After months of negotiations, market structure continues to dominate attention in Washington. Crypto and banking industry executives reviewed the stablecoin yield agreement between Sen. Thom Tillis (R-NC), Sen. Angela Alsobrooks (D-MD), and the White House, but some crypto industry leaders reportedly informed Senate offices they could not support the deal. Tillis told reporters he is considering a “crypto-palooza” summit between banking and digital asset stakeholders to try to break the impasse.

Frustration was already running high on Capitol Hill (recall Sen. Mark Warner’s (D-VA) remark, “I feel like I’m in crypto hell,” during a February hearing with Treasury Secretary Bessent). Those tensions are now spilling more openly into public view. Patrick Witt, a lead White House negotiator, posted on X using a quarterback “internal clock” analogy targeting industry stakeholders, before taking it down and instead emphasizing the urgency of passing legislation under a Republican-controlled Congress.

Meanwhile, crypto tax legislative proposals were released in both the House and Senate.

Within the Administration, the CFTC announced the launch of an Innovation Task Force and David Sacks stepped down as White House AI & Crypto Czar to become co-chair of the President’s Council of Advisors on Science and Technology.

DC Decentralized will return on April 20. Enjoy spring break!

Read more below

Congress

Hearings

Last week

• On March 25, the House Financial Services Committee held a hearing on “Tokenization and the Future of Securities: Modernizing Our Capital Markets.”

• On March 25, the Joint Economic Committee held a hearing on “The Rising Global Scam Economy: Modernizing Federal Approaches to Protect Americans from Foreign Fraudsters.”

• On March 26, the House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee held a hearing on “Innovation at the Speed of Markets: How Regulators Keep Pace with Technology.”

Legislation

• Sen. Ted Budd (R-NC) reintroduced the Virtual Currency Tax Fairness Act to exclude from gross income de minimis gains or losses from certain sales or exchanges of virtual currency. (Text)

• Reps. Max Miller (R-OH) and Steven Horsford (D-NV) released updated discussion draft of the Digital Asset PARITY Act to provide guidance on how digital assets are treated in the tax code. (Punchbowl)

• Sen. Jeff Merkley (D-OR) and Rep. Jamie Raskin (D-MD) introduced the STOP Corrupt Bets Act to ban betting through prediction markets on elections, government actions, sports, and military actions. (Text)

Correspondence

• House Financial Services Ranking Member Maxine Waters (D-CA sent a letter to Federal Reserve Bank of Kansas City President and CEO Jeff Schmid requesting information regarding the Kansas City Fed’s decision to approve a limited purpose account for Payward Financial, doing business as Kraken Financial. (Letter)

• Sen. Elizabeth Warren (D-MA) sent a letter to Jimmy “MrBeast” Donaldson, Founder of Beast Industries, and Jeffrey Housenbold, Chief Executive Officer, raising concerns about Beast Industries’ recent acquisition of Step, a financial technology app designed to provide banking services to children, and its interest in expanding into decentralized finance (DeFi). (Letter)

Trump Administration

White House

• David Sacks stepped down as White House AI & Crypto Czar after hitting the 130-day limit on his role as a special government employee. Sacks is now Co-chair of the President’s Council of Advisors on Science and Technology.

Commodity Futures Trading Commission (CFTC)

• CFTC Chair Mike Selig announced the launch of an Innovation Task Force chaired by CFTC senior adviser Michael Passalacqua.

Financial Crime Enforcement Network (FinCEN)

• FinCEN’s proposed rule on Permitted Payment Stablecoin Issuer Anti-Money Laundering/Countering the Financing of Terrorism Program and Sanctions Compliance Program Requirements has been reviewed by the White House Office of Information and Regulatory Affairs.

Federal Reserve

• Fed Governor Lisa Cook delivered remarks on “Reflections on Financial Stability” in which she said, “… we should embrace responsible changes that strengthen our financial system, not hinder them. The Committee on Financial Stability and the Board’s staff monitor financial and technological innovations that are in early stages of development, including digital assets and the use of artificial intelligence. The fact that the U.S. financial system is the largest and deepest in the world is the result of decades of successive, and transformative, financial and technological innovations. As a corollary, we need to understand innovations at early stages to see the system’s trajectory. We have also observed innovations that have brought unintended consequences, and we need to stay abreast of potential risks in order to better understand where guardrails and industry engagement might be helpful.” (Remarks)

Noteworthy Quotes and Events

ADMINISTRATION

Commodity Futures Trading Commission (CFTC)

• CFTC Chair Michael Selig posted “Crypto, AI and prediction markets are transformative and synergistic technologies. It’s critical that our laws and regulations accommodate the innovators and job makers in these industries, like APompliano, who is an entrepreneur and investor himself. The CFTC will develop fit-for-purpose rules so these technologies can flourish on US soil.”

• Selig also posted “DavidSacks made POTUS’ vision of securing America as the global leader in innovation a reality by working tirelessly to advance pro-growth policies for AI and crypto. Thank you David for your leadership as President Trump’s AI and Crypto Czar. I look forward to working with you in your new capacity as co-chair of the President’s Council of Advisors on Science and Technology.”

• Selig also posted “The CFTC has a statutory mandate to regulate the markets — not to pursue merit-based pet projects like Operation Chokepoint 2.0 and Anti-Crypto Armies. Under my leadership, the CFTC will return to focusing on fulfilling its statutory mission without overregulating and strangling innovators.”

• Selig also posted “As a result of widespread debanking and misreporting in the news, we’re seeing trust in centralized gatekeepers being replaced with trust in decentralization and market systems. It’s essential that we create a regulatory framework that does not quash this trust revolution.”

• Selig said, “You don’t want this patchwork of different states [when it comes to regulations]. You want one rulebook for derivatives, just like we want one rulebook for crypto.”

• Selig also posted “For far too long, the Biden administration left crypto in limbo by driving many crypto firms offshore and creating confusion as to what’s a security and what’s not. SECPaulSAtkins and I have developed a new interpretation that provides regulatory clarity for the crypto markets.”

• Selig also posted “Reshoring ‘true’ crypto perpetual futures in the US is a key piece of the CFTC’s innovation policy agenda. We are hard at work to get this done soon.”

• On prediction markets, Selig said, “Prediction markets are one of the most exciting financial products in our regulatory purview right now… There’s this false media narrative that CFTC-regulated markets are the Wild West and have no regulation and that’s blatantly false. The CFTC uses complex surveillance tools and has seasoned career staff that pro-actively monitor these markets for insider trading and fraud… We’re looking forward to engaging with our exchanges, market participants, lawmakers, and tribal leaders to make sure we get this right. We don’t want to see these markets pushed offshore — they need to be regulated right here.” (Washington Reporter)

Securities and Exchange Commission (SEC)

• The SEC posted “Chairman SECPaulSAtkins at the Digital Asset Summit 2026: ‘The interpretative release is not a panacea. We need to be ready, willing, and able, working closely with the CFTC. . . to provide clarity without overreaching and enable innovation.’”

White House

• White House Adviser David Sacks posted “Getting crypto market structure legislation across the finish line remains a vital part of the President’s pro-innovation technology agenda which we will continue to push.”

• President’s Council of Advisors for Digital Assets Executive Director Patrick Witt posted “Plenty of uninformed FUD circulating on social media this week. It’s all going to work out. Bullish.”

• Witt also posted “I wonder how a future Democrat administration will handle stablecoin rewards. And developer protections. And DeFi. And the line between digital commodities and securities. Etc. Block passage of the CLARITY Act to find out!”

CONGRESS

Digital Asset PARITY Act

• On a final introduced version of the Digital Asset PARITY Act, Rep. Max Miller (R-OH) said, “I would have liked to have it out already, so hopefully you’ll get full bill text over the next month or so.” (Tax Notes)

• Rep. Steven Horsford (D-NV) said, “I think there will be technical revisions, with nothing material changing. That’s one of the reasons we did a draft, so that this was an open, transparent, and inclusive process.” (Tax Notes)

• House Ways and Means Ranking Member Richie Neal (D-MA) said, “I think the problem with crypto is that people don’t know enough about it. I think we’re open to discussion so we learn more about it, for sure, but I don’t think there will be a caucus position on it.” (Tax Notes)

Coinbase Partnership on Mortgage Offerings

• Sen. Elizabeth Warren (D-MA) said, “I cannot think of a worse move at this moment. This is not a moment to integrate a highly volatile asset into the middle of what is supposed to be a stable lending market.” (Punchbowl)

• Sen. Bernie Moreno (R-Ohio) said, “Why not?” (Punchbowl)

• Sen. Kevin Cramer (R-ND) said, “Whether a crypto blockchain is secure enough for mortgages backed by Fannie Mae — I’d have to get schooled up on it a little bit. But, wow.” (Punchbowl)

Market Structure

• On joining the Senate Agriculture Committee’s Digital Commodity Intermediaries Act, Sen. Jon Husted (R-OH) said, “Congress is overdue in providing the regulatory certainty and consumer protections the digital asset space needs. This bill represents an important first step toward delivering that clarity. If the United States is going to lead in digital assets, we need a framework that is clear, practical and supports innovation and job creation here at home. I look forward to working with my colleagues to move this legislation forward. We must also advance broader efforts to establish a strong, modern market structure bill that protects consumers, gives developers confidence to build in the United States and allows this technology to grow responsibly.” (Press release)

• Senate Agriculture Chair John Boozman’s (R-AR) said, “This is a critical step toward creating clear rules for digital asset markets. Advancing this bill brings us closer to a U.S. regulatory framework that protects consumers while allowing American innovation and businesses to thrive. There’s still more work ahead, but I’m proud to lead this important effort and hopeful this will build momentum in the Senate to advance this legislation.” (Press release)

• Sen. Cynthia Lummis (R-WY) posted “Don’t believe the FUD-- we have worked on a bipartisan basis for the last few weeks to make changes to Title 3 that make this bill the strongest protection for DeFi and developers ever enacted. We have to pass the Clarity Act to get these protections.”

• Rep. Julia Letlow (R-LA) posted “I supported the GENIUS Act to protect consumers while keeping the U.S. well positioned in the digital economy. As this bill is implemented under President Trump’s leadership, I look forward to seeing America lead the world in crypto innovation.”

Miscellaneous

• Rep. Bryan Steil (R-WI) posted “’Digital Assets, AI, and real time payments have already begun to revolutionize our financial system. We must ensure regulators have the tools necessary to protect consumers without stifling US innovation.’”

• Rep. David Schweikert (R-AZ) posted “A grandmother is stuffing money into a Bitcoin machine. The owner knows it is fraud and tries to stop her. She lies to him anyway because the stranger on the phone already has her believing the lie. That is what AI changes. It can pull details off social media and put a familiar voice on the line. That is how the fraud starts to sound real. Then the transfer goes through before the family even knows there is a problem. My own father has been scammed multiple times. We need to stop treating this like a simple education problem and start stopping the transfer before the savings are gone.”

• Rep. Rashida Tlaib (D-MI) posted “Two crypto bros are the biggest slumlords in Detroit. The conditions in nearly 700 homes and apartments owned by RealT companies are shocking: smashed windows, flooded basements, no heat. Selling ‘digital tokens’ cannot be a free pass to profit from dangerous living conditions.”

• Rep. Warren Davidson (R-OH) posted “Central Bank Digital Currency (CBDC) corrupts money into a tool for surveillance, coercion, and control. It is communist money for the digital age. Completely ban CBDC!”

What I’m Reading This Week

• Tax Policy for the Digital Asset Age, Coinbase Institute.

• Breaking Up Is Hard to Do: Howey and the SEC’s Crypto Asset Classification Guidance, Lewis Rinaudo Cohen, Samson Enzer, Gregory Strong, Gary Kalbaugh, Brian Farber, and Edward Leaf, CahillNXT.

About Zero One Strategies

Zero One Strategies is a specialized government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com

www.ZeroOneStrategies.com

Sens. Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) have reportedly reached an agreement in principle on legislative language on stablecoin yields, potentially clearing the way for Senate consideration of market structure legislation. The language will be vetted by digital asset and banking industry stakeholders early this week. Alsobrooks reportedly suggested the agreement prohibits yield payments “on a passive balance.”

In the Trump Administration, the SEC published an interpretation on the application of Federal securities laws to crypto assets and transactions, including its long-awaited token taxonomy and clarity on how the Howey test applies to crypto. The CFTC released FAQs on crypto and blockchain registrants and registered entity activities. The IRS extended temporary relief for digital asset brokers whose users seek to identify the specific broker-held tokens they sold or transferred.

Read more below

Congress

Hearings

Last week

• On March 17, the House Financial Services Committee holds a hearing on “Updating America’s Financial Privacy Framework for the 21st Century.”

• On March 18, the Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity Subcommittee hearing on “Revisiting the Treasury-Fed Accord.”

This week

• On March 25, the House Financial Services Committee holds a hearing on “Tokenization and the Future of Securities: Modernizing Our Capital Markets.”

• On March 25, the Joint Economic Committee holds a hearing on “The Rising Global Scam Economy: Modernizing Federal Approaches to Protect Americans from Foreign Fraudsters.”

• On March 26, the House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee holds a hearing on “Innovation at the Speed of Markets: How Regulators Keep Pace with Technology.”

Legislation

• Sens. Dick Durbin (D-IL), Elizabeth Warren (D-MA), Peter Welch (D-VT), Bernie Sanders (I-VT), Tina Smith (D-MN), and Mazie Hirono (D-HI) introduced the No Bailout for Crypto Act to prohibit the use of taxpayer funding to cover the cost of a federal bailout for crypto companies if the industry causes an economic crash or sees mass bankruptcies. (Text)

Publications and Events

• The Congressional Research Service (CRS) published papers on:

  • Prediction Markets: Policy Issues for Congress (Paper)

  • The Financial Crimes Enforcement Network (FinCEN): Anti-Money Laundering Act of 2020 Implementation and Beyond (Paper)

  • An Overview of Decentralized Finance (Defi) (Paper)

Trump Administration

Securities and Exchange Commission (SEC)

• The SEC published as a final rule an interpretation regarding the application of the Federal securities laws to certain types of crypto assets and certain transactions involving crypto assets. The rule provides a coherent token taxonomy for digital commodities, digital collectibles, digital tools, stablecoins, and digital securities; addresses how a “non-security crypto asset” may become subject to, and how it may cease to be subject to, an investment contract; and clarifies the application of federal securities laws to airdrops, protocol mining, protocol staking, and the wrapping of a non-security crypto asset. (Federal Register)

Commodity Futures Trading Commission (CFTC)

• The CFTC’s Market Participants Division and Division of Clearing and Risk published responses to frequently asked questions concerning registrant and registered entity activities relating to crypto assets and blockchain technologies. (Press release)

Internal Revenue Service (IRS)

• IRS released Notice 2026-20 extending the temporary relief that allows taxpayers to use simplified methods under section 1012 to identify which specific units of a broker-held digital asset they are selling or transferring. (Notice)

Noteworthy Quotes and Events

ADMINISTRATION

Securities and Exchange Commission (SEC)

• SEC Chair Paul Atkins and Commissioners Hester Peirce and Mark Uyeda published an op-ed entitled “Crypto Markets – and the American People – Deserve Clarity,” saying, “The Commission has released a landmark interpretation that finally provides clear guidelines. We establish a straightforward taxonomy of crypto assets — most of which are not securities — and clarify how the Supreme Court’s Howey test applies when a crypto asset is part of an investment contract… The SEC’s role is to provide merit-neutral clarity, not dictate how teams design their projects. By providing this guidance as Congress finalizes legislation, we ensure that crypto asset innovation can take root and thrive here at home immediately. Clear rules also allow regulators to focus enforcement resources where they belong: combatting fraud and protecting market integrity within the limits of our statutory authority.” (Op-ed)

• SEC Chair Paul Atkins said, “After more than a decade of uncertainty, this interpretation will provide market participants with a clear understanding of how the Commission treats crypto assets under federal securities laws. This is what regulatory agencies are supposed to do: draw clear lines in clear terms. It also acknowledges what the former administration refused to recognize – that most crypto assets are not themselves securities. And it reflects the reality that investment contracts can come to an end. This effort serves as an important bridge for entrepreneurs and investors as Congress works to advance bipartisan market structure legislation, which I look forward to implementing with Chairman Selig in the near future.” (Press release)

Commodity Futures Trading Commission (CFTC)

• CFTC Chair Michael Selig said, “For far too long, American builders, innovators, and entrepreneurs have awaited clear guidance on the status of crypto assets under the federal securities and commodity laws. With today’s interpretation, the wait is over. Chairman Atkins and I are committed to fostering a regulatory environment that allows the crypto industry to flourish in the United States with clear and rational rules of the road. Today’s joint agency action reflects a shared commitment to developing workable, harmonized regulations for the new frontier of finance.” (Press release)

White House

• On reports of a market structure deal, President’s Council of Advisors for Digital Assets Executive Director Patrick Witt posted “Credit to SenThomTillis and Sen_Alsobrooks for bridging the partisan divide to tackle a difficult issue. More work to be done to close out this and other outstanding issues, but this is a major milestone toward passing the CLARITY Act.”

CONGRESS

Market Structure

• Sen. Angela Alsobrooks (D-MD) said of the tentative agreement on stablecoin yields, “Sen. Tillis and I do have an agreement in principle. We’ve come a long way. And I think what it will do is to allow us to protect innovation, but also gives us the opportunity to prevent widespread deposit flight.” (Politico)

• Sen. Thom Tillis (R-NC) said “In working with the White House, I think we have an agreement. Now we have to vet it with industry, because they are a party to an ultimate deal.” (Politico)

Senate Intelligence Committee Hearing on Worldwide Threat Assessment Q&A

Sen. James Lankford (R-OK)

• Lankford: “A lot of Oklahomans I talk to, and quite frankly folks even outside the state, when they think about threats… they think about the threat to their family… a lot of it is international scammers that are now reaching into the United States to be able to gather data or to be able to steal money from them… FBI had noted that in 2024, it was almost $17 billion that was assumed lost to scammers… some estimates are as high as $50 billion on it… This is accelerating at a pace that’s pretty dramatic with the use of AI on this.”

  • FBI Director Kash Patel: “What we’re doing on the homeland is going out into the streets of America, on the online platforms in America, and shutting down those networks and shutting down the capability of AI to interfere…. The scam center compounds are largely located in Cambodia and Burma and on the Thai border… we’ve… eliminated and scuttled… numerous compounds… and… go into those countries and shut down every single scam center compound.” (Press release)

Miscellaneous

• Sen. Dan Sullivan (R-AK) posted “Last week I gave a speech on the Senate floor on the importance of competing against China and winning the race against China on key emerging technologies: crypto, biotech, and AI. Today, the Trump administration took a critical and commonsense step forward by releasing a framework that gives Congress a clear roadmap to capitalize on AI’s potential. AI has enormous positive potential to transform health care, grow our economy, and improve the lives of everyday Americans. This framework gets the big things right: protecting our kids online, protecting our First Amendment rights, establishing a uniform national policy that gives innovators certainty, and recognizing that, to win the AI race with China, we need to continue unleashing American energy dominance. While we are currently ahead in the AI race, we can’t be complacent. I look forward to working with my Senate colleagues on both sides of the aisle to turn this framework into law.”

• Rep. Bryan Steil (R-WI) posted “Crypto and Digital Asset regulations should be forward-looking, protect consumers, and allow the US to outcompete China. If we do that, the US will win the Web3 race.”

• Rep. Tom Kean (R-NJ) posted “Digital assets are here to stay, and we must maintain regulatory clarity in order to support U.S. leadership in the crypto space. I cosponsored the Blockchain Regulatory Certainty Act to protect blockchain developers and service providers from being misclassified. This clarification protects American innovation and prevents regulatory overreach so we can continue to advance the future of digital finance.”

• Sen. Dick Durbin (D-IL) posted “2008 proved that we cannot leave Americans on the hook to save a failed industry. That’s why today I’m introducing the No Bailout for Crypto Act to ensure that taxpayers aren’t left holding the bag when the crypto industry inevitably crashes.”

• Rep. Al Green (D-TX) posted “Today, Thursday, March 19, 2026, sometime between 12:00-1:00 p.m. ET, I will speak on the topic – ‘Why the crypto industry is spending mega millions of dollars to control Congress.’”

• Rep. Max Miller (R-OH) posted “It’s as simple as it sounds. The Digital Asset PARITY Act protects everyone involved by bringing clarity and parity to the tax treatment of digital assets. Great conversation with RepHorsford at DigitalChamber’s DCBlockchain Summit on how we’re working together to bring much-needed certainty to this space.”

• Sen. Cynthia Lummis (R-WY) posted “America can’t lead in global financial innovation if we can’t even write the rules. The Clarity Act paves the way to make the U.S. the digital asset capital of the world: Clear line between securities & commodities; Strong consumer protections; American innovation.”

• Lummis also posted “Clear rules. Clear regulations. Clear jurisdiction.
  That’s what Clarity is about. It’s time to get digital asset market structure across the finish line.”

• Lummis also posted “President Trump pledged to make America the digital asset capital of the world. The Clarity Act is how we make that happen. Let’s get it done, once and for all.”

• Financial Services GOP posted “This is a welcome development from SECGov and CFTC as Congress works to enact the CLARITY Act, establishing a functional framework for the digital asset ecosystem.”

• Rep. Bryan Steil (R-WI) posted “SECGov and SECPaulSAtkins just dropped a legal interpretation for crypto assets that reflects many of the ideas in CLARITY. This is a great first step, time to build on it and pass CLARITY!!”

What I’m Reading This Week

• Russia’s Push for AI Expansion Threatens to Undermine Crypto Mining, Crypto News.

About Zero One Strategies

Zero One Strategies is a specialized government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com

www.ZeroOneStrategies.com

The era of jurisdictional competition appears to be drawing to a close, as the SEC and CFTC announced a Memorandum of Understanding and Joint Harmonization Initiative to enhance interagency coordination.

Prediction markets are gaining policy traction in Washington, with new legislation and a CFTC Advanced Notice of Proposed Rulemaking signaling regulatory attention.

The SEC confirmed that the long-anticipated innovation exemption will be far narrower than initially envisioned.

The IRS is seeking public comment on its annual Taxpayer Burden Surveys, offering an opportunity to advocate for more comprehensive data collection on digital asset reporting compliance.

Lawmakers on both sides of the aisle increasingly acknowledge that the window for advancing market structure legislation is closing, with late April emerging as the newest deadline for consensus in the Senate. Meanwhile, House Financial Services Chair French Hill (R-AR) suggests shifting the question of stablecoin yields to Treasury rulemaking.

Read more below

Congress

Hearings

This week

• On March 17, the House Financial Services Committee holds a hearing on “Updating America’s Financial Privacy Framework for the 21st Century.”

• On March 18, the Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity Subcommittee hearing on “Revisiting the Treasury-Fed Accord.”

Upcoming

• On March 25, the House Financial Services Committee holds a hearing on “Tokenization and the Future of Securities: Modernizing Our Capital Markets.”

• On March 26, the House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee holds a hearing on “Innovation at the Speed of Markets: How Regulators Keep Pace with Technology.”

