Crypto bill advances in US Senate but faces obstacles

(Reuters) - The US Senate Agriculture Committee, which oversees commodities trading, advanced a bill on Thursday that would establish a federal regulatory framework for cryptocurrencies on a party-line vote, an indication that the legislation likely lacks enough support to be passed by the full Senate.

If passed, the bill would give the U.S. Commodity Futures Trading Commission the authority to oversee spot crypto markets and create rules for digital commodity exchanges, brokers and dealers.

The Senate Banking Committee's companion bill has proven to be more contentious, with banks and crypto firms engaged in a bitter lobbying fight over whether crypto companies should be allowed to pay interest on dollar-pegged crypto tokens known as stablecoins.

The crypto industry has said a crypto market structure bill is crucial to the future of the industry in the U.S. and provides legal certainty for companies to operate. The industry spent heavily in the 2024 elections to promote pro-crypto candidates in hopes of getting this landmark market structure bill across the line.

The House of Representatives passed its version of the bill in July.

DEMOCRATIC BACKING NEEDED TO PASS

To pass and ultimately advance to U.S. President Donald Trump for approval, the bill would need support from at least seven Democrats in the full Senate. But some Democrats have expressed concerns that the measure does not include provisions to prevent political officials from profiting from crypto ventures. None of the Democrats on the Senate Agriculture Committee voted to advance the bill on Thursday.

Senator Cory Booker, the top Democrat on the Senate Agriculture Committee, said he wanted to see more provisions related to decentralized finance and that his discussions with other committee members about that issue were not reflected in the bill.

"We're almost in the red zone on this bill, and that frustrates me, because I see a bipartisan glide path to land this plane, to punch through the end zone," Booker said, using a football analogy ahead of the committee's vote.

The White House on Monday will meet with executives from the banking and cryptocurrency industries to discuss a path forward for the crypto legislation in the Senate Banking Committee, which has yet to vote to advance the bill.