Tim Scott’s Crypto Bill Faces Mounting Criticism from US Senators
Washington's crypto clash heats up as a new legislative proposal draws fire from both sides of the aisle.
The Push for Clarity—Or a Power Grab?
Senator Tim Scott's freshly drafted digital asset framework aims to carve out regulatory lanes for cryptocurrencies. It promises to define which tokens are securities, which are commodities, and who gets to police the trillion-dollar gray area in between. The goal? To give innovators a rulebook instead of a guessing game.
Senate Skeptics Circle
But the bill isn't getting a warm welcome. Critics call it a handout to the crypto industry—a legislative shortcut that weakens investor protections and ties the hands of existing regulators. One senior Democrat blasted the draft as 'dangerously premature,' arguing it prioritizes market speed over consumer safety. Even some fiscal hawks are wary, seeing potential risks to the traditional banking system.
The Stakes for the Street
For Wall Street and Silicon Valley, the bill represents a pivotal moment. Clear rules could unlock institutional capital currently sitting on the sidelines, afraid of regulatory backlash. Yet, the current draft's perceived industry-friendly tilt has some senators accusing Scott of doing the bidding of crypto lobbyists—a classic move in the Washington influence game, just with a digital asset wrapper.
The legislative fight is just beginning. Scott's team is bracing for amendments, negotiations, and a brutal markup process. Whether this bill becomes law, gets gutted, or dies in committee will signal just how ready the U.S. political establishment is to embrace—or restrain—the crypto revolution. One thing's certain: when finance and politics collide, the only guaranteed winners are the lawyers.
Tim Scott’s crypto bill encounters a stumbling block
In the letter, which was obtained by POLITICO, the pair mentioned that the language in Section 604 of the crypto bill was the type of legislative change that falls within the Judiciary Committee’s jurisdiction, adding that the panel was not involved in it before the since-postponed markup.
Scott had plans to hold a vote on the crypto market structure legislation this week, but moved the mark-up amid surprise opposition from a leading crypto firm and other uncertainties.
The section is similar to the standalone bipartisan legislation known as the Blockchain Regulatory Certainty Act that is led in the House by Majority Whip Tom Emmer (R-Minn.) and in the Senate by Senators Cynthia Lummis (R-Wyo.) and RON Wyden (D-Ore.).
A spokesperson for Scott mentioned that the South Carolina Republican appreciates the engagement from Chairman Grassley and Ranking Member Durbin on the issue.
“As the parliamentarian has ruled, the Blockchain Regulatory Certainty Act falls squarely within the Banking Committee’s jurisdiction,” said the spokesperson, Jeff Naft. “The Chairman remains committed to protecting software developers while ensuring that law enforcement has the necessary tools to prosecute actual illegal money transmission operations.”
In his statement, Grassley mentioned that he appreciates the work done by Chairman Tim Scott and his staff as they work through the important bill.
Grassley mentioned that the country needs to protect its national and financial security while ensuring that crypto and other industries play by the same rules as everyone else. He also plans to work with Scott to reach a sound outcome.
According to reports, Grassley and Durbin are warning that the provision exempts a dangerously broad category of actors from treatment under the current criminal law. They also say the language would have likely stopped the government from bringing charges against the founder of Tornado Cash.
Lawmakers want to review the draft legislation
The pair claimed that the co-founder of Tornado Cash, a platform allegedly used to launder stolen funds, was operating as a mixer and was found guilty of operating an unlicensed money transmitting business last year, although crypto proponents and some congressional Republicans have criticized the conviction. They also mentioned that Scott’s draft legislation would create a big enforcement gap for decentralized digital asset platforms.
“Such a gap risks attracting illicit actors—like cartels and other sophisticated criminal organizations—to decentralized platforms. Criminals already use tactics to obscure unlawful transactions. This bill would make prosecuting this conduct even more difficult,” the letter said.
The concerns were shared by some law enforcement. The National Association of Assistant United States Attorneys mentioned that the crypto bill could limit the ability of prosecutors to pursue financial crimes involving the movement of funds outside established regulatory guidelines.
The issue also centers around how the market structure bill should treat the sectors of the industry known as decentralized finance or DeFi. That aspect uses software to facilitate trading and lending, cutting out centralized entities like exchanges.
Senators have been talking and have raised concerns about DeFi platforms being a hotbed for illicit finance. They have called for changes to the BRCA language and were preparing to amend it during the markup.
Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.