Legislation

• Sen. Dick Durbin (D-IL) introduced the No Crypto in Social Security Act to prohibit the Social Security Trust Funds from investing in cryptocurrencies. (Press release)

• Sens. Richard Blumenthal (D-CT) and Andy Kim (D-NJ) introduced the Prediction Markets Security and Integrity Act to enact federally-enforced rules on insider trading and market manipulation; ban prediction market listings related to war, death, and military action; require that states offering a sports betting program meet minimum federal standards with respect to advertising, affordability, and artificial intelligence; require age verification and a ban on advertising to underage individuals or individuals on the self-exclusion list; and reverse Commodity Futures Trading Commission preemption of state gambling regulations. (Text)

Trump Administration

Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC)

• The SEC and the CFTC announced that they have entered into a Memorandum of Understanding (MOU) to guide coordination and collaboration between the two agencies. They also announced a Joint Harmonization Initiative to support coordination across the policymaking, examination and enforcement functions of each agency, particularly for joint applications and shared policy efforts, including “providing a fit-for-purpose regulatory framework for crypto assets and other emerging technologies.” (MOU)

Internal Revenue Service (IRS)

• The IRS is seeking public comment on Taxpayer Burden Surveys, specifically on: (a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency’s estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. The IRS Taxpayer Burden Surveys are designed to gather statistically representative data that allows the IRS to provide accurate estimates of taxpayer compliance burden and help the IRS understand how and why taxpayer burden changes over time, and inform the IRS of the impact of tax law changes and changes in taxpayer behavior, such as use of tax preparation software and services. The comment period closes May 11. (Federal Register)

National Institute of Standards and Technology (NIST)

• On April 16, NIST is hosting a workshop to examine the technical architectures, interoperability challenges, operational practices, and security risks that are emerging in real-world blockchain and DLT deployments. (Event)

Department of Justice (DOJ)

• The Wall Street Journal reported that DOJ is investigating Binance over allegations that the company facilitated illegal movement of funds to Iran. Binance denied the claims and has sued the Wall Street Journal for defamation. (The Guardian)(WSJ)

Commodity Futures Trading Commission (CFTC)

• The CFTC published an Advanced Notice of Proposed Rulemaking seeking public comment on the need to amend or issue new regulations concerning event contracts traded on prediction markets. (Press release)

Noteworthy Quotes and Events

ADMINISTRATION

Securities and Exchange Commission (SEC)

• In remarks at a meeting of the SEC Investor Advisory Committee, Commissioner Hester Peirce announced, “Commission staff is working on an innovation exemption to facilitate limited trading of certain tokenized securities—much narrower than the ‘blanket’ exemption mentioned in the draft recommendation.” (Press release)

• Chair Paul Atkins delivered remarks at the IAC meeting, saying, “The Committee will vote on recommendations regarding the tokenization of equity securities. I want to thank the IAC for engaging thoughtfully with this topic, as well as for your recognition that tokenization can enhance settlement efficiency, reduce settlement risk, and eliminate unnecessary intermediaries. As I have previously discussed, I expect the Commission to soon consider an innovation exemption to facilitate limited trading of certain tokenized securities with an eye toward developing a long-term regulatory framework. To help inform our work in this area and to provide for robust public input, our Crypto Task Force has hosted several roundtables, met with hundreds of market participants, solicited broad public feedback, and received scores of written input submissions over the past thirteen months on how best to calibrate our rules to new and novel types of trading. We continue to welcome comments on the design of a potential innovation exemption, which would be limited in time and scope, but long enough so that we can craft more durable rules that harness the full potential of these new technologies.” (Press release)

• At the same meeting, Commissioner Mark Uyeda said, “The Committee will be considering a draft recommendation on the tokenization of equity securities. This recommendation follows the Committee’s discussion of this issue at its last meeting in December. Throughout its history, the SEC has witnessed financial innovation that the federal securities laws did not originally contemplate. In the 1970s, money market funds emerged as a instrument to deal with the sky-high interest rates, prompting the Commission to issue exemptive relief until these products were ultimately codified in Rule 2a‑7. A similar pattern followed with ETFs, which began as a way to provide investors with intraday liquidity. For years, the Commission granted individual exemptions to allow ETFs to operate until adopting Rule 6c‑11. Tokenization of equity securities may be the next example of an innovation that could bring significant benefits to investors but does not fit neatly into the existing regulatory framework. I appreciate the Committee’s efforts to recognize that the advent of new technologies means that our rules may need to evolve but keeping in mind the goals of protecting investors and maintaining fair, orderly, and efficient markets.” (Press release)

Federal Deposit Insurance Corporation (FDIC)

• At the American Bankers Association Summit, FDIC Chair Travis Hill delivered remarks entitled “An Update on Reforms to the Regulatory Toolkit,” saying, “The FDIC has also been hard at work on rulemakings to implement the GENIUS Act, which includes a proposal to establish prudential requirements for payment stablecoin issuers supervised by the FDIC. One issue we plan to address in this proposal, which has broader implications beyond just FDIC-supervised stablecoin issuers, is the applicability of FDIC pass-through insurance to payment stablecoins. The GENIUS Act makes clear that payment stablecoins are not ‘subject to deposit insurance’ or guaranteed by the U.S. government. The GENIUS Act further prohibits payment stablecoin issuers or other parties from representing ‘that payment stablecoins are backed by the full faith and credit of the United States, guaranteed by the United States Government, or subject to Federal deposit insurance or Federal share insurance.’ The GENIUS Act is silent on whether FDIC pass-through insurance could apply to payment stablecoins… As a result, the FDIC is planning to propose that payment stablecoins subject to the GENIUS Act are not eligible for pass-through insurance. The FDIC is particularly interested in comments on this aspect of the proposal, and we are open to hearing different perspectives on this issue. In my view, we should answer this question definitively by regulation, rather than waiting until a bank that holds stablecoin reserves fails, when different parties may have different expectations on the availability of FDIC insurance.” (Remarks)

White House

• President’s Council of Advisors for Digital Assets Executive Director Patrick Witt posted “Arguably my favorite part of this rewards/yield debate has been when bankers say ‘if we allow this, then we’ll see massive deposit flight.’ Crypto has already been offering rewards/yield on stablecoins FOR YEARS. Where is the deposit flight? Is it in the room with us right now?”

• Witt also posted “Lost in the rewards/yield debate is how GENIUS-compliant stablecoins will actually lead to deposit inflows. Global demand for USD is massive. Foreigners exchange local currency for stablecoins from a US-based issuer. That is net new capital entering the American banking system.”

• Witt also posted “The CLARITY Act must remain a pro-innovation piece of legislation. Attempts to hijack the legislative process and turn it into an anti-competition bill are shameful.”

Commodity Futures Trading Commission (CFTC)

• CFTC Chair Mike Selig posted “Prediction markets are one of the most exciting innovations in financial markets. Yet for too long, the CFTC has failed to provide guidance for these markets being used by millions of Americans. This ends today. The CFTC released long-overdue staff guidance and an ANPRM on prediction markets to provide clarity to our exchanges, market participants, and the American people on rules of the road for these markets. This guidance is just a first step, and my staff are diligently working on a formal rulemaking, including through our recent ANPRM submitted to the White House. We look forward to engaging with comments from the public. We want to get this right and ensure we have the gold standard for prediction market regulation here in America. Prediction markets are here to stay and under my leadership, I’ll protect the agency’s jurisdiction over these markets and allow them to flourish in the US.”

• Selig also posted “On Bankless, I told TrustlessState and RyanSAdams that we’re in the midst of a global technological revolution. Blockchain, prediction markets, and artificial intelligence are transforming our financial markets. We must ensure that these innovations aren’t strangled with red tape and forced offshore.”

• Selig also posted “It’s my hope that, by marrying prediction markets with blockchains, we can see how decentralized trust and truth can act as a check on disinformation, outright falsity, and the threat of debanking.”

CONGRESS

Market Structure

• Senate Majority Leader John Thune (R-SD) said, “Market structure is a bill that’s, I’m hoping, going to come out of the Banking Committee soon, probably not before, I would say, the April time period.” (Punchbowl)

• At the American Bankers Association summit, Sen. Angela Alsobrooks (D-MD) said, “I think I have to level set that all of us will probably walk away just a little bit unhappy. The compromise that myself and SenThomTillis have been working on is one we believe will help prevent deposit flight and allow innovation to grow at the same time.” (Eleanor Terrett, x.com)

• Alsobrooks said to Punchbowl, “We’ve been very clear that we want to make sure that we allow rewards and interest to be paid, but not on a stable balance. We don’t want bank-like products that do not have bank-like protections.” She added, “There are a number of other issues that also have to be resolved, with illicit finance and some other things.” (Punchbowl)

• Sen. Thom Tillis (R-NC) said, “If they want to get this done, then we ought to be listening to the concerns of the [global systemically important banks] and the community banks. I mean, we’re not that far apart.” He added, “I’ve been impressed with Brian Armstrong… Some of these other crypto bros, they better learn how to act professionally and how to negotiate, because if they keep swinging for the fences, they’re gonna end up like Babe Ruth. They’re gonna have a big strikeout average.” (Punchbowl)

• Sen. Adam Schiff (D-CA) said, “There hasn’t been much progress lately on it. We’re really still waiting for a concrete response from the White House. The last couple of meetings that Senator Gallego and I scheduled with the White House, the White House did not show up for whatever reason. It’s hard for us to move forward unless we hear a response to the proposals we’ve made.” (Punchbowl)

• Sen. Cynthia Lummis (R-WY) posted “Thank you, Sen_Alsobrooks, for the reminder that the status quo is worse for banks than a bipartisan compromise in the Clarity Act which prevents deposit flight and promotes innovation. America needs clarity. Let’s get it done.”

• Lummis also said, “I don’t know if we’ll get it out of committee until April. And, of course, the first two weeks of April, we’re off on the Easter recess. So it’s getting dicey. We’re putting ourselves in a very dangerous position.” (Punchbowl)

• House Financial Services Chair French Hill said, “My recommendation is that all these issues around paying yield or connecting rewards by either a bank or a non-bank issuer should be dealt with in the regulatory proposal that Treasury has to come up with to implement the Genius Act.” (Chad Pergram, x.com)

• Rep. Mike Flood (R-NE) said, “When we’re talking stablecoins, I want banks in that lane. We need community banks. We need everybody to play in this, and so I’m supportive of them having a role here. I think this is something that can get worked out.” (Punchbowl)

• House Financial Services Ranking Member Maxine Waters (D-CA) said, “Crypto may be inevitable, but it’s got to have guardrails, and they don’t have guardrails yet. The challenge for this, for my side of the aisle, is that we are able to help people understand the possibilities of harm with crypto, and convince them that they’ve got to know what crypto is all about.” (Punchbowl)

• House Financial Services GOP posted “ICYMI: Chairman RepFrenchHill joined LizClaman on FoxBusiness to discuss the latest on the CLARITY Act. ‘Last July, we passed the GENIUS Act that created the first dollar-backed payment stablecoin and we passed the CLARITY Act in the House… in both instances, on a bipartisan basis, we said that stablecoins should not pay yield. It’s just a payment device to be used on a blockchain, and we also outlined in the GENIUS Act that both bank and nonbank issuers of a dollar-backed stablecoin would be treated the same way on sales practices, capital, [and] supervision. So, in my view this can be resolved in the CLARITY Act, and I hope soon.’”

Prediction Markets

• Sen. Dave McCormick (R-PA) posted “This is an important step in the evolution of prediction markets. I commend ChairmanSelig for acting quickly to reinforce regulatory requirements and provide clarity for these markets.”

• Sen. Adam Schiff (D-CA) posted “I’m introducing a bill to ban bets on war and death in prediction markets. Betting on war and death creates an environment in which insiders can profit off of nonpublic information, our national security is jeopardized, and violence is encouraged. Congress must act.”

Miscellaneous

• On a digital asset tax bill, Sen. Steve Daines (R-MT) said he is “making progress now at the committee level.” On bipartisanship, he said, “You saw the difficulty of getting a bipartisan market structure bill together. But clearly, to get an outcome it’s going to have to be bipartisan. So we’re gonna have to find a way to get to 60.” (Punchbowl)

• Sens. Chris Van Hollen (D-MD), Elizabeth Warren (D-MA), and Ruben Gallego (D-AZ) issued a statement on the Wall Street Journal report that the Department of Justice is investigating potential Binance sanctions violations, “Binance has an established track record of putting profits ahead of the law. Recent reports raise serious concerns that the firm is again violating U.S. sanctions laws, recklessly helping bankroll the activities of terrorist groups connected to Iran. We will conduct oversight to ensure the Department of Justice conducts a serious investigation into Binance and holds the company accountable for any wrongdoing. This scrutiny is particularly important given recent reports that Binance is engaging in increasingly risky activity in countries through which illicit actors are known to evade U.S. sanctions and export controls.” (Press release)

• House Foreign Affairs Committee Democrats posted “Trump likes to appear tough on Iran. But he pardoned the founder of Binance—whose crypto exchange pleaded guilty to sanctions violations and is now being investigated for helping Iranian terror networks move money. Guess ‘maximum pressure’ doesn’t apply to crypto billionaires.”

• Sen. Richard Blumenthal (D-CT) posted “Binance thinks its crypto connections to Trump’s family will get it a pass, just as its former CEO got a Presidential pardon. In fact, we can’t trust this DOJ to hold Binance accountable. That why I’ll continue investigating through PSI.”

• Sen. Dick Durbin (D-IL) posted “This week the Senate will consider a bill to help address the housing affordability crisis in America. I introduced five amendments to this bill to ensure homes are safe and affordable and to secure our financial markets from the volatility of crypto or scammers.”

Floor Statements

• Sen. Adam Schiff (D-CA) said at a Punchbowl News conference, “We shouldn’t preempt certain basic protections that states want to put in place for the very reason you mentioned, which is we proved utterly incapable of regulating tech. If we move with the same speed we have moved to deal with Section 230 or all the ills that have come about through social media, then we will never, it feels like, regulate AI. So, before we tell the states back off, we have to show we’re capable of doing something, and that hasn’t happened.” He added, “What the administration is doing right now to Anthropic is so completely self-destructive. It’s destructive of the AI in America, because this is one of the preeminent AI companies. It’s even more broadly destructive over national security, because they’re a leader in this area, so they’re going to undermine our own national security. But it is also a just a direct assault on the whole idea of free enterprise. And I don’t know why all of corporate America isn’t screaming right now, except maybe that they’re terrified. But if the President of the United States can pick an AI company and say, we’re going to give you the death sentence because you dared insist on something that ought to be common sense anyway, then the administration can kill any company in America, and it can extort any company in America, and it’s already extorted a great many. And the only way we stop this is if there is some collective action among corporate America, among our universities and our law firms and our media organizations that push back and say, no. I admire what Anthropic is doing, because, among other things, it is exceedingly rare how many companies are actually standing up to the president right now as he’s trying to tell a company like Microsoft, you got to fire this person, or we won’t do business with you, or this person is on your board Netflix, so that we’re not going to support a merger. What kind of backward country are we becoming? And if corporate America thinks this is good for business, it may be good for a particular company in the very short term, but it is death to the economy in the longer term. And I wish we had more voices like Anthropic out there.” (Press release)

• In remarks on the Senate floor, Sen. Dick Durbin (D-IL) said, “In the aftermath of the 2008 financial crisis spurred by lax lending standards, the Consumer Protection Bureau was created. Dodd Frank placed parameters to prevent this from happening again. The consumer protection Bureau has been gutted while promoting one industry over that almost exclusively. Which industry is that? The cryptocurrency industry. This administration is playing with fire. Dropping lawsuits, hollowing out enforcement, and curtailing bad actors while cozying up to donors. Cryptocurrency is a highly risky volatile asset. Take the bitcoin. The gold standard of crypto. It has fallen in value nearly 50% since hitting a record high last October. And it’s not just bitcoin. The total value of the crypto market has dropped from 4 trillion in October of 2025 to 2.36 trillion today. All the gains from last year have been wiped out investors in that cryptocurrency. Crypto has developed a troubling reputation for fraud, including scams by crypto ATM’s, which target seniors. In 2025, last year alone, the FBI received more than 12,000 complaints of crypto ATM fraud that resulted in more than $333 million in losses. How does it work? A senior citizen get as telephone call -- get as telephone call and is told that you were supposed to show up for jury duty. The senior says, I don’t know about that. Well, that’s a fact. A warrant is going to be served on you unless you pay a fine. I will save you the embarrassment. Go to a -- embarrassed with their kids. Just like that goes to the cryptomachine. Does that happen very often? 12,000 complaints of crypto ATM fraud. $333 million. Seniors convinced by scammers to plug money into the cryptomachines. The President has used crypto to enrich himself and his family. Fresh off returning to the Oval Office for a second time, Donald Trump launched a meme coin that generated more than $280 million in profit. President Trump issued a meme coin that generated more than $280 million in profit since he was reelected as President. And his family’s crypto firm, World Liberty Financial, has brought in approximately $1 billion in revenue, the family firm. President Trump’s crypto dealings reportedly account for more than 20% of his net worth. In one year, President Trump and his family have increased their family fortune to the tune of $1.4 billion, primarily through crypto. My First Amendment would crack down on what some call, quote, the getaway vehicle for criminals, talking about crypto ATMs. You might not know that they’re there. But the next time you go to a grocery store and look at an ATM machine, look at what’s next to it. It’s a crypto ATM. I’m talking about crypto ATM’s that are all around America, 30,000 of that’s machines. If you look at your gas station or grocery store, you are going to see them. They’re being used to cheat senior citizens of their life savings. I’ve spoken about this before. Because of the untraceable and anonymous nature of crypto, one the victim deposits cash into a crypto ATM, sends it to the scammer’s wallet, it is virtually impossible to follow. It would require crypto ATM operator to provide fraud warnings, impose daily transaction limits and provide refunds for customers who are scammed. I’ve also filed an amendment that would prevent crypto companies from receiving a taxpayer-funded bailout. Imagine these crypto operations don’t pay deposit insurance like banks and others and when it comes to the crisis like the one we had in 2008, that insurance becomes important in saving those institutions. Currently crypto is considering asking for that kind of protection without paying any insurance premiums. If and when a crypto crash occurs, American taxpayers should not be the ones on the hook for these crypto ventures that are owned by President Trump and his family. Two in three Americans oppose a government bailout of the crypto industry while only 9% support one. My colleagues on the other side talk a lot about 80-20 issues. This is a 90-10 issue. There should never be a crypto bailout. We cannot discuss retirement security in the United States without mentioning Social Security. While the Social Security can only invest in government bonds, I have filed an amendment to make it explicitly clear that the trust funds cannot currently and can never invest in crypto. Social security ensures our seniors have food on their table and colonials on their backs. It is backed by U.S. Treasury bonds, the safest asset in the world, because of the full faith and credit of the United States backing it up. If the trust funds were exposed to the volatility of the crypto market, the financial security under Social Security that our seniors depend on could be pulled out from under them, rising and falling with the swings of this risky asset. Here’s the bottom line -- do we want to expose the bedrock promise of Social Security to risky assets like crypto? If your answer is no, I hope you’ll support my amendment. When the GENIUS Act came up last year, I voted no because it gave Congress -- I intend to submit these amendments to the bill to fully place meaningful guardrails on this industry. The American consumer is not aware of what’s going on with crypto.”

• Sen. Dan Sullivan (R-AK) delivered remarks on the Senate floor, saying, “Because these technologies in which we are in a race with China in terms of their development might determine who controls the entire 21st Century between the United States and China. Fortunately, Mr. President, we’re starting to focus on these. I’m starting to focus on these, and I would say there are three main areas, digital currency, and blockchain technology, artificial intelligence, and biotech. So if you’re on the hill on different committees, and I’m on the Commerce Committee as well as Armed Services, we are doing hearings, we are doing markups, we established commissions. There’s a lot of work, a lot of debate. I would say, Mr. President, a lot of it is bipartisan, which I think is good, to focus on these emerging technologies because in some ways they’re just as important as our military competition with the Chinese Communist Party. And in my view, Mr. President, it is becoming increasingly clear that we are in a race with the Chinese Communist Party on who will control these critical technologies. The economic resilience and financial strength and productivity of our economy, and, yes, the national security of our citizens increasingly depends on who wins these races in these critical emerging technology areas. A couple of things related to that, Mr. President, I just want to touch on. And I’m going to come down to the floor and speak more and more on these and what we need to do. But make no mistake, as I dig into these issues deeper, as we get the briefings from the experts, it has become clear that we should not -- should not underestimate the Chinese Communist Party in these areas. They can compete. They are competing. I think sometimes in the area of technology, we think, well, we’re the United States, we’re the top dog. But we need to take them very seriously. And in some areas, in these technologies, subcomponents of these technologies, say, for example, like robotics, I think you could make a good case that the Chinese are already in the lead. And we have to take that very seriously. Another thing, Mr. President, is that a fundamental component of competing successfully against China in at least two of three of these technologies, blockchain technology and A.I. is that we have to have abundant American energy to power in advance in these technological areas. Again, for the benefit of our own citizens and our own national security, it is critical that we unleash American energy, all forms of American energy. I am an all-of-the-above energy proponent -- oil, gas, coal, renewables, nuclear. We used to talk about the energy transition, Mr. President, but in terms of winning the race on these kind of technologies, we really need to be talking about energy addition, because we’re going to need all forms of American energy, American energy dominance, when it comes to blockchain technologies, crypto, and A.I. so, in these areas, Mr. President, I believe that, for example, in blockchain technology, when developed properly, it can not only help but ensure our economic resilience, our economic competitiveness and, very importantly, Mr. President, as it relates to competing with China, the continued dominance of the U.S. dollar as the world’s reserve currency, which, as I mentioned, Mr. President, is a critical comparative advantage we have over the Chinese and which they are trying to erode, both in terms of their own digital currencies, but in other ways in terms of working with other countries that want to erode the dollar’s preeminence. Related, blockchain technology can make sure the U.S. is more resilience to economic warfare. Again, only if we are the leaders related to China. In these areas, I think we’re off to a pretty good start, Mr. President, by actually passing laws that are beginning to establish the rules of the road for these technologies, like stablecoin, when we recently passed the GENIUS Act. Next up, as we’re working on additional rules for the road, to establish the strength of these technologies based in America, not China, is the market structure legislation that we are working on. As some of you know, the CLARITY Act passed the House. We’re continuing to move that legislation forward here in the Senate, splitting some of it apart with legislation, such as the digital commodity intermediary act, that recently passed out of the Agriculture Committee. This is also bipartisan legislation, Mr. President. And again, it’s a good start, but we have a long way to go, but I think it’s critical to keep in mind one of the most important elements of this is to beat China, for our economic security, for our national security, and that includes, of course, Mr. President, in the area of A.I. and biotech, as I mentioned. Again, the race against China here is critical. Who wins these technological races will almost certainly dominate key elements of the 21st Century. We need to optimize the full promise of A.I. while protecting our citizens against some of the related harms, particularly protecting our children when it comes to this new technology. Smart regulation and legislation and well-thought-out legislative actions from Congress should focus on empowering our people and accelerating societal benefits that result from the use of A.I., like especially, Mr. President, in health care, in education, where I believe the promise of artificial intelligence is immense and transformative in a very positive way, for our country and our citizens. When I talk to the experts, they believe that we are winning the A.I. race with China, but we can’t be complacent at all. As I mentioned, they can compete, and every day we need to keep moving forward and recognizing that this is a critical competition that we cannot let the CCP dominate and control.”

• Rep. Al Green (D-TX) delivered floor remarks in the House, saying, “It’s amazing how this corruption now brings in the crypto industry. The crypto industry has decided that they are going to target people around the country, spending not a million, but millions of dollars. The crypto industry would if they could control the Congress of the United States of America. I am one of the people standing in their way. I will continue to stand in their way. They graded me out and I got an F. I am as proud of that f as I am of any a I’ve ever received in life. I’m very proud to say that the crypto industry does not find favor with me. They believe that those who receive a’s from them should be rewarded by eliminating the opposition in Congress. That is to them, the opposition to them in Congress. So the crypto industry is on a roll now. They’re going to go around the country going to buy Congressional seats. And that’s what they’re doing. They buy Congressional seats. They buy a reputation for people who are running on their side of the ledger, and they then spend just millions of dollars on ads to try to remove people who are in antithetical to what they’re doing with their crypto program. The program which entails as little regulation as possible. The best use of crypto right now, cryptocurrency seems to be that of allowing those who are engaging in blackmail and extortion to move large sums of money, move large sums of money without it being traced. There are billionaires who would love and are enjoying knowing that they can move large sums of money without it being traced, because these large sums of money can be used for nefarious purposes, or they can be used for evasive purposes, evading taxes, large sums of money unregulated because it can just move from one person to another in a flash. Blockchain technology is a wonderful thing, but the problem that we have is and the thing that I consider a problem for this country is the impact that crypto may have on the dollar, and the fact that these dollars do not move through a central bank, meaning from one person, through a central bank to another person. At some point we will find that cryptocurrency can be used to fund nefarious operations against this country. But how do you prove it right away? When the money moves from one person to another without going through a central bank? Well, I want to see this regulated. I do, and I’m going to continue to want to see it regulated, and I’m going to continue to fight to have it regulated. This is something that I believe is going to injure our interest rates when we borrow from other countries, if it has an adverse impact upon the dollar, the dollar is the reserve currency of choice across the globe, meaning countries hold dollars in reserve in their coffers. This is something for us to cherish and to protect the dollar as a reserve currency. Well, there are some people who are trying to knock the dollar out of this place. There’s a war for currency supremacy, and in so doing, the dollar, if it is diminished in some way, our interest rates could go up. So, we’ve got to be careful in terms of having the supremacy of the dollar continue. Cryptocurrency could conceivably have an impact on the dollar. I’ve had some to tell me that it can and they are concerned about it. These are experts. My hope is this, that we will wake up and understand what is happening with the cryptocurrency purveyors, the people who want to take control of Congress, anyone who is antithetical to them. They’re willing to spend millions, untold millions to remove people from office. And we have to take a stand against this. I will take that stand. There are many who will stand with them. But in doing this, something else is occurring when they can take the Congressional seats by drawing lines and simply taking them. And then if they can take them by using cryptocurrency. And these are friends of the President. They’re friends of the President. They all in this together. The President with the cryptocurrency persons who would desire to control Congress as the President would desire to control it. And for the most part, right now, he does. Well, these people, when they use this cryptocurrency, they’re using it to take away seniority, seniority. They want to get rid of senior Members of Congress, and they’re using their crypto dollars. They’re really American dollars, but they’re using this money to remove people from office, and they’re going after senior leadership in Congress. Now, senior leadership is important in Congress. Senior leadership means that persons have been here. They’ve served, and they understand much of how this great institution functions. And they understand also how to get things done. Efficaciously. But there is something more important than all of this as it relates to senior leadership. If we decide that seniority no longer has any merit in the Congress of the United States of America, and that’s the direction we’re moving in. If we decide that seniority no longer has any merit in the Congress of the United States of America, money will rule. And when money rules, many persons will lose, a good many of them will be people who just don’t have access to billionaires, millionaires, people who are exceedingly wealthy, who can fund their campaigns.”

What I’m Reading This Week

• A Crypto Coin Is Gobbling Up U.S. Treasuries, Talmon Joseph Smith, The New York Times.

• Taxing Digital Assets: Applying Principles to Policies, Michael Kaercher and Sophia Yan, NYU Tax Law Center.

About Zero One Strategies

Zero One Strategies is a specialized government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com

www.ZeroOneStrategies.com

The Senate passed the 21st Century ROAD to Housing Act, temporarily barring the Federal Reserve from issuing or developing a CBDC until December 31, 2030. House Republicans, meanwhile, pressed for a permanent prohibition.

The Treasury Department released new findings and recommendations on countering illicit finance involving digital assets. The IRS proposed regulations aimed at streamlining electronic delivery of Form 1099-DA to taxpayers. Federal banking regulators issued FAQs clarifying the capital treatment of tokenized securities. At the same time, the SEC’s token taxonomy is now under White House review.

The White House also unveiled its National Cyber Strategy, highlighting opportunities to leverage digital assets and blockchain technologies.

Debate continues over how stablecoin yields fit into broader market structure legislation.

Read more below

Congress

Hearings

Last week

• On March 5, the House Financial Services Financial Institutions Subcommittee holds a hearing on “Fighting Fraud on the Front Lines: Challenges and Opportunities for Financial Institutions.”

