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A Decade-Long Tug of War Finally Concludes: "Cryptocurrency Market Structure Bill" Heads to Senate
Original Title: "Security or Commodity? Ten-Year Tug of War Ends, 'Cryptocurrency Market Structure Act' Heads to Senate"
Original Author: Ding Dang, Odaily
On December 10, U.S. Senators Gillibrand and Lummis stated at the Blockchain Association Policy Summit that the "Cryptocurrency Market Structure Act (CLARITY Act)" is expected to release a draft this weekend and enter the amendment and hearing voting stage next week. This means that this long-awaited legislative project is officially entering a decisive window.
The bill was first formally introduced in the U.S. House of Representatives on May 29, 2025, by House Financial Services Committee Chair Patrick McHenry and Digital Assets and Innovation Subcommittee Chair French Hill. It passed the House on July 17 by an overwhelming majority (294 votes in favor) and is currently awaiting final Senate review.
Core Design of the Bill: Classification Rather Than One-Size-Fits-All
The core of the "Cryptocurrency Market Structure Act" lies in its attempt to end the ten-year tug of war between U.S. regulatory agencies and the industry over "whether it is a security or a commodity." It is the first time that a clear boundary has been drawn for digital assets in legislative form, avoiding a "one-size-fits-all" regulatory approach and instead adopting a classification regulatory framework. Specifically:
Lega Distinction Between "Digital Commodity" and "Digital Security"
The bill clearly defines the vast majority of tokens issued natively on decentralized blockchains as "digital commodities" and transfers regulatory authority to the Commodity Futures Trading Commission (CFTC); only tokens that meet the Howey test and exhibit typical "investment contract" characteristics will continue to be regulated by the SEC under securities regulations.
Exemption Pathway for "Mature Blockchains"
To avoid all tokens being forcibly classified as securities, the bill establishes a "mature blockchain system" standard: when a blockchain satisfies both "high decentralization" (where no single entity controls over 20% of the token supply or validation power and the network's value primarily comes from actual usage) it can exempt SEC from security registration requirements. This provides a clear pathway for mainstream assets like Bitcoin and Ethereum, ensuring that regulation does not stifle technological progress.
Secondary Market Fully Shifts to CFTC Regulation
The bill requires all platforms engaged in digital commodity spot or derivative trading to register with the CFTC as a "Digital Commodity Exchange" (DCE), digital commodity broker, or dealer. Considering the industry reality, the bill also specifically establishes a 360-day "temporary registration" pathway to ensure that existing compliant platforms will not be forced to shut down due to technical violations during the transition period, thus achieving a smooth transition.
Limited Financing Exemption
Even for initial token offerings on mature blockchains that are still considered "investment contracts," issuers can apply for an exemption from the registration requirements of the 1933 Securities Act, but the annual fundraising total cannot exceed $75 million and must fulfill more stringent disclosure obligations. This design aims to strike a balance between encouraging innovation and protecting investors.
Division of Labor Between CFTC and SEC: From Confrontation to Collaboration
For a long time, the ongoing tug-of-war between the SEC and CFTC over jurisdiction of digital assets has been described by the industry as the "Achilles' heel" of the crypto industry. Regulatory uncertainty has even been considered a significant hidden cost suppressing domestic innovation in the United States. If the "Cryptocurrency Market Structure Act" is formally enacted, it will legislatively end this situation, establishing a clear division of responsibilities: the CFTC will become the core regulator of the secondary market for digital commodities, while the SEC will focus on token issuances and private placements that still exhibit security-like attributes in the primary market.
To ensure that the two agencies maintain coordination in cross-over areas, the bill requires the establishment of a permanent "Joint Advisory Committee." Either party must formally respond to non-binding recommendations made by the committee when formulating rules that may affect the jurisdiction of the other party. This mechanism aims to prevent future regulatory vacuums or duplicative regulation.
