(Kitco News) – The U.S. Senate Banking Committee announced the release of a draft structure for U.S. digital asset market legislation on Wednesday, and crypto industry executives are hailing it as a major step forward for the American cryptocurrency ecosystem.

The discussion draft builds on the CLARITY Act, which passed the House of Representatives last week with strong bipartisan support.

Banking Committee Chairman Tim Scott (R-S.C.), Subcommittee on Digital Assets Chair Cynthia Lummis (R-Wyo.), Senator Bill Hagerty (R-Tenn.), and Senator Bernie Moreno (R-Ohio) published a discussion draft of the proposed legislation which covers the areas under the Banking Committee’s jurisdiction. The draft builds on the CLARITY Act, which passed the House last week with bipartisan support.

“My colleagues and I in the House and Senate share the same goal: to provide clear rules of the road for digital assets that protect investors, foster innovation, and keep the future of digital finance anchored in America,”  Chairman Scott said in a statement. “I’m grateful for the hard work of our House counterparts to craft smart, bipartisan legislation, and I look forward to building on their work here in the Senate.”

“The time for regulatory uncertainty in the digital asset space has come to an end,” said Senator Lummis. “This discussion draft represents a thoughtful, balanced approach that will provide the clarity our innovators need while providing robust consumer protections. We cannot allow regulatory confusion to continue driving American innovation overseas.”

Lummis said that the legislation “will establish clear distinctions between digital asset securities and commodities, modernize our regulatory framework, and position the United States as the global leader in digital asset innovation.”

The discussion draft defines, clarifies and structures many of the most difficult areas that have challenged lawmakers and the industry in recent years. Among its key provisions, the discussion draft clearly defines an ‘ancillary asset’ to clarify which digital assets are not securities, creates disclosure requirements that are tailored for offers, sales, or distributions of ancillary assets, and requires the Securities and Exchange Commission (SEC) to more clearly define what constitutes an investment contract and which offers or sales of digital assets are exempt from registration requirements.

U.S. digital assets firms have been asking for a comprehensive legislative framework for the crypto industry for years, and the response from crypto executives has been overwhelmingly positive.

“The release of the digital asset market structure discussion draft by Senators Scott, Lummis, Hagerty, and Moreno is a monumental step toward achieving regulatory clarity and innovation in the U.S.” Jonathan Jachym, Kraken’s Global Head of Government Relations and Policy told Kitco News. “Building on the bipartisan momentum of the CLARITY Act, this framework has the potential to provide clear, actionable guidance for the digital asset industry, while preserving the space needed for continued innovation.”

“Kraken looks forward to reviewing the text in further detail and providing feedback to the Senate Banking Committee to ensure the final product promotes a thriving digital asset ecosystem in the United States,” Jachym said, adding that Kraken will be closely tracking the progress of the draft legislation.

Gracy Chen, CEO of Bitget, told Kitco News that the crypto market structure draft represents “a meaningful shift toward real regulatory engagement.”

“By clarifying how ancillary assets should be treated, it helps guide the SEC on what qualifies as a security — offering long-needed direction,” she said. “Together with the House’s Clarity Act and the GENIUS Act, this draft signals a broader move from skepticism to structured oversight.”

Chen said the Clarity Act “functions like a modern-day Glass–Steagall for crypto” by creating clear distinctions between trading, token issuance, and custody. “It’s exactly the kind of scaffolding institutions have been waiting for,” she said.

And while the proposed higher compliance thresholds may favor large, well-funded players, Chen said she believes the regulatory clarity will be a net positive for the industry as a whole. “With the U.S. leading, other regions can benefit from the ripple effects of a clearer global framework — ultimately helping protect users and scale adoption,” she said.

In addition to the discussion draft, Chairman Scott and his colleagues also issued a Request for Information (RFI) for stakeholders to submit feedback on the draft and related issues. Stakeholders have until Aug. 5 to submit their responses and suggestions.