• On March 5, the House Financial Services Capital Markets Subcommittee holds a hearing on “The Role of Self-Regulatory Organizations in U.S. Markets: Examining FINRA (Financial Industry Regulatory Authority) and the MSRB (Municipal Securities Rulemaking Board).”

Upcoming

• On March 17, the House Financial Services Committee holds a hearing on “Updating America’s Financial Privacy Framework for the 21st Century.”

• On March 18, the Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity Subcommittee hearing on “Revisiting the Treasury-Fed Accord.”

• On March 25, the House Financial Services Committee holds a hearing on “Tokenization and the Future of Securities: Modernizing Our Capital Markets.”

• On March 26, the House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee holds a hearing on “Innovation at the Speed of Markets: How Regulators Keep Pace with Technology.”

Legislation

• The Senate passed the 21^st Century ROAD to Housing Act, which prohibits the Federal Reserve from issuing or creating a central bank digital currency (CBDC) before December 31, 2030. (Text)

Correspondence

• Reps. Michael Cloud (R-TX), Chip Roy (R-TX), Scott Perry (R-PA), Clay Higgins (R-LA), Andy Ogles (R-TN), Byron Donalds (R-FL), Keith Self (R-TX), Andrew Clyde (R-GA), Josh Brecheen (R-OK), Mary Miller (R-IL), Eric Burlison (R-MO), Sheri Biggs (R-SC), Andy Biggs (R-AZ), Diana Harshbarger (R-TN), Russ Fulcher (R-ID), Andy Harris (R-MD), Mark Harris (R-NC), Eli Crane (R-AZ), Warren Davidson (R-OH), Ralph Norman (R-SC), Lauren Boebert (R-CO), Ronny Jackson (R-TX), Riley Moore (R-WV), Tom Tiffany (R-WI), Anna Paulina Luna (R-FL), Ben Cline (R-VA), Paul Gosar (R-AZ), Earl “Buddy” Carter (R-GA), Don Bacon (R-NE), Glenn Grothman (R-WI), Greg Steube (R-FL), and Randy Fine (R-FL) sent a letter to House Speaker Mike Johnson (R-LA) and Senate Majority Leader John Thune (R-SD) requesting the Senate amend the 21^st Century ROAD to Housing Act to strike the CBDC sunset provision and make the prohibition permanent. (Letter)

Trump Administration

Treasury Department

• Treasury released a “Report to Congress from the Secretary of the Treasury on Innovative Technologies to Counter Illicit Finance Involving Digital Assets” as part of its implementation of the GENIUS Act. The report outlines Treasury’s findings regarding the use of innovative strategies by financial institutions to counter illicit finance related to digital assets and includes legislative and regulatory recommendations. (Report)

Internal Revenue Service (IRS)

• The IRS published proposed regulations that would provide digital asset brokers that are required to furnish to their customers written statements reflecting information provided to the IRS with respect to digital asset sale transactions with an alternative process for obtaining consent from their customers to receive these statements in an electronic format without offering a paper delivery alternative. The public comment period ends May 5. (Federal Register)

Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation

• The federal banking agencies issued answers to frequently asked questions to clarify the capital treatment of tokenized securities, clarifying that an eligible tokenized security should generally receive the same capital treatment as the non-tokenized form of the security under the capital rule, that the capital rule is technology neutral, and the technologies used to issue and transact in a security do not generally impact its capital treatment. (FAQs)

Securities and Exchange Commission (SEC)

• The SEC has sent a draft framework “Commission Interpretation on Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets” to the White House Office of Information and Regulatory Affairs (OIRA) for final review; the framework includes interpretive guidance on a “token taxonomy” to clarify when a token is a security and when securities rules apply. (Reginfo.gov)

• On March 12, the SEC holds a meeting of the Investor Advisory Committee to consider recommendations regarding the tokenization of equity securities.

White House

• The White House released its National Cyber Strategy, saying, “Securing American innovation and protecting our national intellectual advantage will be paramount. We will build secure technologies and supply chains that protect user privacy from design to deployment, including supporting the security of cryptocurrencies and blockchain technologies.” (Report)

Noteworthy Quotes and Events

ADMINISTRATION

White House

• President Trump posted “The Genius Act is being threatened and undermined by the Banks, and that is unacceptable — We are not going to allow it. The U.S. needs to get Market Structure done, ASAP. Americans should earn more money on their money. The Banks are hitting record profits, and we are not going to allow them to undermine our powerful Crypto Agenda that will end up going to China, and other Countries if we don’t get The Clarity Act taken care of. The Genius Act was the U.S.A.’s first big step to make the United States the Crypto Capital of the World, and getting The Clarity Act done is the next step to finish the job and, most importantly, keep this big and powerful Industry in our Country. The Banks should not be trying to undercut The Genius Act, or hold The Clarity Act hostage. They need to make a good deal with the Crypto Industry because that’s what’s in best interest of the American People. This Industry cannot be taken from the People of America when it is so close to becoming truly successful. Thank you for your attention to this matter! President DONALD J. TRUMP”

• White House Executive Director of the President’s Council of Advisors for Digital Assets Patrick Witt posted “Can someone please explain to me the logic here? No compromise on CLARITY means no restrictions on intermediaries offering stablecoin rewards. If you believe the banks’ argument about deposit flight, this would be catastrophic. Feels like I’m watching an arsonist threaten to burn down their own home.”

• Witt also posted “The deceit here is that it is not the paying of yield on a balance per se that necessitates bank-like regulations, but rather the lending out or rehypothecation of the dollars that make up the underlying balance. The GENIUS Act explicitly forbids stablecoin issuers from doing the latter. Stablecoins ≠ Deposits.”

Securities and Exchange Commission (SEC)

• SEC Chair Paul Atkins posted “President realDonaldTrump is right: the U.S. needs clear rules for digital asset markets. The CLARITY Act helps ensure entrepreneurs build the next gen of financial tech here at home. I look forward to working with ChairmanSelig to help implement CLARITY in the near future.”

• Commissioner Hester Peirce posted “I plan to be at Exchange2026 in Las Vegas on March 16. If anyone wants to meet with me, please send an email to CommissionerPeirce@sec.gov with Las Vegas in the subject line and a brief description of what you’d like to discuss.”

Commodity Futures Trading Commission (CFTC)

• CFTC Chair Mike Selig posted “Thank you RepBryanSteil for your leadership on digital asset market structure. The CFTC stands ready to implement purpose-fit digital asset regulations to help ensure the U.S. remains the crypto capital of the world.”

• Selig said about former CFTC and SEC Chair Gary Gensler, “Someone like that can just run roughshod over entire industries, and that’s exactly what we saw — we saw with crypto, we saw it with prediction markets, we saw with AI, and many other industries where there was just this political motivation to target market participants.” He added, “The other problem with it is that it’s not transparent. I think that you’ve got to put the rules in clear Federal Register typeface so that everybody can see them and it’s fair.” (Washington Examiner)

• About digital assets, Selig said, “Crypto really is a check on debanking and exclusion from the financial system,” Selig said. “It’s important that we have these alternative financial systems, that we have alternatives in our information, in our news media, as well as in our ability to be productive as individuals and as small businesses.” (Washington Examiner)

• On market structure, Selig said, “We’ve been working through some wrinkles with the team, and the White House has really been excellent in trying to make sure that everybody’s at the table and can reach a consensus on this. It’s important to put things expressly in statute, and having a bill that clearly codifies and protects the crypto asset industry here in the U.S., I think it’s an important thing.” (Washington Examiner)

• On the CFTC Innovation Advisory Committee, Selig said, “For too long, governments have kind of been this top-down ivory tower world of we’re going to tell businesses what to do and what’s best for them. We’re not going to do that anymore. We’re going to work together with industry to understand what they’re doing in the markets, what they’re building as a business, and collaborate on what the best regulatory framework looks like.” (Washington Examiner)

CONGRESS

• Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee Elizabeth Warren (D-MA) issued a statement on the Securities and Exchange Commission (SEC) agreeing to end its case against Justin Sun, saying, “Last month, SEC Chair Atkins denied in front of Congress that the Trump Administration is giving a free pass to crypto billionaires with ties to Donald Trump. Justin Sun poured $90 million into Trump’s crypto ventures, and today the SEC agreed to drop its case against him. The SEC should not be a lap dog for Trump’s billionaire buddies, and any crypto legislation moving through Congress must stop the President’s crypto corruption.” (Press release)

• Senator Cynthia Lummis (R-WY) announced that the Federal Reserve Bank of Kansas City approved Kraken Financial for a master account, saying, “This approval is a watershed moment for the digital asset industry. The Federal Reserve has acknowledged what I’ve always said was the case—that a digital asset company can balance innovation with strong risk management. Though approval took five and a half years, the Fed’s actions—at long last—validate Wyoming’s thoughtful regulatory framework. I look forward to resolution of further pending applications in the coming weeks. I congratulate Kraken, the Kansas City Fed, and the Board of Governors for this monumental step towards making payments safer, faster, and cheaper.” (Press release)

• Rep. Bryan Steil (R-WI) posted “Making the U.S. the crypto capital of the world will unleash innovation and lower costs.”

• Sen. Richard Blumenthal (D-CT) posted “Trump’s crypto ventures are merely a pay-to-play bribery scheme for gov’t favors. Justin Sun propped up Trump’s memecoin & bought a seat at the President’s VIP crypto dinner. In return, he gets a generous SEC settlement for Tron’s history of massive fraud.”

• Rep. Ken Calvert (R-CA) posted “I’m thankful for President Trump’s leadership and ongoing efforts to ensure we have a level playing field for cryptocurrency. Earlier this Congress, I voted to pass the CLARITY Act and the GENIUS Act to provide regulatory clarity for digital assets.”

• Sen. Jim Justice (R-WV) posted “We can support innovation and Bitcoin and still shut down the pipelines criminals exploit. We’ve done it with the U.S. Dollar. The right target is not lawful Bitcoin users, but the weak kiosk safeguards that let obvious, repeatable fraud run through these machines.”

• Rep. Stephen Lynch (D-MA) posted “Since taking office, President Trump has launched a ‘Golden Age of Fraud.’ While he and his family rake in at least $1.2 billion from their crypto company, World Liberty Financial, President Trump has systematically dismantled the Consumer Financial Protection Bureau, eliminated the Securities and Exchange Commission’s crypto crimes enforcement unit, and dropped nearly all their enforcement actions against bad actors, leaving American consumers vulnerable to scams and fraudulent activity, which are becoming increasingly deceptive and harmful.”

• Rep. Mike Carey (R-OH) posted “America needs to be the crypto capital of the world. Our tax code needs to reflect that priority, especially for crypto stakers and miners. I discussed the future of crypto taxes with the IRSnews CEO at a WaysandMeansGOP Committee hearing today”

• Financial Services GOP posted Chair French Hill saying, “I want to thank POTUS and his top AI/Crypto advisers, davidsacks47 and Patrickjwitt , for engaging over in the Senate and trying to find a legislative solution for them. We did that last year in the House. We got 78 Democrats to join the Republicans, and we passed the CLARITY Act and the GENIUS Act.”

• Rep. Ralph Norman (R-CA) posted “I’m proud to sign onto a letter urging House and Senate leadership to permanently ban a Central Bank Digital Currency (CBDC). Americans deserve financial freedom, not government-controlled money. A CBDC is essentially a digital dollar issued and controlled by the Federal Reserve. Unlike cash, it could allow the government to track transactions and monitor how Americans spend their money. That’s overreach at its core!! Why be bothered with this? A CBDC would give unelected bureaucrats unprecedented power over Americans’ finances and threaten basic economic freedom. The House already passed legislation to permanently ban a CBDC. The Senate must amend the 21st Century ROAD to Housing Act with STRONGER language before sending any bill to the House. A permanent prohibition is the ONLY way to protect Americans’ privacy and liberty.”

• Rep. Buddy Carter (R-GA) posted “A Central Bank Digital Currency would be disastrous, giving unconstitutional power to the Federal Reserve to surveil YOU! Proud to join RepMichaelCloud’s letter to SpeakerJohnson & LeaderJohnThune, expressing the need to protect the financial freedom of American citizens.”

• Rep. Michael Cloud (R-TX) posted “A Central Bank Digital Currency would expose every American to unconstitutional financial surveillance. It would hand the unelected Federal Reserve unprecedented power over your money — violating your civil liberties and financial freedom. The 21st Century ROAD to Housing Act has language to temporarily ban a CBDC that — in the perverse way the swamp interprets things — would actually create an on ramp to research, creation, and adoption of a CBDC. This bill should be dead-on-arrival unless the Senate includes stronger, permanent language forever banning a CBDC. Thank you to the 31 Members of Congress who joined me in demanding exactly that.”

• Sen. Cynthia Lummis (R-WY) posted “Digital assets make payments safer, faster, and cheaper. Today’s announcement marks a new era for America’s financial system—this is only the beginning.”

• Rep. Riley M. Moore (R-WV) posted “I joined RepMichaelCloud in sending a letter urging the Senate to include GOPMajorityWhip’s Anti-CBDC Surveillance State Act in any housing package. Mountaineers are always free, and Congress must permanently ban any effort to establish a surveillance state Central Bank Digital Currency. We must defend Americans against Chinese Communist Party-style limitless government surveillance.”

• Rep. Anna Paulina Luna (R-FL) posted “If the Road to Housing Bill the Senate is sending over does not have a permanent ban on CBDC’s in it, it will die in the house. This is not negotiable. CBDC’s = No good.”

House Ways and Means Hearing on IRS Oversight Q&A

Rep. Mike Carey (R-OH)

• Rep. Mike Carey (R-OH): “First, I’m going to talk a little bit about crypto as it relates to the staking rewards. Secondly, if we have some time, I’d like to talk a little bit about some of the AI tools kind of build upon what some of the other members have talked about. As you know, when the taxpayer stakes their crypto, the taxpayer produces new tokens through their own computation activity of validating the network’s transactions, similar to a farmer who is harvesting crops or a miner who is actually extracting some type of mineral or manufacturer producing products. Now, in 2023, the Biden IRS issued guidance treating newly created tokens as actual income taxed at the time of creation, unlike any other newly created property. I think you and I have talked about this before, but the White House Working Group of 2025 digital assets report explicitly recommended to the Treasury and the IRS to review previously issued guidance on the timing of the income from staking and mining and it’s considered whether to clarify or whether to moderate or to reverse it. So a few months ago, me along with several of my colleagues, I think 18 in total, including five of us that actually set off this committee, I inquired about this guidance. NCIRS current timeline for completing that review, and as the agency prepared to reverse the previous administration’s guidance, if it is found to be inconsistent with how other self-created property is taxed.”

  • Frank Bisignano, IRS CEO: “Yeah, thank you very much and it’s a timely question. We’re in deep review on it. I’m happy to come, have my staff come and brief your staff on progress and talk about next steps forward if that works for you.”

• Carey: “That works great. And let me just say one other thing is if we’re going to get the teams together here, one other thing is many of the digital asset foundations that steward blockchain protocols are based outside of the United States. And due to the regulatory uncertainty, I firmly believe that the tax policy should, we all want to make sure that we continue to grow, but this tax pay, this tax policy should, we should encourage the onshoring of these digital assets. So, it’s something that I’d like to work with your team on as we get together, we’d like to do that.”

Rep. Max Miller (R-OH)

• Rep. Max Miller (R-OH): “Thank you, Mr. Chairman, right now, thanks for coming. I want to focus on tax modernization and really want to focus on digital assets. I believe digital assets represent one of the most significant economic opportunities in the global economy right now, the United States can lead in this space, but leadership requires clear, workable tax rules that promote compliance without stifling innovation. The IRS plays a critical role in getting this right. Clear Rules, smart reporting, thresholds and administrable standards will strengthen compliance while ensuring that innovation and capital it attracts remains here in the United States. CEO Bisignano, the IRS recently issued revenue procedure 2025-31 allowing digital asset ETPs structured as grantor trust to participate in staking. This updated guidance provided a first step toward meaningful certainty and demonstrated that IRS can adapt as markets evolve, however important interpretive questions remain about the scope and mechanics of Safe Harbor. Will the IRS issue additional clarifying guidance, such as FAQs or informational guidance to ensure taxpayers can comply with confidence and what support from Congress would help you deliver that clarity efficiently?”

  • Frank Bisignano, IRS CEO: “First of all, 100% we were deep in. It would be good to come talk to you about and make sure that for everything you’re thinking about, we understand it and have it covered in that guidance.”

• Miller: “Thank you. In regard to digital asset reporting, we expect Form 1099-DA implementation will generate a significant volume of information returns. Many of these may involve regulated payment stablecoins that are designed to maintain a stable value, often resulting in minimal or no economic gain on routine transactions. Compliance is crucial, but it must be practical and strategically focused. As the IRS evaluated whether processing extremely high volumes of low dollar digital asset transactions will materially improve compliance relative to the administration, administrative burden, and what legislative solutions will help the IRS concentrate resources where they deliver the greatest ROI.”

  • Bisignano: “That analysis is in process right now with some preliminary, but I think we probably got a little more time to really see directly where the sweet spots are and where the issues are.”

• Miller: “I really appreciate your time here today, and I know I haven’t been in my seat for that long, but I have to say I am disappointed. You guys need to do a better job of educating the IRS commissioner about the questions that he’s coming here to answer. I mean, I’m very embarrassed right now from my side, and you’re doing the best you can. I know you’re coming into this with an amazing background, and what I’m saying is going to get me in a lot of trouble, but this is unacceptable. You really need to come in here and answer the questions that these members ask you directly and saying, ‘I’ll come see you in your office,’ even to me on very basic questions that I’m asking you, is really upsetting, and I don’t actually think it’s you who’s letting us down. I’m going to look at your team right behind you, because if I was working for a principal, I would never let them walk into a hearing like this if they worked for me.”

What I’m Reading This Week

• How Candidates Are Using Winks and Posts to Seek Crypto and A.I. Cash, Shane Goldmacher, The New York Times.

About Zero One Strategies

Zero One Strategies is a specialized government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com

www.ZeroOneStrategies.com

Setting the stage for this week in U.S. crypto policy, the OCC issued a notice of proposed rulemaking to implement the GENIUS Act framework for payment stablecoin issuers, while FinCEN opened nominations to the Bank Secrecy Act Advisory Group with a specific focus on experts who can inform Treasury’s efforts to modernize the BSA and implement the GENIUS Act. At the same time, the Federal Reserve Board released a proposed rule to formally codify the removal of reputation risk from its bank supervision framework.

On Capitol Hill, the House Science Committee examined the impact of Bitcoin mining on data center energy consumption, including a line of questioning on whether moving Bitcoin from proof-of-work to proof-of-stake could cut data center power usage roughly in half.

Read more below

Congress

Hearings

Last week

• On February 24, the House Science, Space and Technology Investigations and Oversight Subcommittee held a hearing on “Powering America’s AI Future: Assessing Policy Options to Increase Data Center Infrastructure.”

• On February 26, the Senate Banking, Housing and Urban Affairs Committee held a hearing on “Update from the Prudential Regulators: Rightsizing Regulation to Promote American Opportunity.”

This week

• On March 5, the House Financial Services Financial Institutions Subcommittee holds a hearing on “Fighting Fraud on the Front Lines: Challenges and Opportunities for Financial Institutions.”

• On March 5, the House Financial Services Capital Markets Subcommittee holds a hearing on “The Role of Self-Regulatory Organizations in U.S. Markets: Examining FINRA (Financial Industry Regulatory Authority) and the MSRB (Municipal Securities Rulemaking Board).”

Upcoming

• On March 17, the House Financial Services Committee holds a hearing on “Updating America’s Financial Privacy Framework for the 21st Century.”

• On March 18, the Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity Subcommittee hearing on “Revisiting the Treasury-Fed Accord.”

• On March 25, the House Financial Services Committee holds a hearing on “Tokenization and the Future of Securities: Modernizing Our Capital Markets.”

• On March 26, the House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee holds a hearing on “Innovation at the Speed of Markets: How Regulators Keep Pace with Technology.”

Legislation

• Reps. Young Kim (R-CA), William Timmons (R-SC), and María Elvira Salazar (R-FL) introduced the Savings and Early Exposure to Diversified Securities (SEEDS) Act to make Trump accounts permanent and to treat digital asset indexes as eligible investments for purposes of Trump accounts. (Text)

• Sen. Jack Reed (D-RI) introduced the Foreign Stablecoin Transparency Act to require foreign companies that issue stablecoins pegged to the U.S. dollar to undergo an audit. (Text)

Correspondence

• Sens. Jack Reed (D-RI) and Andy Kim (D-NJ) sent a letter to the Office of the Comptroller of the Currency (OCC) requesting the names of the ultimate beneficial owners of World Liberty Trust Company N.A. The letter says, “Applications for charters from the OCC are supposed to be public, with limited information entitled to confidential treatment. But the public volume of the application does not include any information about the ultimate beneficial owners of World Liberty Trust Company. The only information disclosed is that World Liberty Trust Company is 100% owned by an entity called WLTC Holdings, LLC. The full ‘upper tier’ organizational chart of World Liberty Trust Company and a capitalization table for WLTC Holdings have been kept confidential.” (Letter)

• Senate Permanent Subcommittee on Investigations (PSI) Ranking Member Richard Blumenthal (D-CT) sent a letter to Richard Teng, chief executive officer of Binance, requesting information on why the exchange chose to suspend or terminate compliance personnel who discovered illicit Iranian and Russian use of the platform. (Letter)

• Sens. Ruben Gallego (D-AZ), Chris Van Hollen (D-MD), Angela Alsobrooks (D-MD), Raphael Warnock (D-GA), Catherine Cortez Masto (D-NV), Elizabeth Warren (D-MA), Lisa Blunt Rochester (D-DE), Andy Kim (D-NJ), Tina Smith (D-OR), Mark Warner (D-VA), and Jack Reed (D-RI) sent a letter to Treasury Secretary Scott Bessent and Attorney General Pam Bondi pressing the Treasury and Justice Departments to investigate reports that Binance is facilitating illicit finance activities, including transactions linked to Iran and its proxies. (Letter)

Trump Administration

Office of the Comptroller of the Currency (OCC)

• The OCC issued a proposed rulemaking to implement the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. The notice of proposed rulemaking seeks comment on the regulations that would apply to permitted payment stablecoin issuers and foreign payment stablecoin issuers under the OCC’s jurisdiction as well as certain custody activities conducted by OCC-supervised entities. Comments from the public are due 60 days from the date of publication in the Federal Register. (Notice)

Treasury Department

• FinCEN published a request for nominations of financial institutions, trade groups, and non-federal regulators or law enforcement agencies for membership in the Bank Secrecy Act Advisory Group. New members will be selected for three-year membership terms. FinCEN is “particularly interested in receiving nominations for eligible entities… that can share insights on Treasury’s efforts to modernize the BSA framework and implement the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act).” Nominations must be received by March 27. (Federal Register)

Federal Reserve

• The Federal Reserve Board published notice of proposed rulemaking requesting comment on a proposal to codify the removal of reputation risk from its supervision of banks. The proposal also reiterates the Board’s policy against penalizing or prohibiting an institution from banking a customer engaged in legal activity. Comments are due by April 27. (Federal Register)

Securities and Exchange Commission (SEC)

• Taylor Lindman was named Crypto Task Force Chief Counsel, replacing current CFTC Chair Michael Selig.

Noteworthy Quotes and Events

ADMINISTRATION

Office of the Comptroller of the Currency (OCC)

• The OCC posted “Stablecoins represent a legally permissible new payment tool. The OCC invites comments on a proposed regulatory framework for payment stablecoins pursuant to the GENIUS Act.”

Federal Reserve

• In her opening statement at the Senate Banking hearing on prudential regulators, Federal Reserve Board Vice Chair Michelle Bowman said, “Non-bank financial institutions continue to increase their share of the total lending market, creating strong competition for regulated banks without facing the same prudential standards to compete effectively with non-banks on both payments and lending. The Federal Reserve is encouraging banks to innovate, to improve their products and services. We’re working with the banking regulators to develop regulations that include capital and liquidity for stablecoin issuers, as required by the GENIUS Act. We also need to provide clarity on digital assets to ensure the banking system is well placed to support these activities.”

• In her written remarks, Bowman said, “We are also working with the other banking regulators to develop regulations that include capital and liquidity for stablecoin issuers as required by the GENIUS Act. Additionally, we will provide clarity regarding the treatment of digital assets to ensure that the banking system is well placed to support digital asset activities. This includes clarity on the permissibility of activities and willingness to provide regulatory feedback on proposed new use cases. As a regulator, it is my role to encourage innovation in a responsible manner, and we must continuously improve our ability to supervise the risks that innovation may present to safety and soundness.” (Remarks)

Federal Deposit Insurance Corporation (FDIC)

• At the Senate Banking hearing, FDIC Chair Travis Hill said, “The FDIC has also taken a more open minded approach with respect to banks that offer products and services related to digital assets, while maintaining our expectation that such activities are conducted in a safe and sound manner. Specifically, we rescinded the Biden era prior notification requirement for digital. Asset activities, which served as a significant barrier to banks participation in these activities, withdrew from several interagency joint statements, including one that suggested that use of public distributed ledger systems was likely inconsistent with safe and sound banking practices, and are actively working to implement the requirements of the GENIUS Act. We issued an initial proposal to establish an application process for stablecoin issuers in December, and expect to issue a more comprehensive proposal to implement other aspects of the law in the coming weeks.”

Securities and Exchange Commission (SEC)

• SEC Chair Paul Atkins spoke on the Wall Street Journal Opinion podcast All Things about America’s Digital Currency Revolution. On market structure, he said, “I’m hoping, I think it sounds like they will do it here this year. I’m looking forward to that. And obviously, I’m not a member of Congress, so I don’t know all the dealing that’s going on there, but I take everyone at face value that they want and need this and that’ll go through. So I’m really very supportive. We at SEC have been providing both houses, what we call technical assistance, telling them how their ideas can mesh with the current securities framework, and the CFTC has been doing the same. So I think they’re well provisioned as far as their knowledge of how their drafts will affect the marketplace or not. And so I think all that is great. And so I’m looking forward to their taking good swift action this year getting it to the president’s desk and for his signature.” (WSJ)

• Atkins posted “Thanks to KimStrassel from the WSJopinion for a wonderful conversation! Great to discuss our ongoing efforts at SECGov to modernize our financial system, keep the U.S. as the crypto capital of the world, and reform disclosure requirements.”