At the same time, the bill provides clear protection for the decentralized finance ecosystem: front-end protocol developers, node validators, miners, and other non-custodial, nonprofit roles will be explicitly excluded from the definitions of "broker" or "dealer," significantly reducing compliance burdens at the protocol level and preserving reasonable space for technological innovation.
Simultaneous Implementation of Supporting Actions: CFTC is "Taking the Lead"
As the Senate review of the "Cryptocurrency Market Structure Act" enters a critical stage, on December 5th, Acting Chairman of the U.S. Commodity Futures Trading Commission (CFTC) Caroline D. Pham announced that spot cryptocurrency products would be permitted for trading on CFTC-regulated futures trading platforms for the first time.
Pham stated that this move is part of the Trump administration's effort to establish the U.S. as the "Crypto Capital of the World," aiming to address the lack of protections on offshore trading platforms by providing a regulated domestic market.
Additionally, as part of the "Crypto Sprint" initiative, the CFTC will also promote the use of tokenized collateral (including stablecoins) in the derivatives market and amend rules to support the application of blockchain technology in infrastructure such as clearing and settlement. This effort will enhance the CFTC's leadership role in the digital asset space, aligning closely with the spirit of the legislation.
Trump Nomination Fast-Track: Crypto-Friendly Leadership in Place
Since Trump's second term, the personnel layout of major U.S. financial regulatory agencies has continued to lean towards supporting digital assets, becoming a key catalyst for the accelerated development of the crypto industry.
Securities and Exchange Commission (SEC) Chairman Paul Atkins, in an interview with CNBC, stated that the U.S.'s "resistance" to cryptocurrency has been "for too long." Atkins, appointed by Trump, took office in 2025. He views the "Crypto Market Structure Act" as part of "Project Crypto," aimed at bringing order and fairness to the classification of digital assets through legislation and rules.
At the same time, on October 25, 2025, Trump nominated Brian Quintenz to serve as CFTC Chairman and Commissioner. Quintenz, a former crypto lawyer, represented several crypto companies at the Willkie Farr & Gallagher law firm (such as venture capital funds and blockchain projects) and has been serving as Chief Legal Advisor to the SEC's Crypto Task Force since March 2025, reporting directly to Atkins.
Trump also nominated Travis Hill to serve as Chairman of the Federal Deposit Insurance Corporation (FDIC), having already served as Acting Chairman in 2025. Hill is also crypto-friendly, publicly supporting banks entering crypto custody and stablecoin issuance, believing this can enhance financial inclusion. The FDIC serves as the interface between banks and crypto (such as stablecoin issuers), and his appointment may facilitate banks' entry into the crypto space.
Following the government's resumption of operations, the SEC has also introduced a series of institutional optimization schemes to expedite ETF approval processes. The overall signal is crystal clear: regulatory logic is transitioning from defensive management to structural acceptance.
Conclusion: The U.S. is Filling in the "Crypto Rule of Law Puzzle"
More importantly, the advancement of the "Cryptocurrency Market Structure Act" may solidify the effectiveness of the "American Stablecoin Innovation Act" signed by Trump earlier this year, which has provided a secure framework for stablecoin issuance. This bill further complements the legislative puzzle of the crypto industry, filling in market structure gaps, and propelling the United States from a "follower" to a "leader" in global crypto regulation.
Overall, these policies and personnel changes foreshadow a structural opportunity for the U.S. crypto ecosystem, where regulatory clarity may attract more institutional funding. However, challenges have not disappeared, such as coordinating DeFi regulatory details and aligning with international standards. But for global crypto practitioners, this is not just a U.S. story, but a crucial window of opportunity for the entire industry.
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The X Chat will be available for download on the App Store this Friday. The media has already covered the feature list, including self-destructing messages, screenshot prevention, 481-person group chats, Grok integration, and registration without a phone number, positioning it as the "Western WeChat." However, there are three questions that have hardly been addressed in any reports.
