’ve led a new approach to digital assets regulation, and we’ve delivered results for the industry and the American people. We have more work to do, and I look forward to building on the success of the GENIUS Act and advancing market structure legislation here in the Senate. These principles will serve as an important baseline for negotiations on this bill, and I’m hopeful my colleagues will put politics aside and provide long-overdue clarity for digital asset regulation,” said Chairman Scott.

“America desperately needs digital asset legislation that promotes responsible innovation and protects consumers,” said Senator Lummis. “While the European Union and Singapore have established clear regulations, the U.S. continues to sit on the sidelines while the digital asset industry seeks greener pastures. That changes today. I am partnering with Chairman Scott to provide principles for market structure legislation to finally draw the line between a security and a commodity and ensure the U.S. remains at the helm of global financial advancement.”

“As Congress considers a regulatory framework for digital assets, our top priority must be providing legal clarity and certainty without stifling innovation,” said Senator Tillis. “These principles strike the right balance by protecting consumers, promoting innovation, and clearly defining the roles of regulators in a rapidly evolving market.”

“For too long, a lack of clear regulatory authority has forced digital asset innovation beyond our borders and subjected issuers, exchanges, and developers to crippling uncertainty. By working towards a reasonable, light-touch market structure framework, we can help bolster our nation’s economy and protect American consumers,” said Senator Hagerty. 

The market structure principles state:

Legislation Should Clearly Define the Legal Status of Digital Assets

  • A clear, economically rational line distinguishing digital asset securities from digital asset commodities should be fixed in statute, contemplating existing law and providing predictability, enhanced legal precision, and much-needed regulatory certainty.

Jurisdiction Should Be Clearly Allocated Among Regulators

  • Regulatory authority should be clearly allocated in statute, preventing an all-encompassing regulator from emerging.
  • Legislation should acknowledge that not all distributed ledger technology should be regulated equally.
    • Legislation should recognize the different risks and benefits between centralized firms, decentralized finance protocols, and non-custodial software platforms.
    • For similar reasons, self-custody of digital assets should be explicitly preserved.
    • Likewise, the use of distributed ledger technology and smart contracts for other, non-financial purposes, such as to manage health data, should not be regulated like financial products.

Regulation Should be Modernized to Foster Innovation

  • Regulations should be modernized to account for the unique nature of digital assets and distributed ledger technology.
    • A new SEC exemption for certain digital asset fundraising should be included in legislation.
    • The SEC should revisit its burdensome registration requirements for digital asset issuers, and instead provide a clear, appropriately tailored pathway to compliance for good faith, innovative actors.
    • Clear, pro-innovation principles regarding the trading of digital assets on the secondary market should be established.
  • Legislation should not apply principles designed for centralized firms to decentralized protocols.
    • Tokenization should be recognized as an evolution of financial infrastructure that enhances efficiency, transparency, and liquidity, rather than a fundamental change to the nature of the underlying asset.

Regulation Should Protect Those Who Purchase or Trade Digital Assets

  • Centralized digital asset intermediaries should be subject to innovation-friendly registration and risk management requirements similar to that of other centralized intermediaries today.
    • Requirements could include illicit finance compliance, clear and right-sized capital, custody and segregation requirements, and appropriate enforcement authority.
  • Legislation should also ensure that customer funds are protected during bankruptcy.

Illicit Finance Measures Should Be Targeted and Pro-Innovation

  • A small, common-sense package of measures directed at preventing money laundering and sanctions evasion with digital assets should be included.
  • Potential provisions can and should be targeted and pro-innovation. This could include requiring the adoption of examination standards and clarifying that the Bank Secrecy Act and International Emergency Economic Powers Act (IEEPA) extends to entities abroad with U.S. touchpoints.
  • Reforms should also consider the ways digital assets and distributed ledger technology can improve transparency, efficiency, and the detection of illicit activity, including money laundering.

Federal Financial Regulators Should Welcome Responsible Innovation

  • Federal financial regulators should take common-sense steps to respond to responsible innovation, including potentially through increased use of no-action guidance, sandboxes, safe harbors, coordination, and appropriate application requirements.
  • Federal financial regulators should provide clear guidance affirming that many crypto-related activities are permissible for banks and other financial institutions, provided they do not threaten the safety and soundness of the institution.
  • Clear guidance will also improve and better enforcement by establishing well-defined rules and expectations, fostering accountability, and enabling consistent application of regulations, leading to better understanding and compliance.

For complete market structure principles, click here.

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