CONGRESS

• Sen. Brian Schatz (D-HI) posted “I just don’t think this guy is kidding about trying to take over elections, consolidate media, control AI and crypto for corrupt goals, and divide this country right down the middle. And I think a lot of super smart and decent people are trying not to believe their own eyes.”

• Sen. Elizabeth Warren (D-MA) posted “Sam Bankman-Fried, the fraudster who stole at least $8 billion from customers using his crypto exchange, just endorsed the CLARITY Act. That should set off alarm bells. Any crypto market structure bill must protect investors, our financial system, and American taxpayers.”

• Sen. Cynthia Lummis (R-WY) posted “This is exactly why we need legislation. Under the Clarity Act, banks and credit unions have the opportunity to grow by adopting bitcoin, digital assets and distributed ledger technology.”

• Lummis also posted “It’s not the Fed’s role to play both judge and jury for banking digital asset companies. Glad to see this important step to permanently remove “reputation risk” from Fed policy and put Operation Chokepoint 2.0 to rest so America can become the digital asset capital of the world.”

• Rep. Bryan Steil (R-WI) posted “What am I looking for in President Trump’s State of the Union? Securing US elections, Banning members of Congress from buying stocks, Ensuring US leadership in digital assets”

• Financial Services GOP posted “Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence Chairman RepBryanSteil on boosting U.S. competitiveness in next-generation finance: ‘We’re reshaping the future of digital assets with the enactment of the GENIUS Act and by advancing the CLARITY Act to establish clear rules of the road, protect consumers from fraud, and ensure America is the global leader in innovation.’”

• Rep. Warren Davidson (R-OH) posted “Freedom surrendered is rarely reclaimed. It will take a miracle, but we must protect the right to transact - privately, with self-custody, and no intermediary. No CBDC. No digital ID.”

Senate Banking, Housing, and Urban Affairs Committee Hearing on Prudential Regulators Q&A

Chair Tim Scott (R-SC)

• In his opening statement, Chair Tim Scott (R-SC) said, “I look forward to your agencies’ continued progress implementing the GENIUS Act, bringing digital assets and stablecoins into clear, regular, regulated frameworks, strengthens consumer protection and ensures innovation here at home in the United States and not overseas.”

Sen. Cynthia Lummis (R-WY)

• Lummis: “As you know, this committee has been wrestling with market structure for digital assets for quite some time, and I want to focus for a minute on section 401, of the bill which lists digital asset related activities that banks are permitted to engage in. So is it necessary that we have explicit authority for banks to engage in digital asset activities and have it in statute? Is that important, like for economic opportunities and safety and soundness?”

  • Fed Governor Michelle Bowman: “I can tell you that in my experience at the Federal Reserve that we had implement implemented under the previous Vice Chair requirements that hindered the ability for banks to engage in these kinds of activities. We’ve rescinded those under my leadership. So for the duration of that ability, it could be helpful, but I’d be happy to visit with you about that after I learn more about the draft.”

• Lummis: “Thank you. There are three states that authorize deposits in digital assets by banks, and there will be more if we can get this market structure legislation across the finish line. I’ll look forward to those conversations later… The Bank of England, European Central Bank and Swiss National Bank, among other countries, have offered payment only accounts. They offer them to eligible institutions, and they’ve done it for years. For the US to remain competitive in the payments space long term, do we need the same type of structure?”

  • Bowman: “Senator Lummis, that’s a great question. Thank you for asking it. I would want to defer to Governor Waller, and the work that he’s doing to address some of the issues that have been raised with the structure for how we consider applications for Master accounts. I think the way that he’s working to address this is through the introduction of a potential skinny account that and we’ve published an RFI, a request for information for a number of different questions that that we’ve raised to ensure that should an account of this nature be offered, that it consists of the appropriate safeguards and guard rails to allow for it to be a successful endeavor.”

• Lummis: “Well, and I want to acknowledge that if that we should do this, and we should do it quickly, because we’re in a race with other countries to be the digital asset capital of the world, and this is instrumental and important to that discussion. I strongly support the Federal Reserve finalizing the payment account proposal, and I hope you do it as soon as possible. I hope my colleagues on this committee will also support that. Thank you very much.”

Sen. Thom Tillis (R-NC)

• Tillis: “I am working with the White House and with members on the committee on trying to resolve the final steps so that we can get to a market structure, market formation bill for crypto. And the one thing that I still have not been able to find much analysis on, except for that which was commissioned by various stakeholders is to what extent we really do have a deposit migration risk if we don’t get this right? So we may also submit some questions for the record, for appropriate people to just to point me to a definitive resource. I’m not one of these guys that sees a risk spread and doesn’t try to figure out how to create strategies for dealing with the risk as they’ve been expressed by community banks and G sibs. So I’ll be looking for some help there. I just need some independent assessment on there for us to be able to move forward.”

House Science, Space and Technology Investigations and Oversight Subcommittee Hearing on Data Center Infrastructure Q&A

Rep. Bill Foster (D-IL)

• Foster: “Dr. Masanet, you talked about the importance of getting data collection now, roughly 4% of electrical demand is AI data centers. Roughly one to 2% is Bitcoin mining. And on February 1, the Trump Administration ceased collection of information on the energy consumption by Bitcoin mining. Were you aware of that? No, the EIA has a deep dive discussion of that and so it seems like that’s a huge step backwards. I’ve been frustrated for a while on this because, you know, half of all of the data center consumption is Bitcoin mining. And when Ethereum switch from proof of work to proof of stake, it’s power consumption went from very significant to near zero. And there’s no technical reason why that couldn’t be done with Bitcoin. If we did that, that would provide, you know, today, half the energy that you’re consuming in the whole and I was just wondering, is that something that there have been serious efforts at trying to make that happen? Does that depend on a nudge from Congress?”

  • Eric Masanet, Chair of Emerging Technologies, UC Santa Barbara/Berkeley Lab: “Thank you, Congressman. Cryptocurrency mining is something that folks like I do study in looking at data center energy use. And you’re right, proof of stake, sorry, proof of work is a very energy intensive Bitcoin process, but that shift is really something that is a bit beyond my, my expertise, how to, how to facilitate certain I can say, technically, yes, a shift would…”

• Foster: “In many ways, we have, you know, there’s a voting mechanism where Bitcoin and all crypto can, they can change their underlying code. In fact, that was done with Ethereum back in roughly 2022, and it worked, and it’s reliable. There’s no problem with it, no cybersecurity problems that I’m aware of. And so, it seems like it works. And it’s not a small thing. And that might be something where, with my other head on, in financial services, maybe we can find ways to incentivize the collective voters of Bitcoin to actually change their you know, from proof of proof of work to proof of stake. It would be a huge, anyway, just a thought. If you dig up research on how close that, I believe there were technical proposals that say, here’s exactly how we will switch Bitcoin. And it just seems like if we could do that, that would at least take a lot of pressure off of the grid. Yeah. I’ve read various summaries of various analyzes of what’s the cheapest way to do this, to provide the energy.”

Rep. Emilia Sykes (D-OH)

• Sykes: “My district is home to a cryptocurrency company that once operated the world’s largest data center in China, but is now headquartered in Akron, Ohio, now known as SOLAI Limited, with a data center in the middle of the city. This data center can use about 83 megawatts of power per day and has the ability to draw enough electricity to power 63,000 homes. For context, there are nearly 85,000 homes in all of the city of Akron and Ohioans have already begun seeing increases in electricity costs because of these data centers, moreover, due in part to increase energy use, studies have shown that communities can see increases in air pollution from these crypto mines, increasing health risks and of course, unfortunately, we can’t talk about energy in Ohio without talking about bribery.”

What I’m Reading This Week

• Crypto is Pointless. Not Even the White House Can Fix That, Ryan Cummings and Jared Bernstein, The New York Times.

• Permissibility is the Real Prize for Banks in Crypto Bill, Claire Williams, American Banker.

About Zero One Strategies

Zero One Strategies is a specialized government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com

www.ZeroOneStrategies.com

This week in digital asset federal policy, President Trump will deliver the annual State of the Union address to Congress, where U.S. leadership in digital assets and emerging technology is expected to feature prominently. Setting the tone for the week, the White House convened its third round of discussions with banking and crypto industry representatives to seek alignment on stablecoin yield treatment ahead of a self-imposed March 1 deadline. Reports indicate the dialogue focused on draft White House language that would prohibit yields on idle balances while permitting rewards tied to specific activities.

At ETH Denver, SEC Chair Paul Atkins previewed Project Crypto’s ambitious upcoming agenda. In addition, the SEC updated its staff position on payment stablecoins in net capital calculations.

Internationally, the Financial Action Task Force (FATF) approved the release of two new reports on digital assets—one examining risks associated with offshore virtual asset service providers, and another addressing vulnerabilities linked to stablecoins and decentralized finance.

Read more below

Congress

Hearings

This week

• On February 26, the Senate Banking, Housing and Urban Affairs Committee holds a hearing on “Update from the Prudential Regulators: Rightsizing Regulation to Promote American Opportunity.”

Upcoming

• On March 5, the House Financial Services Financial Institutions Subcommittee holds a hearing on “Fighting Fraud on the Front Lines: Challenges and Opportunities for Financial Institutions.”

• On March 5, the House Financial Services Capital Markets Subcommittee holds a hearing on “The Role of Self-Regulatory Organizations in U.S. Markets: Examining FINRA (Financial Industry Regulatory Authority) and the MSRB (Municipal Securities Rulemaking Board).”

• On March 17, the House Financial Services Committee holds a hearing on “Updating America’s Financial Privacy Framework for the 21st Century.”

• On March 18, the House Financial Services Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity Subcommittee hearing on “Revisiting the Treasury-Fed Accord.”

• On March 25, the House Financial Services Committee holds a hearing on “Tokenization and the Future of Securities: Modernizing Our Capital Markets.”

• On March 26, the House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee holds a hearing on “Innovation at the Speed of Markets: How Regulators Keep Pace with Technology.”

Correspondence

• Senate Banking, Housing, and Urban Affairs Committee Ranking Member Elizabeth Warren (D-MA) sent a letter to Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell requesting written confirmation that neither Treasury nor the Fed will use taxpayer dollars to “bail out cryptocurrency billionaires and other highly compensated cryptocurrency investors.” (Letter)

Publications and Events

• The White House hosted a third meeting of digital asset and banking industries and trades to discuss stablecoin yields. (Details @EleanorTerrett)

Trump Administration

Treasury Department

• The Financial Action Task Force (FATF) Plenary approved the publication of two reports that will help countries address emerging risks in digital assets. One report on “Understanding and Mitigating the Risk of Offshore Virtual Asset Service Providers (oVASPs)” will cover risks associated with the unregulated provision of offshore VASP services, how gaps and differences in regulatory and supervisory coverage are exploited by criminals, and recommend actions for governments. The second “Targeted Report on Stablecoins and Unhosted Wallets” will examine emerging risks associated with stablecoins and make recommendations to help countries and the private sector mitigate risks, including where stablecoins are being moved through peer-to-peer transactions. (Plenary Outcomes)

Securities and Exchange Commission (SEC)

• The SEC Division of Trading and Markets updated its FAQs “relating to crypto asset activities and distributed ledger technology” and covering questions on broker-dealer financial responsibility, transfer agents, security/non-security crypto asset pairs trading by National Securities Exchanges and Alternative Trading Systems, Form ATS and Form ATS-N Disclosures, ATS broker-dealer operator non-ATS activities, clearance and settlement, and exchange-traded products. The Q&A added confirms SEC staff would not object if a broker-dealer were to apply a 2% haircut on proprietary positions in payment stablecoins when calculating its net capital. (FAQs)

Noteworthy Quotes and Events

ADMINISTRATION

Treasury Department

• Treasury issued a press release on the fifth Plenary of the Financial Action Task Force (FATF), saying, “…The FATF also called upon all jurisdictions to impose additional countermeasures to restrict correspondent banking, digital asset transactions, and business relationships with Iran given its severe illicit finance risks. The Plenary approved for publication two reports related to digital assets. The first assesses and proposes ways to mitigate illicit finance risks posed by the misuse of stablecoins and unhosted wallets. The second report is on good practices and challenges associated with mitigating risks associated with offshore digital asset service providers. Digital assets play a crucial role in global innovation and economic development, and the United States appreciates the FATF’s efforts to prevent abuse of this critical industry.” (Press release)

• Treasury Secretary Scott Bessent delivered remarks at the Economic Club of Dallas, saying, “Stablecoins represent another area where leadership matters. A well-regulated, dollar-based stablecoin market can reinforce the global role of the U.S. dollar and extend its network effects into emerging digital payment systems. The GENIUS Act provides Treasury with oversight tools to ensure transparency and confidence in this sector. Industrial capacity, technological leadership, and a strong dollar policy taken together form the backbone of U.S. economic sovereignty, which is why they are all fundamental to our strategy.” (Remarks)

Securities and Exchange Commission (SEC)

• At ETH Denver, SEC Chair Paul Atkins previewed the upcoming agenda for Project Crypto, saying, “We have a lot on our plate. Not only will we continue to engage with Congress on its important efforts, but, as you noted, we will move forward with our regulatory work through Project Crypto, which is now a joint initiative with the CFTC. As you all know, one of our own, Mike Selig, whom Hester brought to the SEC as Chief Counsel of the Crypto Task Force in my office, is now CFTC Chairman. We are planning great things together – harmonization, joint rulemaking – a common, coordinated approach unlike anything seen before at these two, often sparring agencies. As for the SEC, I expect the Commission and staff to consider the following in the coming weeks and months:

  • A Commission framework to explain how we think about crypto assets that are subject to an investment contract. How is such an investment contract formed? And how is it terminated?;

  • An innovation exemption to facilitate limited trading of certain tokenized securities on novel platforms with an eye toward developing a long-term regulatory framework;

  • A rulemaking proposal to establish common-sense pathways for people to raise capital in connection with the sale of crypto assets;

  • No-action letters and exemptive orders to provide additional clarity, including to address wallets and other user interfaces that are not subject to registration under the Exchange Act;

  • Rulemaking on custody of non-security crypto assets, including payment stablecoins, by broker-dealers;

  • A transfer agent modernization rulemaking which will accommodate the role that blockchain can play in recordkeeping; and

  • Additional guidance and no-action letters to help people understand how existing rules apply to their unique factual circumstances.” (Remarks)

• At the same event, Atkins said of the innovation exemption, “The exemption would be temporary but would last long enough for us to consider developing new rules and amending existing rules to allow such trading to continue under appropriate conditions in the future and to enable any parties that need to do so to register.” (Politico)

• SEC Commissioner Hester Peirce released a statement on the updated FAQ, saying, “Today, the staff of the Division of Trading and Markets issued an FAQ relating to the treatment of payment stablecoins under the broker-dealer net capital rule (Exchange Act Rule 15c3-1). The FAQ provides that the staff would not object if a broker-dealer were to apply a 2% haircut on proprietary positions in a payment stablecoin when calculating its net capital. I appreciate the staff’s approach. Stablecoins are essential to transacting on blockchain rails. Using stablecoins will make it feasible for broker-dealers to engage in a broader range of business activities relating to tokenized securities and other crypto assets. FAQs like this shed light on the staff’s thinking about emerging issues. At the Commission level, I would like to consider how Rule 15c3-1 could be amended to account for payment stablecoins. To that end, I would be grateful to hear from market participants about their views, and welcome input on other aspects of our rules that they believe should be modified to address the use of payment stablecoins by SEC-registered entities.” (Statement)

• In remarks at ETH Denver, Peirce said, “The way people talk about it now reminds me of the expectations that people have when they buy an abandoned storage unit; they are sure it will contain a rare work of art and a trunk full of gold bars. So too some people are certain the innovation exemption will cure all their regulatory headaches. Some people in TradFi, by contrast, seem to think that the soon-to-be opened storage unit contains a monster that will swallow all of [traditional finance] in one ugly bite. They fear the innovation exemption will let crypto firms ignore all the rules… Both groups are likely to realize that the innovation exemption is not as monumental as either faction anticipated.” (Politico)

• The SEC posted “Yesterday, the Division of Trading and Markets issued an FAQ confirming that staff would not object if a broker-dealer were to apply a 2% haircut on proprietary positions in payment stablecoins when calculating its net capital.”

• The SEC also posted “Curious about crypto wallets and how to store and access crypto assets? Check out our Crypto Asset Custody Basics Investor Bulletin.”

CONGRESS

• On Senate market structure negotiations, Sen. Bernie Moreno (R-OH) said, “There’s a small list of remaining open items and I think that if a compromise can be found this will get to the president’s desk for a signature in a few months…hopefully by April.” (Politico)

• Rep. Warren Davidson (R-OH) posted “Cash in the digital asset space is generally either ‘coins’ or ‘tokens’. As the future payments infrastructure is being built, some are trying to ban self custody so your entire access to your digital money is via an account. It’s the digital equivalent of banning cash, and must be defeated. Keep your cash! Keep your coins!”

• Rep. Steve Cohen (D-TN) posted “Trump is turning the EPA into the Environmental POLLUTION Agency. By killing the endangerment finding, they are endangering all of us. More cities full of smog, more pollution and health problems, more irreversible impacts to nature and wildlife—that’s what they’re giving us. So much for MAHA. It’s another reason why I won’t stop fighting Trump’s EPA. I led Democrats demanding transparency on Clean Air Act violators, I introduced the Clean Cloud Act w/ SenWhitehouse to put real standards and PENALTIES on AI data centers & cryptominers, and we are not slowing down. More to come.”

What I’m Reading This Week

• The Outlook for Digital Assets in 2026, The Conference Board.

About Zero One Strategies

Zero One Strategies is a specialized government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com

www.ZeroOneStrategies.com

The White House convened a second roundtable with leaders from the digital asset and banking sectors to advance discussions on establishing common ground around stablecoin yields.

Speaking of stablecoins, NCUA released proposed regulations to implement sections of the GENIUS Act.

FinCEN issued an order granting exceptive relief to certain covered financial institutions from specific provisions of the 2016 Customer Due Diligence (CDD) Rule. Treasury announced a series of new initiatives aimed at combating fraud in the financial services sector.

On Capitol Hill, the House Financial Services and Senate Banking Committees held hearings with SEC Chair Paul Atkins, focusing on the dismissal of enforcement actions against digital asset companies, rebuilding momentum on the CLARITY Act, tokenization policy, and the SEC’s forthcoming innovation exemption.

Read more below

Congress

Hearings

Last week

• On February 11, the House Financial Services Committee held a hearing on “Oversight of the Securities and Exchange Commission.”

• On February 12, the Senate Banking, Housing and Urban Affairs Committee held a hearing on “Oversight of the U.S. Securities and Exchange Commission.”

Publications and Events

• The White House hosted a second meeting of digital asset and banking industries and trades to discuss stablecoin yields. (Details @EleanorTerrett)

Trump Administration

National Credit Union Administration (NCUA)

• The NCUA Board published proposed regulations to implement portions of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). The GENIUS Act charges the NCUA with licensing, regulating, and supervising payment stablecoin issuers that are subsidiaries of federally insured credit unions (FICU subsidiaries). The GENIUS Act also requires the NCUA to issue implementing regulations by July 18th, 2026. The proposed rule proposes regulations to implement the statutorily required process for approval and licensure of permitted payment stablecoin issuers (PPSIs) subject to the NCUA’s jurisdiction. It also proposes regulations limiting FICUs to investing in NCUA-licensed PPSIs. The comment period ends on April 13. (Federal Register)

Treasury Department

• Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an order granting exceptive relief to covered financial institutions from certain requirements under FinCEN’s Customer Due Diligence Requirements for Financial Institutions rule (the 2016 CDD Rule). The order excepts covered financial institutions from the requirement to identify and verify the beneficial owners of a legal entity customer each time the customer opens a new account. (Order)(Press release)

• Treasury’s Financial Crimes Enforcement Network (FinCEN) launched a dedicated webpage to confidentially accept whistleblower tips on fraud, money laundering, and sanctions violations. (Website)

• Secretary Scott Bessent announced unveiled a series of Treasury initiatives to combat fraud, including investigating Money Services Businesses, enhancing reporting to accelerate prosecutions and recover laundered funds, and training law enforcement to better leverage financial data to combat complex fraud schemes. (Press release)

Commodity Futures Trading Commission (CFTC)

• The CFTC announced the 35 members named to the Innovation Advisory Committee. (Press release)

Noteworthy Quotes and Events

ADMINISTRATION

Federal Reserve

• Fed Governor Christopher Waller delivered remarks entitled “Thoughts on the Crypto Ecosystem” at the “Global Interdependence Center Conference: Digital Money, Decentralized Finance, and the Puzzle of Crypto.” He said, “I think of the crypto ecosystem as consisting of three parts: a crypto-asset, which generally refers to any digital asset implemented using cryptographic techniques that is being traded; a database management protocol used to record trades, commonly referred to as the blockchain, which includes both permissioned and permissionless distributed ledger technologies; and technology that directly facilitates trading crypto-assets; this includes smart contracts and tokenization as a form of data privacy… So far, spillovers to other parts of the financial system from the stress in the crypto industry have been minimal. The lack of spillovers to date may be attributable in part to the relatively limited number of interconnections between the crypto ecosystem and the banking system. While it is critical that we ensure that the financial stability risks associated with crypto-assets are mitigated, it is important that we keep the various parts of the crypto ecosystem distinct in our minds as the debate about if and how to regulate crypto rolls on. Doing so will ensure we do not unduly limit the development and potential future uses of the positive features of the crypto ecosystem.” (Remarks)

Commodity Futures Trading Commission (CFTC)

• Chair Mike Selig posted “Innovators are harnessing technologies such as artificial intelligence, blockchain, and cloud computing to modernize legacy financial systems and build entirely new ones. Under my leadership, the Commission will develop fit-for-purpose market structure regulations for this new frontier of finance. The Innovation Advisory Committee will play a critical role in advising the Commission on the commercial, economic, and practical considerations of emerging products, platforms, and business models in the financial markets so that it can develop clear rules of the road for the Golden Age of American Financial Markets.”

• The CFTC posted “Scammers use dating apps and social media to begin relationship scams and steal money from Americans. Help protect loved ones by encouraging them to keep their crypto in U.S.-based exchanges.”

Securities and Exchange Commission (SEC)

• SEC Chair Paul Atkins posted “Today, I testified before Congress on the progress we’ve made at SECgov to protect investors & strengthen our capital markets. As we move into 2026, my colleagues and I remain committed to increasing transparency, accountability, and innovation. Here are our priorities. 1. Refocus enforcement on rooting out fraud and protecting investors. Capital markets endure on the trust of those who participate in them. Through targeted enforcement and our Cross-Border Task Force, we are working to safeguard investors in domestic and global markets. 2. Reform disclosure requirements. We must modernize, rationalize, and streamline reports so that they are meaningful, understandable, and not a repellant to investors. 3. Provide regulatory clarity for digital assets. A clear framework for crypto assets is overdue. As Congress completes its vital work, our coordination with the CFTC through Project Crypto will help deliver clarity on regulatory obligations for investors & innovators. America’s $124 trillion capital markets are the deepest & most liquid in the world. They are a marvel of human ingenuity. Working across the Trump administration, we’ll ensure the U.S. continues to be the best & most secure place in the world to invest and do business.”

• Atkins also posted “The U.S. stands as the Crypto Capital of the World with transparency & innovation leading the way. As Congress works to pass the CLARITY Act, ChairmanSelig & I will provide a bridge toward this landmark legislation, ensuring clarity & certainty for innovators & investors.”

• The SEC posted “SECPaulSAtkins on giving regulatory clarity for digital assets: ‘We need a good law coming out of Congress that would undergird our efforts. The SEC has pretty broad authority to interpret and have exemptions under various securities laws. That has been the missing link here.’”

White House

• President’s Council of Advisors for Digital Assets Executive Director Patrick Witt posted “A big thanks to yesterday’s participants from the crypto and banking industries. We are going to get this done.”

CONGRESS

Senate Banking Committee SEC Oversight Hearing Q&A

• In his opening statement, Chair Paul Atkins said, “Of course, I also support congressional efforts to enact the CLARITY Act. Upon its passage, the Commission stands ready to implement this landmark legislation. A federal framework for crypto markets is long overdue. Under Commissioner Hester Peirce, leadership of our Crypto Task Force, SEC staff has provided more clarity in the past year than in the prior decade, but there is no action we can take that future proofs our rule book more formidably than non-partisan, market structure legislation. As Congress completes its vital work, CFTC Chairman Mike Seelig and I intend to provide a bridge towards legislation through our now joint Project Crypto. We will consider a token taxonomy to offer both investors and innovators a clear understanding of their regulatory obligations. We will also look to consider exemptions that would allow market participants to move and transact on chain.”

• In his opening statement, Chair Tim Scott (R-SC) said, “Thank God, under President Trump, we are refocusing on growth, opportunity and common sense. This means clarity instead of chaos, accountability instead of bureaucracy and a government that serves the American people not gets in their way. Jackson, the SEC under your leadership reflects that approach. This can be seen in how your SEC is addressing digital assets. For years under the Biden Administration, regulation of digital asset markets took the form of regulation by enforcement. Instead of clear rules, businesses, builders and investors were left with confusion subpoenas and lawsuits, and instead of innovation growing here at home, much of it was pushed overseas, that approach failed if it failed investors who deserve transparency and protection, it failed entrepreneurs trying to build the next generation of American companies, and it failed our country at a time when global competitors are racing to lead in financial innovation, Congress is now doing Its job as well, working in partnership with the SEC the Senate version of the CLARITY Act is about establishing clear rules of the road for digital assets. It defines responsibilities for regulators, protects investors and gives businesses the certainty they need to innovate in the United States, while keeping consumer protection paramount. Make no mistake, digital asset innovation will happen here.”

