(Bloomberg) -- A key US Senate panel took up the debate over proposed regulation of digital assets, with Republicans calling for a soft approach and Democrats warning about potential loopholes and conflicts of interest.

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The Senate Banking Committee’s hearing Wednesday aimed to keep legislation for crypto-market structure on track for a Sept. 30 panel deadline. The House is set to consider its own measure next week.

“Our job is to set clear, light-touch guardrails to protect investors, stop fraud, and allow responsible innovation to flourish,” Senate Banking Committee Chairman Tim Scott said. He noted that legislation should clearly define which tokens are securities and ensure appropriate illicit finance protections.

Senator Raphael Warnock, a Georgia Democrat, criticized the digital asset proposal and said it doesn’t do enough to deal with conflict of interests from the executive branch. President Donald Trump and his family have launched memecoins and backed a crypto token that’s moving closer to trading openly on exchanges.

“Ironically, for those who want to see us do something on market structure, it seems to me that that’s not a fair market or a free market,” Warnock said.

The hearing included former Commodity Futures Trading Commission Chair Timothy Massad, Blockchain Association’s Summer Mersinger and Ripple’s Brad Garlinghouse. Massad warned senators that the current legislation provided too broad of an exemption for decentralized crypto firms, saying the way the proposals are currently written would cause “the migration of regulated activity into an unregulated space.”

Democrats also raised concerns over plans that allow for crypto firms to list themselves as decentralized platforms and questioned whether firms will avoid registering with the CFTC or Securities and Exchange Commission.

Republican Senators Cynthia Lummis, Thom Tillis, Bill Hagerty and Scott released market structure principles last month calling for clearly defined legal status of digital assets and regulatory authority. That plan is largely in line with the CLARITY Act, which was advanced by House committees in June.

Hagerty said that he isn’t concerned about losing bipartisan support for market structure legislation, predicting that Democrats who backed stablecoin legislation will “get down to business.”