There is a sentence on X's official help page that is still hanging there: "If malicious insiders or X itself cause encrypted conversations to be exposed through legal processes, both the sender and receiver will be completely unaware."
No. The difference lies in where the keys are stored.
In Signal's end-to-end encryption, the keys never leave your device. X, the court, or any external party does not hold your keys. Signal's servers have nothing to decrypt your messages; even if they were subpoenaed, they could only provide registration timestamps and last connection times, as evidenced by past subpoena records.
X Chat uses the Juicebox protocol. This solution divides the key into three parts, each stored on three servers operated by X. When recovering the key with a PIN code, the system retrieves these three shards from X's servers and recombines them. No matter how complex the PIN code is, X is the actual custodian of the key, not the user.
This is the technical background of the "help page sentence": because the key is on X's servers, X has the ability to respond to legal processes without the user's knowledge. Signal does not have this capability, not because of policy, but because it simply does not have the key.
The following illustration compares the security mechanisms of Signal, WhatsApp, Telegram, and X Chat along six dimensions. X Chat is the only one of the four where the platform holds the key and the only one without Forward Secrecy.
The significance of Forward Secrecy is that even if a key is compromised at a certain point in time, historical messages cannot be decrypted because each message has a unique key. Signal's Double Ratchet protocol automatically updates the key after each message, a mechanism lacking in X Chat.
After analyzing the X Chat architecture in June 2025, Johns Hopkins University cryptology professor Matthew Green commented, "If we judge XChat as an end-to-end encryption scheme, this seems like a pretty game-over type of vulnerability." He later added, "I would not trust this any more than I trust current unencrypted DMs."
From a September 2025 TechCrunch report to being live in April 2026, this architecture saw no changes.
In a February 9, 2026 tweet, Musk pledged to undergo rigorous security tests of X Chat before its launch on X Chat and to open source all the code.
As of the April 17 launch date, no independent third-party audit has been completed, there is no official code repository on GitHub, the App Store's privacy label reveals X Chat collects five or more categories of data including location, contact info, and search history, directly contradicting the marketing claim of "No Ads, No Trackers."
Not continuous monitoring, but a clear access point.
For every message on X Chat, users can long-press and select "Ask Grok." When this button is clicked, the message is delivered to Grok in plaintext, transitioning from encrypted to unencrypted at this stage.
This design is not a vulnerability but a feature. However, X Chat's privacy policy does not state whether this plaintext data will be used for Grok's model training or if Grok will store this conversation content. By actively clicking "Ask Grok," users are voluntarily removing the encryption protection of that message.
There is also a structural issue: How quickly will this button shift from an "optional feature" to a "default habit"? The higher the quality of Grok's replies, the more frequently users will rely on it, leading to an increase in the proportion of messages flowing out of encryption protection. The actual encryption strength of X Chat, in the long run, depends not only on the design of the Juicebox protocol but also on the frequency of user clicks on "Ask Grok."
X Chat's initial release only supports iOS, with the Android version simply stating "coming soon" without a timeline.
In the global smartphone market, Android holds about 73%, while iOS holds about 27% (IDC/Statista, 2025). Of WhatsApp's 3.14 billion monthly active users, 73% are on Android (according to Demand Sage). In India, WhatsApp covers 854 million users, with over 95% Android penetration. In Brazil, there are 148 million users, with 81% on Android, and in Indonesia, there are 112 million users, with 87% on Android.
WhatsApp's dominance in the global communication market is built on Android. Signal, with a monthly active user base of around 85 million, also relies mainly on privacy-conscious users in Android-dominant countries.
X Chat circumvented this battlefield, with two possible interpretations. One is technical debt; X Chat is built with Rust, and achieving cross-platform support is not easy, so prioritizing iOS may be an engineering constraint. The other is a strategic choice; with iOS holding a market share of nearly 55% in the U.S., X's core user base being in the U.S., prioritizing iOS means focusing on their core user base rather than engaging in direct competition with Android-dominated emerging markets and WhatsApp.