Sen. Tim Scott (R-SC)

• Sen. Tim Scott (R-SC): “I believe that blockchain technology and digital assets are the future of finance in so many ways, in our country and around the world. Frankly, if we can set up clear rules of the road, we can drive innovation here at home and make America the crypto capital of the world, I will say, without questions. A chair of this committee, we have worked diligently together on market structure legislation for the last six months, plus Democrats, Republicans, meeting thousands of hours at this point trying to figure out the path forward. I think is incredibly important for us to do so, and I think it’s very helpful for us to have a rules of the road that are already in place. Can you speak to why providing legislative clarity for digital assets is critical for American competitiveness and protecting investors at same time?”

  • SEC Chair Paul Atkins: “I support your efforts, and I agree with you that you here in the Senate and your staff and those in the House have really spent a lot of time and energy to come up with a, you know, with what will be, I think, a very good bill once you iron out the details. We have been providing technical assistance to both houses and both sides of the aisle as well, and spent a lot of time ourselves to try to support your efforts and help them come out in the right place. And so the real issue that is so important about this legislation is to future proof things, so that there’s a clarity to innovators as between the SEC and the CFTC, I like to compare the past 40 some years as two fortresses on either side of a no man’s land with where you have innovators and other would be new products getting, you know, bogged down in that no man’s land with a cross fire, and then never really coming to market. We need to give people clarity as to what they need to do. And the past, which has been the problem with SEC of the past few years, is that the SEC state mum, it didn’t try to alter and accommodate its filings and its forms and rules to accommodate this new innovative technology, so we need firm grounding in statute so that we can’t have any backsliding in the future.”

Sen. Elizabeth Warren (D-MA)

• Sen. Elizabeth Warren (D-MA): “These fraudsters stole millions of dollars from their investors. They were convicted of crimes, but after Trump granted them clemency, sec fell in line and dropped its pending cases against them too. You know, it’s part of a broader pattern. Just look at the crypto companies that donated a whopping $85 million to President Trump’s inauguration. They may have scammed investors and consumers, but once Trump was sworn in, the SEC started dropping these cases like hot potatoes crack and donated a million dollars. Case dismissed, Coinbase a million dollars case dismissed, Gemini donates a million dollars case dismissed Binance and a UAE company gave the Trump family stablecoin a huge boost in a $2 billion deal. The case against Binance dismissed, and a recent independent investigation found, and I’m going to quote it, the SEC no longer actively pursues any cases against firms with known Trump ties, the agency backtracked in investigating every firm that has relationships with the Trump family’s crypto business or has donated to Mr. Trump’s political causes. Chair Atkins, help me out here. Prove the outside investigators wrong. List the cases the SEC is still actively pursuing against crypto companies that have made big donations to Donald Trump or Trump businesses.”

  • SEC Chair Paul Atkins: “Well, so your premise again, I think is wrong. I’m not sure what…”

• Warren: “Name the case we weren’t actively pursuing against people or against these giant crypto companies that have made huge contributions to Donald Trump. Are there any?”

  • Atkins: “I don’t know. I can’t offhand say which ones have. The ones that we’ve dropped just were on registration issues.”

• Warren: “When these swindlers crash our economy and pull down retirees pension funds. It’s going to be hard working Americans who pay the price billionaires over families.”

Sen. Mark Warner (D-VA)

• Sen. Mark Warner (D-VA): “I’ll jump back into the old pool now, you know, around crypto and, for all that are watching, we want to get this done. It’s got to be done safely. I appreciate folks like Senator Blunt Rochester, her work on this, and Senator Alsobrooks, and there’s a big working bipartisan group on this, and the Chairman’s leadership. So, I just, but I do feel like on DeFi, that there still is, you know, we got to make sure that we don’t set up a regime that allows bad actors or carve out enforcement, something Senator Cortez Masto is working on. Since you’ve already addressed the fact that tokenized stocks are still a stocks, and the stock is a stock is a stock. How are we thinking about this? I know in a recent speech, you said decentralized finance and other forms of on chain software systems will be part of our securities and markets and not drowned out by duplicative or unnecessary regulation. I hope that unnecessary regulation would not include things like AML rules.”

  • SEC Chair Paul Atkins: “That’s vital and but I think maybe that context was more like looking at, you know, the potential for smart contracts. There are already developments out there to incorporate into the token itself, AML and BSA sort of concerns. ERC-3643 on the Ethereum blockchain is one example of that where people are experimenting with things that are embedded.”

• Warner: “Well, we aren’t working and I want to share my Republican colleagues who work on this as well. No, we’re trying to get technical support from you how we deal with the front ends. There’s lots of expertise that we need. We definitely want to get this right, because I think getting it wrong would be a disaster.”

Sen. Bernie Moreno (R-OH)

• Sen. Bernie Moreno (R-OH): “I find it a little troubling that during this entire hearing, you haven’t thanked Gary Gensler for setting such a low bar for competence. So, thank you for doing this job. And I think anybody who watched the Biden years saw an SEC that was actually a completely rogue agency. So, thank you for bringing credibility back to the agency, and thank you for your team for working so hard to make that happen. You were way in the ditch when it came to credibility, and what you’ve done just in your short-term has made a remarkable difference. Let’s talk about just some fundamental issues. I think we can lay this out the right way. How do you see the role of your team, you and your team in terms of functioning? Do you view yourselves as enforcing law, or do you view yourselves as somebody who creates laws through enforcement?”

  • SEC Chair Paul Atkins: “No, we should be enforcing the law, and we shouldn’t be regulating through enforcement and spring it right back into the crypto world. The reality is, this is not new technology. I mean, my son introduced me to the crypto world when he was 14 years old. He’s now 28, it’s a long time ago, and the Congress has failed miserably in creating laws to give you the proper guard rails to say this is allowed and this is not allowed. How important is it for us to finally get this done, to actually give you a regulatory framework that allows you to decide how to enforce laws and keep bad actors out and make certain that good actors are given the room they need to develop and innovate here at. America. Well, thank you, Senator Liz, so we do need, I believe, you know, a good law coming out of Congress and be enacted that would undergo gird our efforts. The SEC has pretty broad authority to interpret and to have exemptions under the various securities laws. And so that, I think, has been the missing link here, frankly, over the last years, where the SEC has not made really any attempt to accommodate this technology. And so that’s created such a gap between, you know, the possible and then what people were actually able to achieve, because SEC was just, you know, had I compared first to the ostrich or the head in the sand, and then secondly, just, you know, the regulation through enforcement views saying You, know, you can interpret the securities laws as well as we can, but then going after people, you know, with the enforcement division, I think that’s not the way for a regulator to operate. A regulator should perceive, you know, what the questions are in the industry, and then address those. And we have many tools to do it, notice and comment, rulemaking, round tables, all sorts of things like that, is the way a competent regulator should be working.”

• Moreno: “Yeah. When you hear the exchange about less enforcement actions as necessarily a bad thing, the reality is during again, not to beat this to death, but for those who suffered through Gary Gensler’s reign of terror… he was a man-eating absolute devastating lion. So the enforcement actions were basically, again, enforcement, regulation through enforcement. You had just completely arbitrary, capricious views of what should happen, and what you’re doing is following the law. I just urge my colleagues that let’s get this bill across the finish line. The staff has spent thousands, literally thousands of hours getting this done, and I think it’s long overdue. Let me just ask you one question about something that a lot of people including myself, although no longer in this space, because I divested myself of all digital currencies, by the way, the low number. But what do you think about self-custody? Tell me how you view that from your perspective. Should I be able to be a custodian of my own digital assets if I ever were to get back in that space?”

  • Atkins: “Yes, I believe so. I think that your right to your property should determine where it should be held. And then you know the differences. You know perhaps in trading, we have to make sure that you know that there things don’t become balkanized, that we don’t have liquidity that’s atomized. But for the national market system to work and to provide, you know, the engine that we have currently, you know, we’ll take, you know, we’ll have to accommodate all sorts of different ways of doing business.”

Sen. Angela Alsobrooks (D-MD)

• Sen. Angela Alsobrooks (D-MD): “Chairman Atkins, my number one priority on the Banking Committee is pursuing policies that will create real economic opportunity. And I want more of my constituents, quite frankly, not to live on the margins, but to be able to build wealth, generational wealth, for themselves and their families. And so I’m not afraid to say this, and I think it means access to capital, credit and markets, and it also means robust investor protections. I want to briefly mention a few topics surrounding the development of market structure legislation, which I believe is really important to underserved communities. Young people are extremely interested in these technologies, I think about my daughter and all of her friends, and we need to protect both consumers and our financial system by regulating them. I speak for so many of my colleagues in wanting to get to a really good, bipartisan product that protects investors and the integrity of our markets. And part of this process, like others have noted, means getting a full slate of democratic commissioners confirmed to the Commission very quickly. There’s no reason that this White House cannot nominate qualified individuals to the positions that safeguard our financial system. Now you’ve spoken at length, Chair Atkins about tokenization, the technology behind converting ownership of traditional financial assets, including securities, on a blockchain. And as this technology develops, it’s going to be really important that we ensure the owners of tokenized securities have all the same rights and protections as owners of traditional securities. This is vital for protecting investors and the capital markets that make us the envy of the world. Congress should play an important role here in providing guardrails and direction, and I’d be grateful for your continued cooperation. Do I have your commitment in this regard?”

  • SEC Chair Paul Atkins: “Yes, yes, Senator. Thank you very much. But I think it goes without saying that under current law that tokenized securities are securities, and we’ll treat them as such. And you have been that’s our firm position at the SEC so and I think our authority under that is clear no matter how securities are recorded, whether, like the old-fashioned paper certificates or book entry at DTCC, or whether they’re traded on chain, you know as tokenized securities. I’m happy to work with you and your colleagues to get you comfortable with that as you consider to work on market structure legislation, for example, but that’s an important precept, and we will obviously, I think that’s clear under current law.”

Sen. Dave McCormick (R-PA)

• Sen. Dave McCormick (R-PA): “Financial innovations moving at a blistering pace, and lots of areas, including digital assets, I commend you on your efforts to provide the necessary rules and safeguards for digital assets, while we continue to hopefully come forward with legislation on the CLARITY Act you’ve spoken about your support for Super apps, which would allow for seamless side by side trading of different asset classes. For example, a user on one platform could buy or sell crypto alongside traditional stocks while accessing other financial services. Would you outline for us how the super act, super apps, excuse me, would increase global competitiveness for us registered financial firms and the consumer protection principles that should guide the approach to super apps?”

  • SEC Chair Paul Atkins: “It comes again back to harmonization with the CFTC. So here we have two agencies that should be very well knit together and so that there are no gaps. And as the markets have evolved over the last 40 years, and you know where there are actors or market participants in both markets, futures and cash markets, you know it’s really incumbent on us to help make this as efficient for them as possible, so that they can compete effectively with foreign or other sorts of firms that were in other jurisdictions, they don’t have dichotomy as between futures regulator and a cash markets regulator. That’s our goal, is to make it efficient from anywhere from cross margining and portfolio margining to just what sort of medallion you need to do, XY&Z. The more harmonized we are, the better and more efficient.”

Sen. Lisa Blunt Rochester (D-DE)

• Sen. Lisa Blunt Rochester (D-DE): “So there’s been a lot of discussion about market structure, because this committee is working on that issue right now, and I want to shift specifically to crypto as it relates to this. In many crypto markets, founders or insiders can exert control or otherwise have confidential information on token supply, the schedule of token releases, governance changes or major technical decisions, especially before public trading, you would say that’s correct?”

  • SEC Chair Paul Atkins: “I guess it depends on the instrument and the token and right.”

• Blunt Rochester: “I know it kind of depends on, but all in all, this is kind of the way it works there, case by case, this does happen, correct?”

  • Atkins: “Yeah, it could. Yes.”

• Blunt Rochester: “Okay, and so today, I think it’s is insider trading or self-dealing, regardless of asset classification by someone with confidential information or insider control harmful to market integrity and investors?”

  • Atkins: “Well, we want to make sure that the markets are transparent and whatnot.”

• Blunt Rochester: “I really think I tried to like, these are kind of basic, simple questions. I think what I’m trying to get at is that, to me, insider trading is bad? No, it shouldn’t happen anywhere. And I think we agree on that, right?”

  • Atkins: “Well, it depends on, like on the futures markets. I mean, it’s kind of talking about…”

• Blunt Rochester: “That’s futures, but the concept of insider trading, this is something you’re against right?”

  • Atkins: “On the securities markets. Yes.”

• Blunt Rochester: “Okay, I’ll just say this didn’t go the way I thought it was going to go. Because I thought these were sort of basic, all of us agree insider trading is bad and wrong. As a matter of fact, even the case that I referenced, that you did, the complaint against this was like, a guy giving his friends tips and then them passing him envelopes of cash. To me, what I think for our committee is going to be important as we look at something as consequential as market structure, is that we’re also paying attention to making sure that people don’t have this self-dealing or insider trading.”

House Financial Services Hearing on SEC Oversight Q&A

Rep. Maxine Waters (D-CA)

• Rep. Maxine Waters (D-CA): “On January 15, my colleagues and I sent you a letter detailing our significant concerns about the SEC dismissal of over a dozen crypto actions. Our concerns are twofold. First, these cases were dismissed despite the fact that the SEC was winning in court, proving that the SEC crypto enforcement was well grounded. And second, the about-face on Sun, who gave millions of dollars to President Trump and his family. I am most astonished by TRX, the fall of 2024 a federal district court had the SEC state its case against Justin Sun in February 2025 to explore. Well, while you were exploring a potential resolution, Mr. Sun has been busy. He is ingratiating himself. He has invested in the World Liberty Financial token and is the top holder of the Trump meme coin, which earned him an invitation to the White House and a special dinner with the President. Just last week, a person verified to be Mr. Sun’s ex-girlfriend stated publicly that she has detailed evidence that Mr. Sun manipulated the price of TRX using fake trading accounts, and noted she is willing to provide evidence and testify in support of these allegations. Chairman Atkins, you have said that under your leadership, the SEC will focus on real fraud. Yes or no, does your statement extend to fraud in the crypto markets? Does your statement extend to fraud in the crypto market?”

  • SEC Chair Paul Atkins: “Well, whatever involves securities.”

• Waters: “Okay, is the SEC going to continue to prosecute fraud against Justin Sun? Yes or no.”

  • Atkins: “Well, I can’t discuss anything about that.

• Waters: “Okay. Well, will you commit to giving the committee a confidential briefing on the matter?”

  • Atkins: “Happy to talk to the extent I can about matter.”

• Waters: “Given that courts have ruled that TRX is a security and therefore within the SEC jurisdiction, do you agree that the SEC has a responsibility to obtain additional evidence offered by Mr. Sun’s ex-girlfriend, yes or no?”

  • Atkins: “Well, again, I can’t comment on any ongoing matter.”

• Waters: “Will you commit today that the SEC will continue to investigate and prosecute fraud, even if that fraud entails crypto assets that are securities, such as in the case of Justin Sun and TRX?”

  • Atkins: “Again, that’s our job, to investigate fraud that involves securities, so wherever it may be.”

• Waters: “Well, I want to tell you, you made a commitment, you came in, you talked about you were going to deal with fraud. It’s right before your eyes and you will we on this committee are going to keep on until we get to the bottom of this fraud. Will you give us a confidential briefing on this matter?”

  • Atkins: “To the extent the rules allow me to do that, yes.”

Rep. Frank Lucas (R-OK)

• Rep. Frank Lucas (R-OK): Turning to the Crypto Task Force, I understand you’ve contemplated an innovation exemption for tokenized equities. Our current capital markets are the envy of the world, and of course, must be safeguarded. Will you ensure that the Commission seeks broad and diverse stakeholder input through the notice and commitment process to mitigate unintended consequences of potential exemptions?”

  • SEC Chair Paul Atkins: “Yes, notice and comment is important, but the innovation exemption that I’ve been talking about cabins, time limited, transparent and really anchored in strong investor protection. We would police that carefully, and it’s like a sand box, but not picking winners and losers.”

Rep. Nydia Velázquez (D-NY)

• Rep. Nydia Velázquez (D-NY): “Since becoming Chair, the commission has pulled back from a remarkable 61% of the cases against the crypto industry. Do all these cases have the same legal or evidentiary deficiencies?”

  • SEC Chair Paul Atkins: “Well, thank you. Most of those were withdrawn or changed before I arrived in last April, but I can say that you know, what we’re trying to do is realign to what the statute hopefully will be the market structure statute, and the outlines that I’ve given in a couple of speeches regarding, you know, how we view the taxonomy and the structure on crypto.”

Rep. Andy Barr (R-KY)

• Rep. Andy Barr (R-KY): “Chairman Atkins, thanks for the great work you’re doing at the commission. For two consecutive congresses, the House has passed and sent to the Senate digital asset market structure legislation, most recently known as the CLARITY Act, receiving overwhelming bipartisan support in this chamber last July. That level of bipartisan agreement reflects a growing interest in providing long-term certainty for market participants. From your perspective, Mr. Chairman, how does durable digital asset market structure legislation like the CLARITY Act impact the United States ability to continue to lead in financial market innovation and protect investors?”

  • SEC Chair Paul Atkins: “Well, as you know, the President has set out the challenge to that the US should be the crypto capital of the world, and I feel strongly that we can and should do that and achieve it. To do that, we have to have a framework that makes sense, that is fit for purpose. Unfortunately, traditional rules that the SEC has, you know, are not really fit for purpose here, and has created a lot of uncertainty in the marketplace. Thus the CLARITY Act, and thus the rule, the true importance of the SEC to work very much hand in glove with the CFTC, in order that there be no gaps in the oversight, but that also innovators have surety as to what they’re doing, and they’re not going to get, you know, in a gotcha sort of situation like has happened in the past with some of the enforcement actions that the SEC has brought in that area. So, we want to make sure that, you know, people know the rules of the road and can abide by it, and that those will foster innovation here in the United States.”

• Barr: “I know there’s a few outstanding issues and points of disagreement in the Senate. We certainly encourage a resolution of those points of disagreement to achieve what you said is so important kind of a statutory framework for market structure so that indeed, the United States can be the crypto capital of the world.”

Rep. Young Kim (R-CA)

• Rep. Young Kim (R-CA): “Under Gary Gensler’s runaway rogue regulation, the Commission drifted away from its mandate of protecting investors and facilitating capital formation, using regulation as enforcement, he single handedly set back the crypto industry in this country by over a decade, and since taking office, President Trump and you have taken important steps to reverse that trend. Thank you for your work in Congress. We have worked hard to assist those efforts with the passage of The GENIUS Act, and now we must continue that work by getting the CLARITY Act across the finish line. One way that the SEC has achieved that is through the Crypto Task Force and its focus on unlocking tokenization to promote innovation and efficiencies in our capital markets. Can you provide a brief update on the efforts to unlock tokenization and the benefits tokenization promises to bring to the US capital markets?”

  • SEC Chair Paul Atkins: “Tokenization, I think, is very important innovation that’s coming about, and tokenized securities that can be traded on chain, I think has a future benefit just for the transparency that distributed ledger technology brings to the issue, and then the prospect for a t zero sort of payment versus delivery type of regime on change so that can help de risk the financial services industry by a lot. We want to encourage that, and then have rules around this that protect investors, protect issuers and the other stakeholders in this whole effort.

• Kim: “I know that one avenue we’re exploring to unleash tokenization is the potential innovation exemption. So how is the commission approaching this innovation exemption, and is there a timeline to issue that exemption?”

  • Atkins: “Well, we’re planning to do that here this year, and so we’re hoping that you all will in Congress will adopt the CLARITY Act, or whatever, however you do it, and then that arrives on the president’s desk. But in the meantime, we’re working a pace, and this innovation exemption, I think, will be a good watershed.”

• Kim: “Sure, and one aspect of Crypto Task Force has been collecting industry feedback around topics such as tokenization. So how does the commission plan to utilize the feedback that you collect on that issue from the Crypto Task Force?”

  • Atkins: “Yes, we’ve done a number of round tables, and we’ve received a lot of commentary coming in from all sorts of stakeholders in and around the digital asset industry. We are distilling that and using that to help refine what we will come out with. With respect to this innovation exemption.”

Rep. Josh Gottheimer (D-NJ)

• Rep. Josh Gottheimer (D-NJ): “There’s been much discussion about the SEC forthcoming digital asset innovation exemption. You’ve said that this exemption will, quote, allow registrants and non-registrants to quickly go to market with new business models and services that do not neatly fit within our existing rules and regulations. Just yesterday, the founder of the SafeMoon token was sentenced to eight years in prison for conspiracy to commit securities fraud, and new services like Pump Dot Fun make it very easy to launch tokens backed by absolutely nothing. I believe we need clear guardrails and rules of the road for digital asset innovation to flourish in the United States. We also have to have strong consumer protections. Can you discuss the timing and scope of the innovation exemption, and how you’re building consumer protections into it?”

  • SEC Chair Paul Atkins: “Yes, well, so fraud is fraud, whether it happens, you know, the crypto world or in paper certificates, and so we take that very seriously. And like you say, that really is a detriment to investor confidence if we’re not active in that area. So with respect to the innovation exemption, you know it will be when we come out, the goal is to make it a cabins limited time, type of exemption, but to allow innovators to operate in that that within those limits.”

• Gottheimer: “And there’s supervision, but you’re concerned, like I am, about these tokens backed by nothing like these, these Pump Dot Fun type things, right? I assume that’s not what the SEC wants, absolutely. Okay. I think it’s very important we keep an eye on that. Obviously want innovation, but we also don’t want scam artists out there and hucksters pushing stuff online. And I think we have to be very careful about that. The SEC has rightly been spending a lot of time and attention on digital assets, but there are many other opportunities for updating and modernization. Electronic record keeping, rules E, delivery, cross trading, Form PF, reporting for private funds, co-investment by open and mutual funds and many other areas are ripe, in my opinion, for modernization. Are these initiatives in your SEC still getting appropriate attention? How do you and your staff prioritize them, and how are you thinking about them?”

  • Atkins: “Well, we have a lot on our plate, obviously, but you know, we’re, I’m really very pleasantly surprised coming back to the SEC how gung ho the staff is and all the divisions to dive into these. I think we’ve restored confidence in the morale of the agency, and people are leaning into it.”

• Gottheimer: “Yeah and I think the modernization piece is key, right? There’s a lot of opportunity to do it. I appreciate that you’ve previously recognized that tokenized securities are and will continue to be securities. Would you agree that market making activity of tokenized securities should be treated in similar manner to traditional financial market making activity?”

  • Atkins: “Yeah. Well, those are those big issues of, you know, how to adjust the rules to deal with the new reality, but we definitely are looking in that, to that in our Trading and Markets area. And we’ve been having round tables, you know, in this regard, and working, obviously with the CFTC on it as well.”

• Gottheimer: “Thank you. Digital asset market actors consistently tell us that regulatory fragmentation between the SEC and CFTC creates uncertainty, discourages responsible innovation and drives activity offshore. I appreciate the steps you’ve been taking in the CFTC to harmonize definitions and disclosure standards and supervisory expectations to reduce regulatory fragmentation. Can you discuss some of the challenges that market actors face, navigating across conflicting regulatory frameworks?”

  • Atkins: “Yeah, well, I like to use an analogy of SEC CFTC, two fortresses with no man’s land in between. So traditionally, that field or that no man’s land is littered with the bodies of would be products that could never really make it through that gauntlet. So we are, you know, out to change that and to work in harmony.”

Rep. Ritchie Torres (D-NY)

• Rep. Ritchie Torres (D-NY): “You know, I’ve long been a believer in emerging technologies like crypto and blockchain. But as you know, every industry has actors good and bad. Crypto is no exception. Have you taken any enforcement action against any bad actor in the crypto industry?”

  • SEC Chair Paul Atkins: “Yes. I mean, we have brought cases for fraud, outright fraud, and we’re in litigation with some of those right now involving digital assets, involving digital assets, one actually up in your city or up in New York.”

Miscellaneous

• Sen. Dick Durbin (D-IL) posted “Americans’ opinions about cryptocurrency are crystal clear. In a recent survey, 61% said they oppose using taxpayer dollars to bail out the crypto industry—including 57% of Trump supporters. Will the White House and Congressional Republicans protect the taxpayers or their rich crypto donors?”

• Rep. Rashida Tlaib (D-MI) posted “During the 2024 election, nearly half of corporate spending came from the crypto industry. Now the SEC is dismissing cases against major crypto-related Trump supporters like Coinbase, Kraken, Binance, and Justin Sun. The corruption is just staggering.”

• Sen. Dave McCormick (R-PA) posted “Digital assets are a fast-growing space. In this new world, we need to ensure competition and opportunity, while also establishing clear rules that give consumers and investors confidence. Smart crypto regulation will help protect the public and encourage responsible growth.”

• Rep. Bryan Steil (R-WI) posted “BREAKING CRYPTO NEWS SECPaulSAtkins confirms that the SEC is preparing Token Taxonomy guidance in line with CLARITY to secure US Leadership in Digital Assets.”

What I’m Reading This Week

• J5 Warns of Use of Crypto Platforms for Tax Evasion, Other Crimes, Kelsey Brooks, Tax Notes.

• Taxing Digital Assets, Jasper L. Cummings, Jr., Tax Notes.

• J5 Discusses Cryptocurrency Payment Processor Expansion, Tax Notes.

