Lawmakers have just released a long-awaited draft law on the structure of the crypto market.

The Senate Agriculture Committee has released a draft of its portion of the much-anticipated Digital Asset Market Structure bill — a major step toward accelerating institutional and retail adoption of cryptocurrencies.

A bipartisan discussion proposal introduced Monday by Agriculture Chairman John Boozman, R-Ark. and Sen. Cory Booker, D-N.J., lays the groundwork for the creation of U.S. crypto industry watchdogs. It also sets guidelines for institutions that want to work with digital assets, from Bitcoin and Ether to tokenized financial instruments.

“This is the most consistent plan for how institutions will incorporate digital assets into their business,” Cody Carbone, CEO of crypto trade association Digital Chamber, told CNBC. “It’s like the best possible step-by-step of what type of compliance requirements they would have to follow in order to work with crypto.”

Here are five key takeaways from the discussion draft.

The text classifies some of the largest digital assets by market capitalization, such as bitcoin and ether, as “digital commodities,” placing them under the jurisdiction of the Commodity Futures Trading Commission.

The provision removes a major blocker of digital asset adoption for institutional fiduciaries, Juan Leon, an analyst at cryptocurrency asset manager Bitwise, told CNBC.

“Compliance and risk departments will finally have a federal statute to point to,” Leon said. “This shifts the internal conversation … (and) provides the legal certainty needed to move assets into a formal, strategic divestment.”

It will also create a “sharply bifurcated market” consisting of regulated and unregulated tokens, with the former asset class seeing “massive inflows of institutional capital, deep liquidity and a robust derivatives ecosystem.”

The proposal calls for crypto companies to “establish separation of governance, personnel and financial resources between affiliated entities that perform distinct regulated functions.”

Bitwise’s Leon interprets this provision as a challenge to the “all-in-one” business model common among crypto exchanges. Under these models, the exchange, broker, custodian and proprietary trading department are wrapped into one entity.

In other words, digital asset firms could be required to keep their various businesses separate like traditional financial companies, according to Leon. The change would serve as “a cornerstone for institutional acceptance.”

The text gives more powers to the CFTC and allows it to work in tandem with the Securities and Exchange Commission in issuing joint rules on cryptocurrency-related matters.

“There is a lot more power or authority delegated to the CFTC to have jurisdiction over this industry,” Carbone said.

The move comes after the SEC served as the main regulator of digital assets for years after it ousted the CFTC to gain authority over the industry.

The proposal requires regulated entities to pay CFTC fees. These fees would go towards registering digital commodity exchanges, brokers and dealers, in addition to conducting oversight of regulated entities and conducting education and outreach.

The text calls for crypto exchanges to only allow trading in digital commodities that are “not easily susceptible to manipulation.”

It’s a provision that could reduce the number of “carpet pulls” and other scams that are still common in some parts of the crypto industry, with the goal of establishing standards and building trust in the market.

The Senate Agriculture Committee’s discussion draft is far from final, but Carbone says it offers a crucial insight into the direction of efforts to pass crypto-friendly regulations in the US.

“It’s not final, it’s not done, but it gives a good overview of where Congress is going and what the final rules might be,” Carbone said.

The committee is likely to spend the next few weeks gathering feedback on its proposal, which means it may be “almost impossible to complete (the final version of this part of the bill) by the end of the year,” he added.

However, this period will give lawmakers time to offer more specific guidance on several issues that are listed or not yet finalized in the discussion draft. These include provisions on anti-money laundering rules and regulations specific to decentralized financial entities.

Several crypto players plan to work with lawmakers to help iron out these details, among other things.

“We’ve long said that cryptocurrencies are a bipartisan issue, and this proposal from Chairman Boozman and Senator Booker reflects that,” Moonpay President Keith Grossman told CNBC. “It is critical that the legislation differentiates between centralized intermediaries and decentralized systems, and we look forward to working with the committee to get it right.”

According to Carbone, the discussion proposal is just one piece of a larger legislative effort to overhaul regulations for the crypto industry. Finally, the text will be combined with the proposal of the Senate banking committee on the market structure of digital assets in an effort to create one comprehensive bill.

And while lawmakers are far from over in the process, crypto firms are looking for other ways to work with regulators and other authorities to meaningfully advance their industry, Grayscale Investments chief legal officer Craig Salm told CNBC.

“Without comprehensive legislation, we’ve still seen meaningful progress on the regulatory front,” Salm said, adding that the SEC, Internal Revenue Service and Treasury Department recently provided guidance on betting on crypto exchange-traded products. “This means that thoughtful legislation will be critical to solidifying the foundations of the U.S. digital asset industry and delivering even greater value to investors and consumers.”