These two interpretations are not mutually exclusive, leading to the same result: X Chat's debut saw it willingly forfeit 73% of the global smartphone user base.
This matter has been described by some: X Chat, along with X Money and Grok, forms a trifecta creating a closed-loop data system parallel to the existing infrastructure, similar in concept to the WeChat ecosystem. This assessment is not new, but with X Chat's launch, it's worth revisiting the schematic.
X Chat generates communication metadata, including information on who is talking to whom, for how long, and how frequently. This data flows into X's identity system. Part of the message content goes through the Ask Grok feature and enters Grok's processing chain. Financial transactions are handled by X Money: external public testing was completed in March, opening to the public in April, enabling fiat peer-to-peer transfers via Visa Direct. A senior Fireblocks executive confirmed plans for cryptocurrency payments to go live by the end of the year, holding money transmitter licenses in over 40 U.S. states currently.
Every WeChat feature operates within China's regulatory framework. Musk's system operates within Western regulatory frameworks, but he also serves as the head of the Department of Government Efficiency (DOGE). This is not a WeChat replica; it is a reenactment of the same logic under different political conditions.
The difference is that WeChat has never explicitly claimed to be "end-to-end encrypted" on its main interface, whereas X Chat does. "End-to-end encryption" in user perception means that no one, not even the platform, can see your messages. X Chat's architectural design does not meet this user expectation, but it uses this term.
X Chat consolidates the three data lines of "who this person is, who they are talking to, and where their money comes from and goes to" in one company's hands.
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Soaring 50 times, with an FDV exceeding 10 billion USD, why RaveDAO?
1 billion DOTs were minted out of thin air, but the hacker only made 230,000 dollars
After the blockade of the Strait of Hormuz, when will the war end?
Before using Musk's "Western WeChat" X Chat, you need to understand these three questions
The X Chat will be available for download on the App Store this Friday. The media has already covered the feature list, including self-destructing messages, screenshot prevention, 481-person group chats, Grok integration, and registration without a phone number, positioning it as the "Western WeChat." However, there are three questions that have hardly been addressed in any reports.
There is a sentence on X's official help page that is still hanging there: "If malicious insiders or X itself cause encrypted conversations to be exposed through legal processes, both the sender and receiver will be completely unaware."
No. The difference lies in where the keys are stored.
In Signal's end-to-end encryption, the keys never leave your device. X, the court, or any external party does not hold your keys. Signal's servers have nothing to decrypt your messages; even if they were subpoenaed, they could only provide registration timestamps and last connection times, as evidenced by past subpoena records.
X Chat uses the Juicebox protocol. This solution divides the key into three parts, each stored on three servers operated by X. When recovering the key with a PIN code, the system retrieves these three shards from X's servers and recombines them. No matter how complex the PIN code is, X is the actual custodian of the key, not the user.
This is the technical background of the "help page sentence": because the key is on X's servers, X has the ability to respond to legal processes without the user's knowledge. Signal does not have this capability, not because of policy, but because it simply does not have the key.
The following illustration compares the security mechanisms of Signal, WhatsApp, Telegram, and X Chat along six dimensions. X Chat is the only one of the four where the platform holds the key and the only one without Forward Secrecy.
The significance of Forward Secrecy is that even if a key is compromised at a certain point in time, historical messages cannot be decrypted because each message has a unique key. Signal's Double Ratchet protocol automatically updates the key after each message, a mechanism lacking in X Chat.
After analyzing the X Chat architecture in June 2025, Johns Hopkins University cryptology professor Matthew Green commented, "If we judge XChat as an end-to-end encryption scheme, this seems like a pretty game-over type of vulnerability." He later added, "I would not trust this any more than I trust current unencrypted DMs."