About Zero One Strategies

Zero One Strategies is a specialized government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com

www.ZeroOneStrategies.com

Treasury Secretary Scott Bessent appeared in contentious hearings before the Senate Banking and House Financial Services Committees, where digital assets emerged as a central topic of discussion. That focus is expected to continue this week as both committees hold SEC oversight hearings with Chairman Paul Atkins.

A Treasury official clarified that the Department will not pursue regulations treating payment stablecoins as cash for tax purposes under the GENIUS Act, leaving any such policy changes squarely in the hands of Congressional tax writers as they shape forthcoming digital asset tax legislation.

The Senate Judiciary Committee advanced the Guarding Unprotected Aging Retirees from Deception (GUARD) Act, which aims to leverage blockchain technology to strengthen financial fraud investigations.

Read more below

Congress

Hearings

Last week

• On February 4, the House Financial Services Capital Markets Subcommittee held a hearing on A New Day at the SEC: Restoring Accountability, Due Process, and Public Confidence.

• On February 4, the House Financial Services Committee held a hearing on “The Annual Report of the Financial Stability Oversight Council.”

• On February 5, the Senate Banking, Housing and Urban Affairs Committee held a hearing on “The Financial Stability Oversight Council’s Annual Report to Congress.”

This week

• On February 11, the House Financial Services Committee holds a hearing on “Oversight of the Securities and Exchange Commission.”

• On February 12, the Senate Banking, Housing and Urban Affairs Committee holds a hearing on “Oversight of the U.S. Securities and Exchange Commission.”

Legislation

• The Senate Judiciary Committee passed the Guarding Unprotected Aging Retirees from Deception (GUARD) Act to allow grantees of several existing federal grant programs to use funds to increase resources and personnel specifically to utilize the blockchain for investigating financial fraud. It would also permit federal law enforcement to assist state and local law enforcement with tracing tools for blockchain technology, bolstering their ability to catch fraudsters who use cryptocurrency to facilitate their crimes. (Text)

• Senate Judiciary Committee Chairman Chuck Grassley (R-IA) and Sen. Amy Klobuchar (D-MN) reintroduced the Combating Money Laundering, Terrorist Finance and Counterfeiting Act to update counterfeiting laws to prohibit state-of-the-art counterfeiting methods. (Text)

• Reps. Rashida Tlaib (D-MI), Pramila Jayapal (D-WA), and Delia Ramirez (D-IL) introduced the Defund the Oligarchs, Fund the People Resolution. The press release said, “The legislation calls for an end to the political and economic dominance of billionaire oligarchs… As wealth concentrates, our democracy becomes less responsive to the needs of everyday people, and necessities like housing and health care have become unaffordable. Campaign contributions allow ultra-rich oligarchs and corporations to purchase influence, winning tax breaks for the oil and gas industry, unrestricted development of artificial intelligence, and industry-friendly crypto legislation.” (Press release)

Correspondence

• House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party (CCP) Ranking Member Ro Khanna (D-CA) sent a letter to World Liberty Financial (WLF) requesting information on the reported $500 million investment deal with United Arab Emirates (UAE) Royal Family member Sheikh Tahnoon bin Zayed Al Nahyan and potential influence on the diversion of advanced artificial intelligence chips to China from the UAE. The letter also seeks information from World Liberty Financial about its facilitation of a $2 billion investment in a cryptocurrency exchange founded in China by Changpeng Zhao, recently pardoned by President Trump. Khanna sent a related letter to Benjamin Wallace, United States Attorney for the District of Delaware. (WLF Letter)(Wallace letter)

Trump Administration

Federal Reserve

• On February 9, Fed Governor Christopher Waller will deliver remarks on “Digital Assets” at the Global Interdependence Center Summit: The Dollar and Continued U.S. Exceptionalism.

Noteworthy Quotes and Events

ADMINISTRATION

Treasury Department

• On public comments submitted regarding GENIUS Act implementation, Treasury Office of Tax Policy attorney Erika Nijenhuis said at the San Jose State University Blockchain Tax Conference, “By far the largest category of [comments] received are that payment stablecoins should be treated as cash, similar to cash equivalents or something along those lines… I think a lot of those comments are based on policy: ‘This is good policy. This would be a good result.’ Very few of them talked about what the legal basis for reaching that conclusion is.” She added, “While none of those [provisions] are exactly on point on the tax question, they do kind of send a signal that Congress didn’t want stablecoins to be treated like cash, at least for some purposes. There are many provisions of the Code that treat money differently from other types of items, like the subject received on partnership distribution or section 6050I. I have not heard anyone in the crypto world clamor to be included.” She concluded, “The preamble of [the 2024 final regulations] says that if Congress enacts legislation dealing with stablecoins — i.e., the GENIUS Act — the Treasury and the IRS will reconsider the stablecoin rules in the reporting rules. So that is among the many issues we’re thinking about with respect to stablecoins.” (Tax Notes)

• Secretary Scott Bessent posted “Thank you to SenLummis for your continued efforts in the Senate to advance critical market structure legislation for digital assets. As I said during my testimony, it is vital that the CLARITY Act is signed into law. The digital asset revolution is here, and I am confident that with leadership from both sides of the aisle we can get this across the finish line.”

Internal Revenue Service (IRS)

• The IRS posted “Tax Tip: Taxpayers who have digital assets must report gains or losses on their IRS tax return, even if they did not receive a 1099-DA form.”

Securities and Exchange Commission (SEC)

• SEC Chair Paul Atkins posted “This is history in the making. With POTUS’ leadership and a new era of coordination between the CFTC and SECGov, we’re cementing the U.S. as the Crypto Capital of the World.”

• Atkins also said, “We are out to harmonize the rules between the SEC and the CFTC, giving clarity and certainty to the innovators and to investors...so that people can develop their products in the United States rather than feel that they have to go offshore.”

White House

• President’s Council of Advisors for Digital Assets Executive Director Patrick Witt posted “Sincere thanks to the representatives from the crypto and banking industries who participated in today’s meeting on stablecoin rewards and yield. The discussion was constructive, fact-based, and, most importantly, solutions-oriented. Over the course of the past few months, we have achieved breakthroughs on several seemingly intractable policy issues. I am confident we will be able to resolve this one too.”

CONGRESS

Senate Banking FSOC Hearing Q&A

Sen. Bill Hagerty (R-TN)

• Sen. Bill Hagerty (R-TN): “Mr. Secretary, President Trump signed my bill, the GENIUS Act, into law. Private sector estimates suggest that stablecoin adoption may reach between 1 trillion and $3 trillion by the end of this decade. As you know, the GENIUS Act requires stablecoins to be backed by high quality, liquid assets such as US Treasuries. How does the US leadership in crypto and stablecoins fit into Treasury strategy for maintaining the dollar’s role in the center of the global financial system?”

  • Treasury Secretary Scott Bessent: “Well, Senator, I want to congratulate you and your colleagues both sides of the aisle, but thank you for your leadership on this. This can be an important source of funding for the US government, as we push down the funding for the US government that helps everyday Americans, whether it is for mortgages, they are any other borrowing requirements, keeps taxes low, and we believe that with the US having the safest, soundest best practices, we can draw in new sources, via of funding, via the stablecoin mechanism.”

• Hagerty: If you think about the impact of the passage of the GENIUS Act, it was a major statement in terms of keeping innovation on shore. And I’d just like to get your perspective in terms of the stability and clarity that we provide over the GENIUS Act, and what that means for keeping innovative capacity here in America.

  • Bessent: “Well, it’s innovative capacity in digital assets, and remaining the leader in that is imperative. And what we don’t want to have are central bank digital assets, which we are seeing in the rest of the world. And Senator as you and I have often discussed, we are going to see a choice between American private sector assets with our best practices and regulation, or between central bank digital assets, whether in Europe, whether in China, in the rest of the world. And I think the world is going to choose the US dollar and the private sector, well-regulated choice that US stablecoins will provide.”

• Hagerty: “Well, I couldn’t agree more, and I think that underscores my sensitivity to not undoing ex post facto, the good work that we did in genius. I want to see us put in place international reciprocal regimes that work. I want to increase the demand for US Treasuries, as you do, and I’m going to encourage my colleagues to preserve the GENIUS Act given all the hard work that went into it.”

Sen. Mark Warner (D-VA)

• Sen. Mark Warner (D-VA): “I feel like I’m in crypto hell… You know, I think, and actually, and I really appreciate what you did on the stablecoins bill. And I think, you know, we got a lot of broad bipartisan support, at least many of us. I think all of my Republicans and many of my Democratic friends agree. We want these products built in America. Crypto is here to stay, and we need clear rules of the road. And stablecoin was simple compared to market structure, but you have one of the things that we see in crypto when we are working our tail off, you can please, I think the Chairman and I’ve spent, and Cynthia and others spent more time on this than I don’t, use up my time. But there are a lot of issues around national security that you have unique perspectives on. With FinCen, with the Secret Service, we sure as hell don’t want to take away from prosecutors some of the tools they have to go against bad guys. We’ve got to have some area to close down some of the gaps in DeFi. And again, there’s bipartisan agreement on this, but boy, we need, I think we’re starting to get some of the technical assistance, but if you can just make clear that this is a real problem, and we’ll deal with yields and rewards, we’ll deal with a host of other issues, but these national security issues around DeFi are real, and we need to not create a set of rules that leaves huge exemptions and candidly takes away some of the prosecutorial powers that exist today.”

  • Treasury Secretary Scott Bessent: “Senator, I look forward to working with you on that.

• Warner: “We’ve had problems, and historically, there’s problems when the technology gets ahead of the legislation. So, if we can work with you on the legislation for both OFAC and FinCEN. We would love your technical assistance. And I think, Mr. Chairman and Senator Lummis, that you will be invited to our next round robin on that, and that may be later today or tomorrow or Monday.”

  • Bessent: “Good. And if you could convince some of the… there seems to be a nihilist group in the industry who would prefer no regulation over this very good regulation.”

• Warner: “Amen brother. So, weigh in.”

  • Bessent: “I do weigh in, early and often.”

Sen. Cynthia Lummis (R-WY)

• Sen. Cynthia Lummis (R-WY): “You’ve had a chance to travel the world since you took the oath of office. Is China trying to use digital assets and blockchain to build an alternative to American financial leadership?”

  • Treasury Secretary Scott Bessent: “We don’t know that for sure. There are lots of rumors of Chinese digital assets, of Chinese digital assets that may be backed by something other than the RMB, perhaps gold based. We haven’t seen that. They have a very large sand box in Hong Kong and is actively traveling the world, looking at different mechanisms. So, I would not be surprised.”

• Lummis: “Based on what you know now. What is your opinion about the importance of having clear rules of the road, market structure, legislation in the United States?”

  • Bessent: “Look, I think that it’s impossible to proceed without it. We have to get this Clarity Act across the finish line. And any market participants who don’t want it, should move to El Salvador.”

• Lummis: “So, as an industry, what is the benefit to having this industry embedded in the US economy?”

  • Bessent: “Well, again, as I said, that there seem to be people who want to live in the US but not have rules for this important industry, and we’ve got to bring safe, sound, and smart practices and the oversight of the US government, but also allow for the freedom that is crypto. And I think it’s a balance that is being worked out. It was worked out in the GENIUS Act, and I’m confident with leadership of people on both sides of the aisle that we can get Clarity across the line this year.”

• Lummis: “Can you see a day when conventional banks and digital asset banking are offering the same types of products, giving each an advantage to offering a broader array of financial products to the American consumer?”

  • Bessent: “I think that can happen over time, and we’ve actually been working with small and community banks to discuss how they can be part of the digital asset revolution.”

• Lummis: “Also, among the things that have challenged us in these last months is concerned by community banks and big banks that the stablecoin bill, the GENIUS Act, and market structure could cause a bleeding of deposits from small banks. What’s your reaction to that concern?”

  • Bessent: “Look, I’ve been a champion of these small banks, and deposit volatility is very undesirable, because it is the stability of those deposits that allows them to lend into their communities, ag, small business, real estate, and we will continue to work to make sure that there is no deposit volatility associated with this.”

• Lummis: “Well as an ag borrower, I commend you on that, because I have borrowed from community banks on our ag operation for decades, and we’re dependent on our community banking relationships in rural America to help sustain us and grow our businesses. So, I very much appreciate that. I want to switch to digital asset taxation for just a minute. So, among the things that I’m exploring, and the Senate Finance Committee has a package of bills that looks really good to me on digital asset taxation, but one of them that’s kind of vexing, that I could use some guidance on is the issue of de minimis, with regard to especially Bitcoin and other digital assets that might be used as a means of exchange. So, the issue is, will it be a capital gain, or will it be exempt from capital gains when it’s used as a means of exchange to purchase things? And if it’s going to be subject to a capital gain, how do you calculate what the capital gain is if somebody has a blended portfolio of Bitcoin, some of which were purchased when it was $300 some of which were purchased today at 75,000, and some of which were purchased a year ago at over $100,000? How do you calculate the capital gain? Do you have some thoughts about that, or who I could consult with in your shop?”

  • Bessent: “It’s a very complicated subject. We’d be very happy to have our Office of Tax policy work with your team.”

• Lummis: “I’ll be over. Thank you, Mr. Secretary, look forward to seeing them.”

House Financial Services FSOC Hearing Q&A

Rep. Brad Sherman (D-CA)

• Rep. Brad Sherman (D-CA): “Mr. Secretary we live through the bailouts of 2008. When powerful men lose money, they now want a government bailout. Does the Treasury Department or the various components of the FMOC have the authority to bail out Bitcoin?”

  • Treasury Secretary Scott Bessent: “Could you please elaborate? What exactly does bail out Bitcoin mean?”

• Sherman: “Okay, could you instruct the banks of this country to buy more bitcoin, or change banking regulations so that they are encouraged to do so in terms of the reserves that they’re otherwise required to have?”

  • Bessent: “Again, that within the context of asset diversification, within banks, they could hold many assets.”

• Sherman: “They can and they’re different. But do you have the authority to order banks to buy Bitcoin or to invest US tax dollars in Bitcoin or Trump coin?”

  • Bessent: I am Secretary of the Treasury. I do not have the authority to do that, and as Chair of FSOC, I do not have that authority.”

• Sherman: “So we’re not going to see our tax dollars invested in crypto assets?”

  • Bessent: “Why would a private bank be your tax dollars, Congressman?”

• Sherman: “Excuse me, I’m now asking about the money of our taxpayers, which you manage as Secretary of the Treasury. Is it going to be deployed into crypto assets?”

  • Bessent: “We are retaining seized Bitcoin.”

• Sherman: “That’s not exactly taxpayer money. You collect a lot of taxes this month.”

  • Bessent: “No, that is an asset of the US.”

• Sherman: “It’s an asset of the US. And are you going to invest seizure?”

  • Bessent: “Of that one billion of Bitcoin was seized, 500 million was retained, and that 500 million has become over 15 billion.”

Rep. Bryan Steil (R-WI)

• Rep. Bryan Steil (R-WI): “I chair the digital asset subcommittee. We passed and signed into law the STABLE Act, setting forward legislation as relates to stablecoin. Treasury is required to complete implementing regulations by July 18 of this year. Are you going to hit the deadline? And are there any impediments preventing you from hitting that July 18 deadline?”

  • Treasury Secretary Scott Bessent: “I don’t see any impediments at present, and if we’re going to hit them, we will notify you in the committee.”

Rep. Stephen Lynch (D-MA)

• Rep. Stephen Lynch (D-MA): “Mr. Secretary based on early reports, and this is an analysis done by Public Citizen and subsequent news reports, when the Trump Administration came into office, they immediately took steps to either halt, dismiss, or roll back over 100 enforcement actions and investigations against corporations in its first two months in office, with a very heavy concentration on financial services, consumer protection, and cryptocurrency, totaling over $3.1 billion in potential penalties avoided. As a member of the Financial Services Oversight Council, is that a concern that you have raised within the council, all these immediate dismissals of cases against financial services firms?”

  • Treasury Secretary Scott Bessent: “Well, I think your Biden Administration had an excuse…”

• Lynch: “Sir. Please be responsive to my question.”

  • Bessent: “I am.”

• Rep. Stephen Lynch (D-Mass.): “You’re not.”

  • Bessent: “I’m trying, sir, and this back and forth is just eating your time. The Biden Administration had an extinction policy for crypto.”

• Lynch: “This is when Trump came into office. I’m going to go to the next question, because you’re not… the answers have to be responsive if we’re going to have a if we’re going to have a serious hearing here.”

  • Bessent: “Well, Questions have to be serious.”

• Lynch: “Well, those are 100 dismissals of cases that the Trump Administration came in and executed in their first weeks in office. Like that. All of a sudden, all these crypto cases went away. The SEC was dropping cases. The Consumer Financial Protection Bureau dropping cases and… Look, you’re on FSOC with all the heads of these agencies, this should be a serious question to you. Trust should be a serious question and a serious issue for the financial services industry, especially as a Secretary of the Treasury.”

Rep. Warren Davidson (R-OH)

• Rep. Warren Davidson (R-OH): “As Mr. Foster was trying to tout the benefits of communist money, I appreciate you calling him out on that and rejecting it. And frankly, during the Biden Administration, the Federal Reserve posted positions; they were literally recruiting developers to develop a central bank digital currency, including, you know, a quote, senior crypto architect, role dedicated to CBDC development. Are you aware of any ongoing government or Federal Reserve efforts to develop a US central bank digital currency within the administration?”

  • Treasury Secretary Scott Bessent: “Absolutely not. President Trump has made it clear that a central bank digital currency is anathema to the creation of the US as a digital powerhouse. I can’t speak for what goes on at the Fed, but I would assume that they would not be part of that either.”

• Davidson: “Yeah, I hope so. Because not only has the president been clear on that, he issued an executive order on it, and said that we will not develop a central bank digital currency. And of course, that applies to the whole executive branch. Does that mean it applies to the Federal Reserve?”

  • Bessent: “Again, I would say that the Federal Reserve has been very cooperative in terms of the regulation, and they’re a bit forward thinking with the GENIUS Act. What’s happening? Fitting with stablecoins? How that fits within the financial and the payment system?”

• Davidson: “Yeah, I think that that approach clearly contrasts with what really China has been working on is essentially managed, basically programmable money by the federal government. And frankly, they’re working on it with the Bank of International Settlement, with the European Central Bank of England, Mark Carney, seems to be a fan of it, and they’re all collaborating to basically develop communist money and impose it on their populations. And it seems like you have a different hope for the future. So, as you lay that out, would love to work with you on the future of money. I really think it’s going to shape the future of Western civilization.”

  • Bessent: “I couldn’t agree more with you, Congressman, and it’s moving fast, and the U.S. has to keep the lead.”

Rep. Mike Lawler (R-NY)

• Rep. Mike Lawler (R-NY): “Today, a substantial and growing share of the dollar stablecoin market operates outside the US, as foreign jurisdictions move quickly to establish legal regimes that encourage dollar stablecoin issuance in their markets. Foreign issued stablecoins already compete globally by offering consumers economic value and incentives to use and hold them, and countries like China are actively using economic incentives to drive adoption of their digital currencies. As Treasury implements stablecoin legislation, do you agree that US rules should preserve enough flexibility for American issuers to remain competitive so dollar activity stays on shore, transparent and under US oversight?”

  • Treasury Secretary Scott Bessent: “With stablecoins, I would say what we want is US best practices. Stablecoins can go around the world. And indeed, we are seeing the, I believe we will see the adoption, especially in emerging economies or maybe any other individuals who want to hold the US dollar. But I think it is paramount, as was done with the GENIUS Act, to put in US best practices.”

Digital Asset Tax

• Senate Finance Chair Mike Crapo (R-ID) said, “It’s a new policy area, and there’s folks with a lot of different perspectives.” He also said, “There’s so many different positions within the parties, so we’ve always got little issues coming up that haven’t yet been resolved.” He added, “The president wants to have us set the rules of the road and they’re working with us, so it’s a joint effort.” (Punchbowl)

• Senate Finance Ranking Member Ron Wyden (D-OR) said, “Clearly this affects so many aspects of the tax debate, including the tax gap, so I’m very interested in working cooperatively and trying to address this.” (Punchbowl)

Miscellaneous

• On Mornings with Maria, Sen. Roger Marshall (R-KS) said, “Yeah, Maria, I think that’s the biggest hang-up, is the banks are keeping it from going forward because they don’t want that to happen. They’re afraid that people will move their CDs, their savings out of their bank account, and into community banks. We loan that money. I get all that. But also, I think there’s still concern in how criminals use crypto as well, and how it’s used in money laundering, the Chinese tried using it for money laundering, as they continue, fentanyl poisoning, human trafficking, those types of things as well. So, look, we want to get it right. We don’t want to make the regulations too tight, but they can’t be too loose, and it’s hard to get it just right.” (Press release)

• Marshall said about the crypto ransom note in the Nancy Guthrie case, “Well, Maria, I think to a certain point you can, but it’s how deep does it go? And boy, I’m not the crypto expert, but for some reason, for most of these criminals, that ransom they want, of course, is in crypto. So, there’s a reason they like that.” (Press release)

• Rep. Stephen Lynch (D-MA) posted “In the first two months after Trump took office, the Securities & Exchange Commission and other financial regulatory agencies dismissed more than 100 crypto- and finance-related enforcement cases – allowing finance and crypto companies to defraud American investors and consumers and violate U.S. securities laws while avoiding over $3 billion in government penalties. The Trump Administration has also abandoned critical consumer protection policies related to the use of artificial intelligence by banks and other financial institutions. As lead Democrat on the Subcommittee on Digital Assets and Artificial Intelligence, I demanded accountability from SecScottBessent on behalf of American investors and consumers.”

• Rep. Bryan Steil (R-WI) posted “Breaking Crypto News SecScottBessent confirms Treasury is on track to implement stablecoin regulations by July 18 and secure US dollar dominance!”

• Sen. Dick Durbin (D-IA) posted “Cryptocurrency is a notoriously risky asset that is vulnerable to financial crashes. But Senate Republicans voted down my amendment that would have prevented American taxpayers from being on the hook to pay for a crypto bailout.”

• Sen. Cynthia Lummis (R-WY) posted “Digital assets are the future of financial services. We are putting strong safeguards in place to ensure their seamless integration, making life easier and more affordable for the American people.”

• Lummis also posted “We are working every single day to get digital asset market structure across the finish line. The time is now.”

• Rep. Troy Downing (R-MT) posted “Under negotiator-in-chief POTUS’s leadership, we’ve never been closer to providing real CLARITY for digital assets.”

• Rep. Thomas Massie (R-KY) posted “BLOCKED: My amendment to stop the creation of Central Bank Digital Currencies (CBDCs) that will be used for financial surveillance and control of your wallet.”

• Rep. Warren Davidson (R-OH) posted “Chinese people don’t even like Chinese money. Instead, China is working with Democrats and Europeans to build a Central Bank Digital Currency backed by digital ID - communist money. Sadly, Republicans have proven incapable of banning it. President Trump’s full Digital Asset Executive Order should become law. 1. Ban CBDC 2. Protect self-custody. 3. Stablecoins 4. Market structure”

What I’m Reading This Week

• EU Calls on 12 Countries to Impose Crypto Tax Rules, Josh White, Law360.

• Crypto Asset Manager Addresses Staking Safe Harbor, Tax Notes.

About Zero One Strategies

Zero One Strategies is a specialized government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com

www.ZeroOneStrategies.com

Today, the White House will host executives from the banking and cryptocurrency industries and trade associations to discuss the stablecoin yield issue and a path forward for market structure legislation.

The Senate Agriculture Committee advanced their market structure legislation on a 12-11 party-line vote. Despite opposition from Democrats, both sides emphasized negotiations would continue and changes to the bill could be made.

The Chairs of the SEC and CFTC hosted a joint event to discuss harmonization between the two agencies and published an op-ed highlighting upcoming regulatory actions on digital assets.

Pro-crypto lawmakers celebrated President Trump’s nomination of Kevin Warsh as Chair of the Federal Reserve Board of Governors. Warsh has been cited as calling Bitcoin a “sustainable store of value” but other cryptocurrencies as “software that pretends to be money.” In 2022, he published an op-ed in the Wall Street Journal calling for a U.S. CBDC.

Read more below

Congress

Hearings

Last week

• On January 29, the Senate Agriculture, Nutrition and Forestry Committee held a markup of crypto market structure legislation.

This week

• On February 4, the House Financial Services Capital Markets Subcommittee holds a hearing on A New Day at the SEC: Restoring Accountability, Due Process, and Public Confidence.

• On February 4, the House Financial Services Committee holds a hearing on “The Annual Report of the Financial Stability Oversight Council.”

• On February 5, the Senate Banking, Housing and Urban Affairs Committee holds a hearing on “The Financial Stability Oversight Council’s Annual Report to Congress.”

Upcoming

• On February 11, the House Financial Services Committee holds a hearing on “Oversight of the Securities and Exchange Commission.”

