• The Senate draft gives CFTC new power to oversee crypto spot trading and protect digital asset investors.
• Treasury allows crypto ETPs to stake assets giving investors direct access to staking rewards.
• Crypto markets show recovery as government funding deals and new crypto rules boost investor confidence.

The Senate Agriculture Committee introduced a bipartisan discussion draft in which the Commodity Futures Trading Commission (CFTC) will have direct powers to regulate spot-market trading of digital commodities, including Bitcoin and other non-security tokens. This proposal, which is chaired by John Boozman and Senator Cory Booker, is the culmination of months of negotiation.

The draft defines digital commodities as fungible assets recorded on secure public blockchains and transferable without intermediaries. The legislators consider the CFTC to be the right body to oversee the spot trading and protect the consumers and stability of the market. The proposal creates a legal framework of the crypto markets and seeks to seal the loopholes in regulations. The Senate recently revealed plans to release the crypto market bill this week to clarify digital asset rules.

Proposed Funding and Implementation Timeline

Under the draft, a new funding stream would be created for the CFTC to manage its expanded responsibilities. The spot-market regime would take effect 270 days after enactment. A transition period would allow current operators to continue functioning while they seek registration.

The Agriculture Committee has a historical relationship with the regulation of commodities which goes back to the early 20th century. Its supervision was widened with the Grain Futures Act of 1922 and the Commodity Exchange Act of 1936. The CFTC took its present shape in 1974 based on the laws. Currently, the agency regulates derivatives tied to crypto assets but not their direct trading. The draft aims to extend that authority to spot markets, where most retail activity occurs.

Treasury and IRS Issue New Crypto Staking Guidance

In a parallel move, the U.S. Department of the Treasury and the Internal Revenue Service have issued new regulatory guidance allowing cryptocurrency exchange-traded products (ETPs) to stake their underlying digital assets. The update permits ETPs to distribute staking rewards directly to retail investors. In August, 112 crypto firms urged the US Senate to protect developers and non-custodial providers in digital asset legislation.

Previously, U.S. rules limited ETPs to holding spot assets without earning on-chain yields. The new guidance changes that by authorizing issuers to provide staking-based returns while maintaining transparency. Analysts expect this step to encourage institutional participation and expand demand for staking-related funds.

Market Reaction Amid Government Funding Progress

The announcement is in time with development as the current 41-day shutdown of the U.S government is nearing its conclusion. A procedural vote of the Senate has passed a compromise, and it is bipartisan, which can reopen the government in days. The market has reacted with fresh optimism. 

Bitcoin and other leading cryptocurrencies like Ethereum, Solana and Avalanche have started to pick up after previous losses. Analysts are of the opinion that this move by the Treasury might draw in fresh inflows in staking-centered funds that might redefine U.S. crypto investment items.

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