From a September 2025 TechCrunch report to being live in April 2026, this architecture saw no changes.
In a February 9, 2026 tweet, Musk pledged to undergo rigorous security tests of X Chat before its launch on X Chat and to open source all the code.
As of the April 17 launch date, no independent third-party audit has been completed, there is no official code repository on GitHub, the App Store's privacy label reveals X Chat collects five or more categories of data including location, contact info, and search history, directly contradicting the marketing claim of "No Ads, No Trackers."
Not continuous monitoring, but a clear access point.
For every message on X Chat, users can long-press and select "Ask Grok." When this button is clicked, the message is delivered to Grok in plaintext, transitioning from encrypted to unencrypted at this stage.
This design is not a vulnerability but a feature. However, X Chat's privacy policy does not state whether this plaintext data will be used for Grok's model training or if Grok will store this conversation content. By actively clicking "Ask Grok," users are voluntarily removing the encryption protection of that message.
There is also a structural issue: How quickly will this button shift from an "optional feature" to a "default habit"? The higher the quality of Grok's replies, the more frequently users will rely on it, leading to an increase in the proportion of messages flowing out of encryption protection. The actual encryption strength of X Chat, in the long run, depends not only on the design of the Juicebox protocol but also on the frequency of user clicks on "Ask Grok."
X Chat's initial release only supports iOS, with the Android version simply stating "coming soon" without a timeline.
In the global smartphone market, Android holds about 73%, while iOS holds about 27% (IDC/Statista, 2025). Of WhatsApp's 3.14 billion monthly active users, 73% are on Android (according to Demand Sage). In India, WhatsApp covers 854 million users, with over 95% Android penetration. In Brazil, there are 148 million users, with 81% on Android, and in Indonesia, there are 112 million users, with 87% on Android.
WhatsApp's dominance in the global communication market is built on Android. Signal, with a monthly active user base of around 85 million, also relies mainly on privacy-conscious users in Android-dominant countries.
X Chat circumvented this battlefield, with two possible interpretations. One is technical debt; X Chat is built with Rust, and achieving cross-platform support is not easy, so prioritizing iOS may be an engineering constraint. The other is a strategic choice; with iOS holding a market share of nearly 55% in the U.S., X's core user base being in the U.S., prioritizing iOS means focusing on their core user base rather than engaging in direct competition with Android-dominated emerging markets and WhatsApp.
These two interpretations are not mutually exclusive, leading to the same result: X Chat's debut saw it willingly forfeit 73% of the global smartphone user base.
This matter has been described by some: X Chat, along with X Money and Grok, forms a trifecta creating a closed-loop data system parallel to the existing infrastructure, similar in concept to the WeChat ecosystem. This assessment is not new, but with X Chat's launch, it's worth revisiting the schematic.
X Chat generates communication metadata, including information on who is talking to whom, for how long, and how frequently. This data flows into X's identity system. Part of the message content goes through the Ask Grok feature and enters Grok's processing chain. Financial transactions are handled by X Money: external public testing was completed in March, opening to the public in April, enabling fiat peer-to-peer transfers via Visa Direct. A senior Fireblocks executive confirmed plans for cryptocurrency payments to go live by the end of the year, holding money transmitter licenses in over 40 U.S. states currently.
Every WeChat feature operates within China's regulatory framework. Musk's system operates within Western regulatory frameworks, but he also serves as the head of the Department of Government Efficiency (DOGE). This is not a WeChat replica; it is a reenactment of the same logic under different political conditions.
The difference is that WeChat has never explicitly claimed to be "end-to-end encrypted" on its main interface, whereas X Chat does. "End-to-end encryption" in user perception means that no one, not even the platform, can see your messages. X Chat's architectural design does not meet this user expectation, but it uses this term.
X Chat consolidates the three data lines of "who this person is, who they are talking to, and where their money comes from and goes to" in one company's hands.
The help page sentence has never been just technical instructions.
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