Legislation

• The Senate Agriculture Committee passed their market structure bill, the Digital Commodity Intermediaries Act, by a 12-11 party-line vote. (Press release)

Correspondence

• Sens. Mazie Hirono (D-HI), Elizabeth Warren (D-MA), Dick Durbin (D-IL), Sheldon Whitehouse (D-RI), Chris Coons (D-DE), and Richard Blumenthal (D-CT) sent a letter to Deputy Attorney General Todd Blanche requesting information on his decision last year to disband the Department of Justice’s (DOJ) National Cryptocurrency Enforcement Team (NCET) and terminate investigations and prosecutions into cryptocurrency crime, in light of recent reporting that he held more than $150,000 in cryptocurrency at the time of the decision. (Letter)

• Rep. Lloyd Doggett (D-TX) sent a letter to Secretary of State Marco Rubio and Secretary of the Treasury Scott Bessent requesting information on the Trump Administration’s handling of revenues from Venezuelan oil through an offshore account in Qatar. The letter asks, “Most notably, proceeds from Venezuelan oil-related corruption have been laundered via cryptocurrency. How is the Department helping Venezuelan authorities to track these assets? What is the Department doing to ensure that US-associated cryptocurrency firms are not engaging in further illicit financial flows associated with these Qatar-based oil revenues?” (Letter)

Publications

• SEC Chair Paul Atkins and CFTC Chair Michael Selig published an op-ed in Fox News entitled “Team Trump Readies Crypto Plan so Americans Can Count on Their Future,” saying, “The SEC-CFTC harmonization agenda begins with fundamentals: aligned definitions, coordinated oversight, and seamless, secure data sharing between agencies. Market participants should not be saddled with duplicative agency registrations and sets of regulations in order to offer economically similar products that can be effectively regulated under a unified approach. Harmonization strengthens standards through coherence, predictability and economic rationality.” (Op-ed)

Trump Administration

White House

• On February 2, the White House will meet with executives from the banking and cryptocurrency industries and trade associations to discuss the stablecoin yield issue and a path forward market structure legislation. (Reuters)

Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC)

• SEC Chair Paul Atkins and CFTC Chair Michael Selig held a joint event on January 29 to discuss harmonization between the two agencies and their efforts to deliver on President Trump’s promise to make the United States the crypto capital of the world.

Federal Reserve

• President Donald Trump announced Kevin Warsh as his nominee for Chair of Federal Reserve Board of Governors.

Noteworthy Quotes and Events

ADMINISTRATION

White House

• AI & Crypto Czar David Sacks posted “With today’s vote to advance crypto market structure legislation out of the SenateAg Committee, we are one step closer to establishing the necessary regulatory framework to make the United States the crypto capital of the world. Thank you to Chairman JohnBoozman as well as his staff for their leadership throughout this process. While the vote was partisan, a number of Democrat members stated their commitment to passing this important legislation. We will continue to work with them on a bipartisan basis to achieve that goal.”

Securities and Exchange Commission (SEC)

• Chair Paul Atkins posted “Thanks to the leadership of President Trump, America’s financial regulators - including ChairmanSelig and myself - are returning to the basic tenets that made our markets the envy of the world.”

• The SEC posted “Chairman SECPaulSAtkins and CFTC ChairmanSelig held a joint event today to discuss harmonization on Project Crypto. Working together, the agencies are optimistic about what their teams can accomplish, and how collaboration can promote the long-term dynamism of U.S. markets. Through Project Crypto, the SEC and CFTC can help to ensure that the future of finance is built in the U.S. under rules that protect investors, support innovation, and cement America’s leadership in the global financial system.”

Commodity Futures Trading Commission (CFTC)

• Chair Mike Selig posted “The future of finance will be built somewhere. Through Project Crypto, and disciplined, harmonized, minimum-effective-dose regulation, we ensure that it is built here, under rules that protect investors, promote innovation and cement America’s leadership in the global financial system.”

CONGRESS

Senate Agriculture Market Structure Markup

• In opening remarks directed to his Democratic colleagues on the Senate Agriculture Committee, Chair John Boozman (R-AR) said, “…we’re committed to continue working with you. And there’s all kinds of mechanisms that we can use to amend this bill in the future, if we choose to, in the sense of a management things like that. So, we appreciate your willingness, like I say, to continue. What we want is a bipartisan bill.”

• Before the markup, Boozman said, “We reached a little bit of an impasse, and so we felt like we needed to move it forward. We will be able to change it as we need to.” (Punchbowl)

• Sen. Cory Booker (D-NJ) said the draft Republican bill “was negotiated with two parties at the table, but it isn’t in accord with the principles we laid out in November in a bipartisan way.” (Punchbowl)

• During the markup, Booker said, “To be clear, the product put before us today is not the bipartisan draft we’re working on. Right now, our inability to work together and move together in this final process is undermining our ability to get it done.” He added, “The White House has made this infinitely harder.” (Decrypt)

• Of White House involvement in the Senate negotiations, Sen. Elissa Slotkin (D-MI) said, “It just feels like the White House came in on top of everything and said, ‘well, you’re doing this work and you’re being diligent and you’re being the deliberative body, but we want what we want.’” (Punchbowl)

• Slotkin added, “I’m just disappointed that we’re here where we are. It feels like the White House came in and said… ‘We’re gonna shortcut what you’re doing and turn this into a partisan issue’, when it doesn’t have to be.” (Decrypt)

• Slotkin also said, “The ethics piece, to me, is a big part of it. I know the other side would be having a conniption if this was Joe Biden or Barack Obama. It’s just an enormous amount of money.” (Decrypt)

• Sen. Adam Schiff (D-CA) said, “It’s going to need to include ethics language. It should cover all federal officials… from the president on down.” (Decrypt)

• Sen. Raphael Warnock (D-GA) released a statement after the markup, saying, “I am bitterly disappointed that the majority chose to abandon the bipartisan pathway that is needed to pass a bill into law. While I voted no today, I am not done working on this legislation. The bipartisan draft included some very strong policy provisions, many of which will help protect consumers who trade and invest in crypto. When I was elected to the Senate, I promised that I would always center the people, and I take that commitment seriously. I look forward to continuing to work with the majority, with consumers and investors, and with industry stakeholders to pass a market structure bill into law that protects consumers and ensures that there are clear rules for digital asset investors, customers, and businesses.” (Press release)

• Sen. Dick Durbin (D-IL) released a statement after the markup, saying, “The 2008 financial crisis was a wake-up call to Congress and led to the creation of the Consumer Financial Protection Bureau and the Dodd-Frank Act. With the rise of cryptocurrency, we can’t repeat the 2008 mistakes in 2026. Congress must regulate this industry, which is a risky, volatile, and unpredictable investment. Now that Senate Agriculture Committee Republicans have advanced this partisan legislation, I strongly advise the full Senate to pause this advancement and work to provide meaningful protections and transparency for consumers, instead of rubber stamping an industry that President Trump is using to enrich himself and his family. Rushing this process is unwise and poses a serious danger to the U.S. financial system.” (Press release)

• Durbin also posted “Americans have lost more than $333 million to crypto ATM scams. I introduced an amendment to a crypto bill that would give law enforcement the tools to go after these scams and their perpetrators, but Senate Republicans voted it down.”

• Durbin also posted “There were already bipartisan negotiations to pass a cryptocurrency bill that would have provided more meaningful guardrails on the industry, but Republicans threw it out. Why? So President Trump and his crypto allies can profit off their own personal cryptocurrencies.”

• Sen. Cynthia Lummis (R-WY) posted “Great to see digital asset market structure pass SenateAgGOP. We are one step closer to getting this legislation to POTUS’ desk, and I look forward to continuing to work closely with my colleagues across the aisle to make America the digital asset capital of the world.”

Nomination of Kevin Warsh as Federal Reserve Chair

• Sen. Cynthia Lummis (R-WY) released a statement on President’s Trump’s selection of Kevin Warsh to serve as the Chairman of the Federal Reserve, saying, “Now more than ever, we need a Federal Reserve that embraces digital assets and financial innovation, not one that shuns advancement. I applaud President Trump’s decision and look forward to hearing Kevin Warsh’s plans to undertake needed reforms to the make the Fed more transparent and accountable to Congress.” (Press release)

• Rep. Tom Emmer (R-MN) posted “Kevin Warsh is another outstanding pick by POTUS. I hope to sit down with him soon to discuss the importance of maintaining America’s status as the crypto capital of the world and look forward to his swift confirmation in the Senate.”

Miscellaneous

• House Judiciary Dems posted “Trump’s DOJ has created a prosperous subculture of “Friends of Trump” lawyers who help wealthy criminals dodge prosecution and get pardons. ‘Bitcoin Jesus’—a crypto billionaire accused of evading $50 million in taxes—fled to Spain and hired—what do you know!—the same lawyer who defended Trump in the J6 investigation and the classified documents case. The result? No guilty plea or prison time. He wrote a check and walked free. In Trump’s Gangster State, tax evasion isn’t a crime if you can get to the right people.”

• Sen. Mazie Hirono (D-HI) posted “Last year, this regime eased crypto-crime enforcement. And now, a recent investigation reveals that a top DOJ official held over $150,000 in cryptocurrency when he made the decision. This regime may let corruption and conflict of interest fly, but I don’t.”

• Rep. Young Kim (R-CA) posted “President Trump is doing everything he can to ensure America is the world capital of crypto. It’s time for the Senate to do their part and pass the CLARITY Act so we can unleash the golden age of American crypto innovation.”

• Rep. Warren Davidson (R-OH) posted “Chinese people don’t even like Chinese money. Instead, China is working with Democrats and Europeans to build a Central Bank Digital Currency backed by digital ID - communist money. Sadly, Republicans have proven incapable of banning it. President Trump’s full Digital Asset Executive Order should become law. 1. Ban CBDC 2. Protect self-custody. 3. Stablecoins 4. Market structure”

What I’m Reading This Week

• Trump Regulators Say They Are Ready to Lay Out Crypto Rules to Foster Growth, Dylan Tokar, The Wall Street Journal.

About Zero One Strategies

Zero One Strategies is a specialized government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com

www.ZeroOneStrategies.com

This week in federal digital asset policy, Congressional activity remains uncertain as a major winter storm has kept many lawmakers from returning to Washington. The Senate Agriculture Committee’s scheduled markup on digital asset market structure legislation may be delayed as a result. Chair John Boozman (R-AR) has released updated bill text, though it currently lacks support from committee Democrats, setting the stage for a likely partisan markup once it proceeds.

The Senate Banking Committee has indicated it will shift its attention from market structure to housing legislation, planning to return to digital asset legislation later in March. However, the schedule could slip further if Congress fails to pass government funding by Friday, triggering a federal shutdown.

On the regulatory front, the SEC and CFTC will hold a joint event this week focused on interagency coordination and progress toward achieving President Trump’s goal of making the United States the global leader in digital assets.

Read more below

Congress

Hearings

Last week

• On January 21, the House Small Business Rural Development, Energy, and Supply Chains Subcommittee held a hearing on Empowering Rural America Through Investment in Innovation.

This week

• On January 27, the Senate Agriculture, Nutrition and Forestry Committee is scheduled to hold a markup of crypto market structure legislation.

Upcoming

• On February 4, the House Financial Services Capital Markets Subcommittee holds a hearing on A New Day at the SEC: Restoring Accountability, Due Process, and Public Confidence.

• On February 4, the House Financial Services Committee holds a hearing on The Annual Report of the Financial Stability Oversight Council.

• On February 11, the House Financial Services Committee holds a hearing on Oversight of the Securities and Exchange Commission.

Legislation

• The House Financial Services Committee passed the Combating Money Laundering in Cyber Crime Act of 2025 to strengthen the section 1960 authority of the United States Secret Service to investigate various crimes related to digital asset transactions and to counter transnational cyber criminal activity, including unlicensed money transmitting businesses, structured transactions, and fraud against financial institutions. (Text)

• Senate Agriculture Chair John Boozman (R-AR) released the Republican draft of his committee’s market structure legislation. (Text)

• House Agriculture Committee Ranking Member Angie Craig (D-MN) introduced the Presidential Conflicts of Interest Accountability Act to require the President and Vice President and their immediate family members to disclose financial interests and divest of any financial interest posing a potential conflict of interest. (Text)

Correspondence

• The OCC responded to a letter from Sen. Elizabeth Warren (D-MA) regarding concerns with World Liberty Financial’s application to establish a national trust bank. The response from Comptroller of the Currency Jonathan Gould states “…it is vital the OCC return to normal order. This means adhering to the law and reviewing all applications, including applications to establish national banks, in an apolitical, nonpartisan and objective manner, supporting both innovative and traditional approaches to the very old business of banking.” (Letter)

Trump Administration

Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC)

• SEC Chair Paul Atkins and CFTC Chair Michael Selig will hold a joint event on January 27 to discuss harmonization between the two agencies and their efforts to deliver on President Trump’s promise to make the United States the crypto capital of the world. (Register)

• CFTC Chair Mike Selig published an op-ed in the Washington Post entitled “America’s Financial Markets are Ready for a Golden Age,” announcing the launch of the “Future-Proof” initiative at the CFTC. (Op-ed)

Noteworthy Quotes and Events

ADMINISTRATION

White House

• In remarks at the World Economic Forum at Davos, President Trump said, “I’m also working to ensure America remains the crypto capital of the world… Congress is working very hard on crypto market structure legislation… Which I hope to sign very soon, unlocking new pathways for Americans to reach financial freedom.” (Press release)

• The White House posted “Thanks to President Trump, America is the CRYPTO CAPITAL of the WORLD”

• White House AI & Crypto Czar David Sacks told CNBC, “We’re not going to have a separate banking industry and crypto industry. It’s going to be one digital assets industry… I bet you over time the banks like the idea of paying yield because they’re going to be in the stablecoin business… Everyone offering the same product should be regulated in the same way.” (CoinDesk)

• On market structure legislation, Sacks said, “A good compromise leaves everyone a little bit unhappy.” (CoinDesk)

• President’s Council of Advisors for Digital Assets Executive Director Patrick Witt posted “‘No bill is better than a bad bill.’ What a privilege it is to be able to say those words thanks to President Trump’s victory, and the pro-crypto administration he has assembled. But let’s not kid ourselves. There *will* be a crypto market structure bill — it’s a question of when, not if. Assuming a multi-trillion dollar industry will continue to operate indefinitely without a comprehensive regulatory framework is pure fantasy. So, do we take advantage of the opportunity to pass a bill now, with a pro-crypto President, control of Congress, excellent regulators at the SEC and CFTC to write the rules, and a healthy industry? Or do we fumble the ball and allow Dems to write punitive legislation in the wake of a future financial crisis à la Dodd-Frank? You might not love every part of the CLARITY Act, but I can guarantee you’ll hate a future Dem version even more. Let’s keep working to improve the product, recognizing that compromises will need to be made in order to get 60 votes in the Senate, but let’s not let perfect be the enemy of the good.”

Securities and Exchange Commission (SEC)

• The SEC posted “Save the Date! We’re partnering with CFTC on Jan. 27 to discuss harmonization between our agencies and our efforts to deliver on realDonaldTrump’s promise to make the US the crypto capital of the world.”

• The SEC also posted “NEXT WEEK: We are partnering with the CFTC to hold a joint event on harmonization and U.S. financial leadership in the crypto era. The event, held at CFTC headquarters, will be open to the public and livestreamed on our website.”

Commodity Futures Trading Commission (CFTC)

• CFTC Chair Mike Selig posted “There is no better place in the world to build than the CRYPTO CAPITAL of the WORLD. Thanks to POTUS President Trump’s leadership, the CFTC is modernizing its rules and regulations to ensure that the future of crypto and onchain finance is Made in America.”

• Selig also posted “Today, I am launching the ‘Future-Proof’ initiative at the CFTC. We are at a pivotal moment in the evolution of American financial markets. The CFTC must be equipped to serve the markets of the future. The same spirit that drove American farmers to cultivate the Great Plains is inspiring today’s innovators to leave tradfi and conquer unexplored territories. They are leveraging technologies like blockchain to modernize legacy financial systems and build entirely new ones. Instead of fostering ingenuity with new rules, the Biden administration regulated by enforcement — subjecting novel products like digital assets and perpetual futures to legacy rules that could not fit the product, but could fit the prosecutor. Under my leadership, the CFTC is charting a new course. Just as American businesses are modernizing legacy financial systems by harnessing new technologies, the CFTC must upgrade its approach to unleash innovation. We will review our existing rules and regulations and modernize these requirements to ensure a level playing field for new entrants and incumbents alike. Our guidelines should not just fit the product, but also serve a tailored regulatory purpose. Markets shunned by the Biden administration are booming today. Prediction markets have exploded in popularity as participants seek to hedge risks and test their abilities to forecast truth. The digital asset economy has grown from a mere curiosity to a $3 trillion market. The Innovation Advisory Committee will play a major role in Future-Proofing the CFTC’s regulatory approach by advising the agency as it develops purpose-fit rules for prediction markets, digital assets and other emerging asset classes. In the days ahead, we will announce additional policy changes at the CFTC designed to Future-Proof it against rogue regulators. We will end regulation by enforcement and ensure new markets flourish at home with tailored rules that keep American markets the best in the world. The CFTC’s approach will be to deliver the minimum effective dose of regulation — nothing more and nothing less. The agency’s policymaking divisions will develop clear rules of the road for market participants that will be codified through notice-and-comment rulemaking. President Trump POTUS has assembled a dream team in the financial regulatory space, including davidsacks47, SecScottBessent and SECPaulSAtkins. I am humbled to be on this roster. The CFTC will seize this generational opportunity to Future-Proof its approach to regulation and ensure that the great innovations of today and tomorrow are made in America.”

CONGRESS

Market Structure

• Senate Agriculture Chair John Boozman (R-AR) issued a statement upon release of the Republican market structure legislative text, saying, “I appreciate Senator Booker and his staff for working with us and providing thoughtful additions as we advance consumer protections and provide new authority to the CFTC. While differences remain on fundamental policy issues, this bill builds on our bipartisan discussion draft while incorporating input from stakeholders and represents months of work. Although it’s unfortunate that we couldn’t reach an agreement, I am grateful for the collaboration that has made this legislation better. It’s time we move this bill, and I look forward to the markup next week.” (Press release)

• In response, the spokesperson for Sen. Cory Booker (D-NJ) said the Senator “has been working in good faith with Senator Boozman for months to craft market structure legislation that can get broad support in the Senate. He is committed to the shared goal of passing legislation that can get signed into law. He will continue to work with the Chairman to get there.” (Politico)

• On the Senate Agriculture bill, Sen. Kirsten Gillibrand (D-NY) said she is “very optimistic” and added, “Senators have been working on a bipartisan basis for the last six months pretty intensely, and we have two different bills… because these types of digital assets have some characteristics of both commodities and securities, you need regulation under both those committees… I think both senators on the Banking and Ag committee are working in a bipartisan way and in good faith… hopefully the senators will work on a bipartisan basis to amend that draft to make it stronger, to make it better, to continue their negotiations in the areas where there wasn’t resolution… My hope is that those senators can get back to the drawing board and try to re-include some of those compromises that I thought were very strong.” (CNBC)

• On the Senate Banking Committee bill, Gillibrand said, “I think that people are going to keep working over the next few weeks… people want to get this done now.” (CNBC)

• On the yield issue, Gillibrand said she is “optimistic that we can find some common-sense bipartisan language that satisfies everyone’s concerns on this issue… I thought we had done that in GENIUS, but if it needs more work, we will keep working. We had very strong language to that effect that we were fine with rewards and points and other programs, but that you couldn’t be offering interest-like products on stablecoins. We wanted to make sure that no consumer was confused about what a stablecoin is versus what a dollar sitting in a bank account is because stablecoins are not FDIC insured. We made sure that every stablecoin was backed by a U.S. dollar or a U.S. dollar equivalent and so we thought the compromise and the language that we concluded with in that bill was very strong.” (CNBC)

• Gillibrand added, “I don’t want China or Asia or other parts of the world to have the benefit of these industries because we are unwilling or unable to regulate it. If we want to protect consumers and we want to protect the traditional financial services, the best way to do... is to regulate it. It’s the one thing that actually makes it possible to compete worldwide.” (CNBC)

• House Financial Services GOP posted “Chairman RepFrenchHill on the CLARITY Act: ‘This is an important priority not only for President Trump, but for Republicans in the House, where we’ve worked for 4 years on market structure legislation and we’ve passed it twice... You cannot pass a bill just for dollar-backed stablecoins, just like the GENIUS Act that President Trump signed into law last year, without market structure. It’s like passing a bill authorizing cell phones, but there’s no cell towers. This bill is very important and I agree with the President that I hope he can sign it soon.’”

• The House Committee on Agriculture posted “RepFrenchHill is spot on—it’s time to get CLARITY to the President’s desk. This bipartisan bill will give clear rules of the road to developers and users of digital assets and unlock innovation in our financial markets. It’s an honor to partner with RepFrenchHill on this.”

• Rep. Tom Emmer (R-MN) posted “Agree with our Chairman RepFrenchHill. We need to get market structure legislation to President Trump’s desk ASAP. The House passed the CLARITY Act in July 2025 with the support of every Republican and nearly 80 Democrats. The Senate must get this done.”

• Sen. Cynthia Lummis (R-WY) posted “The U.S. doesn’t sit on the sidelines—we lead. The CLARITY Act ensures we stay ahead in digital assets instead of watching from the bench while other nations set the rules. With a pro-crypto president ready to sign, let’s remind the world what American leadership looks like.”

• Lummis also posted “Real progress requires real coalition-building. The CLARITY Act brings together voices across the digital asset ecosystem who are ready to move forward. We have the administration. We have the momentum. What we need now is action before the opportunity slips away.”

Miscellaneous

• Rep. Scott Perry (R-PA) posted “‘If you have 51 people on the floor of the Senate doing their job, they can demand a vote on any measure.’ Chip Roy is spot on - and it’s really that simple. The Senate must vote on the SAVE Act - along with other no-brainer bills, like eliminating Central Bank Digital Currency.”

• Rep. Warren Davidson (R-OH) posted “There is no more consequential difference between patriots and globalists. The globalists cannot control the money by winning CBDC and digital ID. It is “’one ring to rule them all.’”

• Financial Services GOP posted a quote from Rep. Scott Fitzgerald (R-WI) supporting the Combating Money Laundering in Cyber Crime Act of 2025, “’The United States Secret Service plays a critical role in investigating cyber enabled financial crime, including the illicit use of digital assets through its global network of cyber fraud task forces and its long standing expertise in financial investigations. Today, a growing share of cyber crime involves unlicensed money transmitting businesses, structured transactions designed to evade reporting requirements, and fraud targeting financial institutions, as defined under the Bank Secrecy Act, which are generally not federally insured.’”

• Sen. Bill Hagerty (R-TN) posted “The GENIUS Act, which I proudly sponsored, is now law. This framework makes the U.S. the crypto capital of the world, strengthens US dollar dominance, protects consumers, and fuels innovation.”

• Sen. Elizabeth Warren (D-MA) released a statement on the response letter received from the OCC, stating, “President Trump’s unprecedented crypto corruption has metastasized to the banking system. Comptroller Jonathan Gould – who serves at the pleasure of President Trump – is refusing to delay the review of World Liberty Financial’s bank charter application until Trump and his family divest from the company. The OCC’s review is a sham. We have never seen financial conflicts of this magnitude and no crypto market structure legislation should pass Congress without guardrails to stop this kind of corruption.” (Press release)

What I’m Reading This Week

• An Unlikely Source of Crypto Innovation: Afghanistan, Emile Ducke, The New York Times.

• Quantum Computing Is Already Hitting Bitcoin—Here’s How, Lockridge Okoth, beincrypto.com.

About Zero One Strategies

Zero One Strategies is a specialized government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com

www.ZeroOneStrategies.com

This week in digital asset federal policy, the path forward for the Senate Banking Committee market structure bill is unclear in the aftermath of last week’s turmoil. Committee Chair Tim Scott (R-SC) postponed the scheduled markup and vote on the Digital Asset Market Clarity Act after late-stage backlash led by Coinbase CEO Brian Armstrong’s public withdrawal of support. A raft of amendments to the heavily negotiated text, notably bipartisan amendments from Sens. Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) to further restrict stablecoin rewards, emerged as key flashpoints for industry and some lawmakers. Scott pledged further negotiations to revise the draft and build bipartisan and industry backing before any future markup is set.

At the same time, the Senate Agriculture Committee has moved ahead on its own digital asset market structure proposal, scheduling a markup for next week, with legislative text expected to be released on January 21 amid ongoing bipartisan talks.

In the Administration, the CFTC is seeking nominations for their Innovation Advisory Committee.

Read more below

Congress

Hearings

Last week

• On January 13, the House Ways and Means Trade Subcommittee held a hearing on Maintaining American Innovation and Technology Leadership.

• On January 13, the House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee held a hearing on Delivering for American Consumers: A Review of FinTech Innovations and Regulations.

This week

• On January 21, the House Small Business Rural Development, Energy, and Supply Chains Subcommittee holds a hearing on Empowering Rural America Through Investment in Innovation.

Upcoming

• On January 27, the Senate Agriculture, Nutrition and Forestry Committee holds a markup of crypto market structure legislation.

