Galaxy Research Raises Concerns Over Senate Crypto Market Structure Bill

Senate crypto draft pairs market reforms with a major expansion of U.S. surveillance powers, raising industry concerns.

Galaxy Research has raised concerns about a new Senate crypto bill, warning it could significantly expand the U.S. government’s ability to monitor digital asset activity. The proposal includes several changes welcomed by the crypto industry, such as clearer rules and added protections. However, researchers say its approach to illicit finance signals a major shift toward stronger federal oversight.

Galaxy Research Warns Senate Crypto Draft Broadens Treasury Surveillance Powers

Head of Firmwide Research, Alex Thorn, reviewed a discussion draft released late Monday by the Senate Banking Committee. He concluded that it significantly broadens the U.S. Treasury’s authority over digital asset activity.

Thorn added that, if enacted, the bill would represent the largest expansion of financial surveillance powers since the USA PATRIOT Act. House lawmakers took a narrower approach, approving the Clarity Act with strong bipartisan backing in July 2025.

According to Galaxy, the Senate version could massively expand the U.S. government’s power to monitor financial activity. At the same time, the bill includes changes that the crypto industry has been asking for for many years. Galaxy Research pointed out that the draft clearly protects users’ right to hold their crypto.

In addition, it tightens and clarifies who counts as a money transmitter and limits legal risk for software developers who don’t control user funds. The bill also aims to reduce confusion between regulators by drawing clearer lines around which agencies oversee different parts of the crypto market.

Senate Crypto Proposal Reflects Democratic Push on Enforcement

Crypto policy discussions often follow the same pattern. Lawmakers push for more oversight, while the industry asks for clear rules and protections. Concerns center on how the Senate draft tackles illicit finance risks tied to digital assets. 

Galaxy said the bill arms the Treasury with new mechanisms that could affect a wide range of crypto activity. This includes parts of decentralized finance that interact with users through identifiable platforms.

The research firm contrasted those measures with the House-passed Clarity Act. Instead of creating new surveillance powers for crypto, the House bill mainly applied existing Bank Secrecy Act rules to traditional crypto businesses such as exchanges and custodians. It did not give the government new, crypto-specific tools to monitor transactions or users.

From a political standpoint, the Senate draft reflects concessions to Democrats on illicit finance, while Republicans secured core market structure reforms. Galaxy Research warned that some lawmakers continue to push for even stricter enforcement measures, despite what the firm already views as a historic expansion of government power.

Analysts Warn Delays Could Stall Crypto Legislation for Years

The Senate Banking Committee is set to mark up and vote on the bill on Thursday. Meanwhile, the Senate Agriculture Committee, which oversees the Commodity Futures Trading Commission, has delayed its hearing until later this month.

Any final bill would need to reconcile differences between committee versions and win at least 60 votes to pass the Senate. The debate over illicit finance has become a major dividing line, raising questions about whether industry support will remain intact.

Market analysts see a narrow window for action. Analysts have said the opportunity for legislation is “here and now,” while others warned that prolonged delays could push real-world effects years down the road.

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