Legislation

• Senate Banking Committee Chair Tim Scott (R-SC) released a manager’s amendment ahead of the expected markup of market structure legislation. (Text)

• Sens. Cynthia Lummis (R-WY) and Ron Wyden (D-OR) introduced the Blockchain Regulatory Certainty Act (BRCA) to clarify that software developers and infrastructure providers who do not control user funds are not money transmitters under federal law. The BRCA was included in the Senate Banking market structure legislative text. (Text)

Correspondence

• Senate Judiciary Committee Chair Chuck Grassley (R-IA) and Ranking Member Dick Durbin (D-IL) sent a letter to Senate Banking Chair Tim Scott (R-SC) and Ranking Member Elizabeth Warren (D-MA) expressing concern with changes to Section 1960 in market structure legislative text, saying, “Section 604 of the legislation weakens 18 U.S.C. § 1960, a federal criminal code provision prohibiting unlicensed money transmitting businesses (MTB), by providing a sweeping exemption to non-controlling developers or providers from critical portions of Titles 18 and 31. The Senate Judiciary Committee—which has jurisdiction over Title 18—was not consulted or given the opportunity to meaningfully review the proposed changes in advance.” A Banking Committee spokesperson responded that the same language is included in the Blockchain Regulatory Certainty Act (BRCA), which the Parliamentarian ruled is entirely within the jurisdiction of the Banking Committee. (Letter via PoliticoPro)

• Sen. Elizabeth Warren (D-MA) sent a letter to Comptroller of the Currency Jonathan Gould requesting the OCC delay review of World Liberty Financial’s bank-charter application “until President Trump divests from WLF and eliminates all financial conflicts of interest involving himself or his family and the company.” (Letter)

• Warren also sent a letter to Securities and Exchange Commission Chair Paul Atkins requesting information about how the agency will protect investors following President Trump’s Executive Order allowing pension funds and retirement accounts to hold cryptocurrency assets. (Letter)

• House Financial Services Ranking Member Maxine Waters (D-CA), and Reps. Sean Casten (D-IL) and Brad Sherman (D-CA) sent a letter to SEC Chair Paul Atkins expressing concern with “the SEC’s significant pullback from its responsibility to investigate and pursue enforcement actions involving crypto assets” and encouraging the SEC to pursue an enforcement action against Tron Foundation founder. (Letter)

Publications

• The Senate Banking Committee published fact sheets on the CLARITY Act market structure legislation. (Fact sheet)(Myth vs. Fact)

• Sen. Richard Blumenthal (D-CT) published an op-ed in FOX News expressing his concerns about the potential negative impact of crypto market legislation on the U.S. financial system, saying, “In racing to finish the crypto industry’s wish list before midterms, Congress should remember what happened the last time crypto impacted legacy banking… Silicon Valley Bank, Signature Bank and First Republic Bank raked in profits when venture capital and crypto boomed, but they all learned that tech money comes fast but leaves even faster — threatening the stability of banking and leaving taxpayers and investors on the hook for losses. These bank failures provide a chilling warning for anyone backing the crypto lobby’s efforts to further cement the unsavory world of crypto into the American economy… Unless Congress acts to put some guardrails on the recently passed GENIUS Act, it will only be a matter of time before the industry is clamoring for bailouts again.” (Op-ed)

Trump Administration

Commodity Futures Trading Commission (CFTC)

• The CFTC launched a rebranded Innovation Advisory Committee, formerly the Technology Advisory Committee, to provide expertise and recommendations on innovation in financial markets. The CEO Innovation Council participants will be charter members. Nominations for additional IAC members are due by January 31. (Press release)

Noteworthy Quotes and Events

ADMINISTRATION

White House

• White House AI & Crypto Czar David Sacks posted “Passage of market structure legislation remains as close as it’s ever been. The crypto industry should use this pause to resolve any remaining differences. Now is the time to set the rules of the road and secure the future of this industry. The White House remains committed to working with Chairman Scott, members of the Senate Banking Committee, and industry stakeholders to pass bipartisan crypto market structure legislation as soon as possible.”

• Executive Director of the President’s Council of Advisors for Digital Assets Patrick Witt posted “For crypto and tradfi stakeholders alike, remember that for every one issue in the market structure draft giving you heartburn, you’re getting several pieces of candy. That’s how this works. Zoom out, maintain perspective.”

• Witt also posted “Lost in yesterday’s disappointing postponement news is the fact that Senate Banking Democrats were prepared to vote unanimously against a bipartisan bill that included so many concessions to them that it ultimately cost industry support. Bad faith.”

• Witt also posted “UPDATE: we have received confirmation from DOJ that the digital assets forfeited by Samourai Wallet have not been liquidated and will not be liquidated, per EO 14233. They will remain on the USG balance sheet as part of the SBR.”

Federal Reserve

• In remarks on the Outlook for the Economy and Monetary Policy, Vice Chair for Supervision Michelle Bowman said, “Since the President appointed me as Vice Chair for Supervision last June, we have made meaningful progress on several priorities that will improve transparency, efficiency, and focus within our supervisory and regulatory framework. My objective is to ensure that supervision and regulation are appropriately tailored, risk focused, and grounded in our statutory responsibilities. Congress has also taken several steps in this regard. The passage of the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), along with ongoing consideration of banking and other digital assets legislation, underscores the importance of regulatory clarity as innovation enables the banking and financial systems to continue to evolve. We are actively working to implement the Federal Reserve’s responsibilities under this new law.” (Remarks)

CONGRESS

Senate Banking Committee Markup Pause

• Senate Banking Chair Tim Scott (R-SC) posted “I’ve spoken with leaders across the crypto industry, the financial sector, and my Democratic and Republican colleagues, and everyone remains at the table working in good faith. As we take a brief pause before moving to a markup, this market structure bill reflects months of serious bipartisan negotiations and real input from innovators, investors, and law enforcement. The goal is to deliver clear rules of the road that protect consumers, strengthen our national security, and ensure the future of finance is built in the United States.”

• Sen. Cynthia Lummis (R-WY) posted “Thanks to Chairman Scott’s leadership, we are closer than ever to giving the digital asset industry the clarity it deserves. Everyone is still at the negotiating table, & I look forward to partnering with him to deliver a bipartisan bill the industry— & America— can be proud of.”

• Lummis also posted “We have spent thousands of hours working in good faith to deliver a bill that offers the digital asset industry the clarity it needs to thrive on U.S. soil and solidify America’s leadership in financial innovation for generations to come. Today’s response from some in the industry proves they just are not ready, and while I am deeply disappointed, I am committed to taking this feedback and partnering with the industry to deliver a product that helps them thrive. When Senator Gillibrand and I started this mission to create a clear and commonsense framework for digital assets more than four years ago, our goal was to protect consumers and ensure digital asset innovation happens here on U.S. soil, and that mission has not changed. Everyone is still at the negotiating table and I’m incredibly grateful to Chairman Scott for his tireless efforts and continued commitment to finding common ground.”

• Lummis said, “It’s going to take a while to develop a plan on how to make another run at it. I’m not going to reach out to do it immediately. People need a chance to soak in what happened.” (Politico)

• Lummis also said, “I feel like I got run over by a Mack truck. We’ll pick up the discussion in February in some manner. But I don’t know when, and I don’t exactly know how.” (Punchbowl)

• Lummis also said, “‘It wasn’t just the Coinbase comments on Twitter. As I continued to visit with members last night, it just sounded like there was too much reticence about going forward today. They just weren’t ready.’” (Punchbowl)

• The night before the markup, regarding his amendment with Sen. Angela Alsobrooks (D-MD) to further limit stablecoin yields, Sen. Thom Tillis (R-NC) said, “I’ve let my chair know I’m going to move forward with the amendment, and I think it’ll get bipartisan support.” (Punchbowl)

• After the markup was paused, Tillis said, “I want a solution here. I do not want us to fail, because this is the future of our banking system… Part of what we need to do is really get some principles in the room and have executive level discussion on some of these issues. I believe that will probably get us closer to a consensus than anything.” (Punchbowl)

• Tillis also said he is “optimistic we’ll have a successful markup this quarter.” (Politico)

• Sen. Mark Warner (D-VA) said, “I think there is a way forward.” (Politico)

• Warner also said, “We have been working really in good faith. But we’ve still got issues to close out. We gotta find a way to link arms.” (Punchbowl)

• Warner also said the crypto industry has gotten “fairly used to virtually getting everything they want.” (Punchbowl)

• Sen. John Barrasso (R-WY) posted “Chairman Scott’s mission is to keep America the global financial leader. The innovative crypto industry is one key part of our continued dominance now and in the future. Tim is effectively working with all stakeholders to set new guidelines that boost investment in the United States and protect consumers. I am confident he will succeed.”

• Sen. Bill Hagerty (R-TN) posted “I applaud Chairman SenatorTimScott for his leadership, as well as SenLummis and the White House, for working day and night with all the members of the Banking Committee on the crypto market structure legislation. I am confident we will get to a consensus product in short order. It took hard work and dedication to get the GENIUS Act across the finish line last year, and this is no different. Because of GENIUS, America will become the crypto capital of the world, and what we produce on market structure will significantly improve the United States’ posture. I am fully committed to continuing this important work with my colleagues on market structure and look forward to passing legislation that ensures this innovative technology flourishes in the United States for decades to come.”

• Sen. Pete Ricketts (R-NE) posted “Getting the policy right is more important than getting it done fast. But the goal remains the same: making sure the digital asset market is both innovative and predictable.”

• Sen. John Kennedy (R-LA) said, “We should have released the bill and the amendments and given senators, and more importantly, the American people, a chance to digest it, then hold a long hearing to get feedback. That was my request, but it was declined, and that was Timmy’s right to do it the way he wants to. He is the chairman.” (Punchbowl)

• Sen. Dave McCormick (R-PA) posted “Earlier this week I had a productive discussion with PA's community bankers in Juniata County. We must strike the right balance — embrace and accelerate crypto innovation while ensuring banks can compete fairly and the banking system remains strong.”

• Rep. Haley Stevens (D-MI) posted “This week, I have been closely following the important debate in the Senate about the future of digital asset market structure. I cosponsored and voted to pass the Clarity Act in the House because American innovators deserve regulatory certainty. Clear rules of the road will unlock increased access to banking and credit for all communities, and enhance American security as the next generation of global financial infrastructure is built. I am glad to see reports that all parties remain at the table, and I encourage my Senate colleagues to keep working together to get this critical bipartisan legislation across the finish line.”

Senate Agriculture Markup

• In releasing the schedule for upcoming committee consideration of their market structure legislation, Senate Agriculture Chair John Boozman (R-AR) said, “This schedule ensures transparency and allows for thorough review as the committee moves forward with legislation to provide clarity and certainty for crypto markets. I’m grateful to Senator Booker, who continues to be a great partner, as well as our to staff for their hard work and dedication to create new rules to protect consumers while also supporting American innovation.”

• In response to the breakdown in momentum in the Senate Banking Committee, Sen. Cory Booker (D-NJ) said “the negotiations are ongoing.” (Punchbowl)

• Sen. Andy Kim (D-NJ) said, “Let’s just say my concerns have not been addressed.” (Punchbowl)

Miscellaneous

• Sen. Richard Blumenthal (D-CT) posted “In racing to finish the crypto industry’s wish list, Congress should remember the lesson of Silicon Valley Bank—tech money comes fast but disappears even faster, leaving taxpayers & investors on the hook for bailouts & losses.”

• Rep. Buddy Carter (R-GA) posted “When it comes to crypto, one thing is for sure: we need to get the framework legislation right the first time. We made HUGE steps with the Genius Act. Let’s keep that momentum going with the Clarity Act.”

• Sen. Cynthia Lummis (R-WY) posted “Developers who can’t touch, move, or control your crypto shouldn’t be regulated like they can. That’s not controversial, it’s just common sense. Proud to work with RonWyden to bring sanity to digital asset regulation while keeping every AML protection in place.”

• Lummis also posted “The digital asset industry can’t wait any longer for regulatory clarity. This bipartisan Clarity Act provides the framework America needs to lead in financial innovation while protecting consumers. Both parties contributed to every section. Let’s get this done!”

• Lummis also posted “After months of hard work, we have bipartisan text ready for Thursday’s markup. I urge my Democrat colleagues: don’t retreat from our progress. The Digital Asset Market Clarity Act will provide the clarity needed to keep innovation in the U.S. & protect consumers. Let’s do this!”

• Rep. Warren Davidson (R-OH) posted “The future of money will determine the future. Either we stop CBDC & digital ID while protecting self-custody and the fundamental right to transact or western civilization is effectively lost.”

• Financial Services GOP posted “Chairman RepFrenchHill: ‘I’m really looking forward to the Senate’s market structure markup tomorrow and I hope this means that we’re moving closer toward having a law that President Trump can sign, which is one of his commitments to have both stablecoin and market structure bills signed into law.’”

• Financial Services GOP also posted “WATCH: Chairman RepFrenchHill to OANN on Committee Republican staff debanking report: ‘Debanking is not new. Obama and Biden are two sides of the same coin, and I believe every legal business that’s following the laws of the state following the federal laws should have the opportunity to find financial services. Our investigation by last Congress and in this Congress found that they were systematically debanked because these prior administrations did not favor digital asset businesses - they would stop its access to the banking industry, and that contributed to many losses during the four years of Biden like financial losses.’”

• Financial Services GOP also posted “WATCH: Chairman RepFrenchHill to OANN on debanking: ‘If you can debank the President of United States, who else can you debank? As someone who’s been in finance essentially my whole career, I can’t stand the lack of transparency and the lack of fairness in that…. Debanking, to me, is when the government goes to that little bank and says, you may not do any business with anyone involved in this industry. Well, why? Well, we don’t like that industry.’”

• Sen. Elizabeth Warren (D-MA) posted “SenBlumenthal is right. As the Senate continues to debate a crypto market structure bill, we must make sure it protect investors, our financial system, and American taxpayers.”

What I’m Reading This Week

• Perpetual Futures Contracts on Cryptoassets, Lee A. Sheppard, Tax Notes.

• Navigating the quantum computing threat landscape for blockchains: A comprehensive survey, Hassan Khodaiemehr, Khadijeh Bagheri, Chen Feng, Computer Science Review.

About Zero One Strategies

Zero One Strategies is a specialized government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com

www.ZeroOneStrategies.com

The Senate Banking Committee is scheduled to hold a markup of its digital asset market structure bill on January 15. Final legislative text remains under development, with key sticking points—such as provisions on stablecoin yields and ethics requirements—still the subject of active negotiation. The session is expected to be a lengthy and contentious one; as Sen. John Kennedy (R-LA) quipped in Punchbowl News, he “would not faint with surprise if there’s about a squillion amendments.”

Meanwhile, the Senate Agriculture Committee had also signaled plans to mark up its version of the market structure legislation on January 15, but Chair John Boozman (R-AR) has indicated he may postpone the session. Boozman is reportedly weighing whether to give more time for bipartisan discussions with Sen. Cory Booker (D-NJ), which have shown signs of progress in recent days.

On the other side of the Capitol, the House Ways and Means Committee is laying the foundation for work on a digital asset tax bill.

Read more below

Congress

Hearings

This week

• On January 13, the House Ways and Means Trade Subcommittee holds a hearing on Maintaining American Innovation and Technology Leadership.

• On January 13, the House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee holds a hearing on Delivering for American Consumers: A Review of FinTech Innovations and Regulations.

• On January 15, the Senate Banking Committee holds a markup on comprehensive digital asset market structure legislation.

Upcoming

• On January 21, the House Small Business Rural Development, Energy, and Supply Chains Subcommittee holds a hearing on Empowering Rural America Through Investment in Innovation.

Legislation

• Reps. Max Miller (R-OH) and Steven Horsford (D-NV) released a discussion draft of their Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields (PARITY) Act to modernize the federal tax code for digital assets. (Text)

Correspondence

• Senate Banking Committee Republicans negotiating a market structure bill sent a “closing offer” to Democratic negotiators early in the week, proposing revisions and additions to legislative text. Bipartisan negotiators met Tuesday to discuss the final sticking points in the offer. (Document)

Trump Administration

Securities and Exchange Commission (SEC)

• On January 27, the SEC Crypto Task Force will be in Miami for stakeholder meetings.

Internal Revenue Service (IRS)

• The IRS released a reminder to taxpayers on updates and tips for this filing season, including “Digital assets reporting requirements: Taxpayers who bought, sold or received digital assets, including cryptocurrency, stablecoins or NFT, must report those transactions. Some taxpayers may receive Form 1099-DA from brokers. Regardless, all taxpayers must answer the digital asset question on Form 1040 and report any related income, gains, or losses.” (Notice)

Noteworthy Quotes and Events

ADMINISTRATION

White House

• On the debated issue of stablecoin yields within the market structure negotiations, Executive Director of the President’s Council of Advisors for Digital Assets Patrick Witt posted “For the anti-rewards/yield crowd currently threatening to withhold their support for the CLARITY Act, I would … remind you that tanking the bill over this issue preserves the status quo which you allege is intolerable. You will have achieved nothing.”

Securities and Exchange Commission (SEC)

• Commissioner Hester Peirce posted “The SEC Crypto Task Force is hitting the road again. We’ll be in Miami on January 27 and want to hear from small, early-stage projects. Email crypto@sec.gov with ‘Miami’ in the subject line + a brief description of your project.”

CONGRESS

Market Structure Markups

• On a market structure markup, Senate Agriculture Chair John Boozman (R-AR) said, “We’re going to have a markup in the very near future. And the reason we’re going to do that is, I don’t think anything would change if we moved the markup several weeks from now, based on past history. At some point, you have to vote. And that’s kind of where we’re at.” (PoliticoPro)

• On a market structure markup, Sen. Cory Booker (D-NJ) said, “It’s not next week yet. And I’ve been so encouraged by [Boozman’s] willingness to get a bipartisan draft. We made a tremendous amount of progress. I’m hoping that we can continue on that and not backslide to the way this place usually works. I’m hopeful.” (PoliticoPro)

• Sen. Catherine Cortez Masto (D-NV) said, “We’re still having conversations, but it’s been very productive — open on both sides to working through all of the issues.” (PoliticoPro)

• Sen. Mike Rounds (R-SD) said, “They’ve made some real, significant advancements, in terms of working through issues. I don’t know that it’s ready to go yet. I do believe you have to fully vet a product as important as this. So, I’m not worried about it getting done on a particular day, this week or next week.” (Punchbowl)

• Sen. Cynthia Lummis (R-WY) said of any further delay in advancing a market structure bill, “I will probably consider hara-kiri. I’m sorry, that wasn’t funny. I just can’t contemplate working this hard for five years on something and have it just not happen.” (Punchbowl)

• Lummis posted “Unhosted wallets. FTX. The Fed hating crypto. Market volatility. Veto of SAB12. We’ve come so far, and we are close to a bipartisan legislation that will stand the test of time.”

• Lummis also posted “The Responsible Financial Innovation Act of 2026: Draws the line between digital asset securities and commodities. Protects Americans with clear safeguards and regulations. Secures the U.S. as the digital asset capital of the world.”

• Sen. Tim Scott (R-SC) posted “When POTUS took office, he did so with a promise to establish the United States as the crypto capital of the world. After months of good-faith, bipartisan negotiations, it’s time to take the next step in making that promise a reality.”

Stablecoin Yields in Market Structure

• On her proposal regarding stablecoin yields, Sen. Angela Alsobrooks (D-MD) said, “I do not oppose paying rewards. I want to make sure that this innovation is able to grow. The point of compromise that I think we’re able to make is to say, we want to make sure that we are not paying interest solely just on a balance, but on activity.” She said she seeks “to make sure that we are not doing anything that mimics a bank-like product without bank-like protections. It’s an issue that’s very important to a number of community banks who provide a tremendous service to underserved communities.” (PoliticoPro)

• Sen. Katie Britt (R-AL) said stablecoin yields is “an issue that we continue to have conversations on… Alabama is built on community banks… I believe in the digital asset space and want to have innovation occur here. I’m excited to have some guardrails and structure in that moving forward. But I also want to make sure that our community bank and lending institutions are on equal footing, with an opportunity to compete in this space for people’s business.” (PoliticoPro)

• Sen. Bernie Moreno (R-Ohio) compared the issue to a “senator 20 years ago that said ‘we have to advocate for Blockbuster’… One thing the United States government should never do is give businesses a competitive advantage over another. This conversation about yield has nothing to do with community banks. It has to do with these massive financial institutions. If they want to revisit GENIUS, count me out, and there is no bill.” (PoliticoPro)

• Moreno also said, “If we’re gonna rehash [the GENIUS Act], then we’re not gonna have a bipartisan bill.” (Punchbowl)

• Sen. Thom Tillis (R-NC) said, “I don’t think that we’ve got a fix on it, but I thought we had a really good discussion about what we have to address. Part of it is getting consensus on recognizing it’s something that has to be addressed. We’ll be looking at language.” (PoliticoPro)

• Sen. John Kennedy (R-LA) said of the yield issue, “It’s important. The bill’s in jeopardy if we don’t work something out.” (Punchbowl)

Ethics in Market Structure

• Sen. Adam Schiff (D-CA) said ethics language must be included and “That needs to be applied to everyone… It’s critical for the country and for the industry. With no one given beneficial, favorable treatment.” (Punchbowl)

• Sen. Ruben Gallego (D-AZ) said, “It is a red line. They need to get it right, or they’re not going to have enough votes to pass this… Right now, they don’t have the ethics right, so, no. They could land almost 90% of everything right, but if they mess up ethics, they don’t have the votes they need.” (Punchbowl)

Miscellaneous

• Rep. Steven Horsford (D-NV) posted “I have long said our economy needs clarity and fairness, not confusion and hidden costs. That’s why I teamed up with Rep. Miller to create the only bipartisan framework for crypto tax rules, the Digital Asset Parity Act. This brings commonsense tax clarity to digital assets, closes loopholes that invite abuse, and protects everyday people from unnecessary burdens in a rapidly evolving market. This is not just for Wall Street, it is about fair rules for consumers, innovators, and Main Street.”

• Rep. Young Kim (R-CA) posted “Crypto leadership is the next frontier of American innovation. 2026 must be the year that we sign the CLARITY Act into law & secure America’s spot as the world’s leader in crypto!”

• Sen. Tina Smith (D-MN) posted “Wish he cared about all Americans as much as he cares about his oil industry and crypto benefactors.”

• Rep. Martin Stutzman (R-IN) posted “People want their money in a safe place. A free market system for digital assets with federal guardrails will create an environment where crypto can be utilized freely while also protecting consumers from bad actors.”

• Rep. Warren Davidson (R-OH) posted “1. Ban Central Bank Digital Currency 2. Protect self-custody and the right to transact - Keep Your Coins Act 3. Clear bright line tests for tokenized security versus tokenized commodity versus tokenized real world assets. 4. House fixes to the GENIUS Act”

• Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee Elizabeth Warren (D-MA) issued a statement in response to World Liberty Financial filing an application for a US bank charter, “President Trump’s crypto company just applied for a federal banking charter. The application will be reviewed, and presumably approved, by a regulator that serves at the pleasure of the President. We have never seen financial conflicts or corruption of this magnitude – and the Senate must address this in its consideration of crypto market structure legislation in the coming days. Our banking regulators are supposed to ensure that businesses and households have fair access to credit and that our economy benefits from a stable banking system, not enrich their boss — the President of the United States.” (Press release)

What I’m Reading This Week

• Who Reports Cryptocurrency to the IRS?, Jeffrey L. Hoopes, Tyler S. Menzer, and Jaron H. Wilde, Internal Revenue Service.

• Tax Court Allows Taxpayers to Shield Crypto Information, John Colvin and Elliot Schwinn, Tax Notes.

• Tax Professionals Hope for New Stablecoin Stance in 2026, Mary Katherine Browne, Tax Notes.

• Six Ways Congress Can Make Crypto Taxes Work for Everyday Users, Jason Somensatto, Coin Center.

About Zero One Strategies

Zero One Strategies is a boutique government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com

www.ZeroOneStrategies.com

Full text of the Digital Asset PARITY Act discussion draft is available here.

Below are an at-a-glance summary and detailed summary of the Digital Asset PARITY Act discussion draft. A PDF of these summaries is here.

For a comprehensive (yet accessible!) primer on digital asset tax policy and updated summaries of major legislative proposals and administrative actions, see the Zero One Strategies Digital Asset Tax Policy Primer.

Please reach out to stacey@zeroonestrategies.com if you have any questions!

Discussion Draft: Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields (PARITY) Act

Brief Summary

Section 1. De Minimis Gain from Sale or Exchange of Regulated Payment Stablecoins

• For the sale or exchange of regulated payment stablecoins: Gain excluded from gross income, loss recognition allowed.

• For routine consumer payments using regulated payment stablecoins: Per-transaction de minimis exclusion up to $200, possible annual cap to apply.

Section 2. Sources of Income (Non‑U.S. Trading Safe Harbor)

• Expands the current “trading safe harbor” so non‑U.S. persons can trade digital assets through U.S. intermediaries or exchanges for their own account without being treated as engaged in a U.S. trade or business, excluding dealers.​

• Limits the safe harbor to digital assets and transactions of a kind customarily dealt in and consummated on digital asset exchanges, tying the rule to standard market practice.​

Section 3. Digital Asset Lending

• Extends §1058 nonrecognition to lending of fungible digital assets, clarifies that fixed‑term loans in ordinary course qualify, and confirms basis and income‑inclusion mechanics for substitute payments and the return of lent assets.​

Section 4. Wash Sales for Digital Assets

• Applies wash‑sale loss disallowance to a broad category of “specified assets” including securities and actively traded digital assets, related derivatives, and contracts.

Section 5. Mark‑to‑Market Election for Digital Asset Dealers and Traders

• Allows dealers and traders in digital assets to elect mark‑to‑market treatment, but only for digital assets that meet an “actively traded” standard.​

Section 6. Constructive Sales of Digital Assets

• Conceptually extends constructive sale rules to digital assets where offsetting positions substantially eliminate both risk of loss and opportunity for gain in appreciated positions.​

Section 7. Election for Digital Asset Mining and Staking Rewards

• Creates an election regime (statutory text to come) for mining and staking rewards by allowing taxpayers to defer ordinary income recognition on rewards for up to five years, then set basis at FMV on recognition with subsequent appreciation treated as capital gain.

Section 8. Charitable Contributions and Qualified Appraisals

• Adds “actively traded digital assets” to the list of property exempt from qualified appraisal requirements where reliable market pricing exists and that also meet a minimum average yearly market capitalization, with possible additional thresholds.​ For illiquid/speculative digital assets, the donor’s deduction would be limited to the amount actually realized by the charity on disposition.​

Section X. CAMT Clarification

• Would exclude unrealized gains and losses from purely accounting‑driven mark‑to‑market investments from the corporate alternative minimum tax base.​

Section X. Grantor Trusts / PTPs

• Aims to clarify that passive, protocol‑level staking by investment vehicles holding digital assets is not a trade or business for §§512 and 864, while active, customer‑facing validation remains an ordinary business activity.​

Detailed Summary

SEC. 1. DE MINIMIS GAIN FROM SALE OR EXCHANGE OF REGULATED PAYMENT STABLECOINS.

Core rule (new §139J):

• Excludes from gross income any gain (and allows recognition of loss) from the sale or exchange of a “Regulated Payment Stablecoin”, subject to threshold and anti‑abuse limits.​

• “Regulated Payment Stablecoin” is a digital asset under §6045(g)(3)(D) that is a “payment stablecoin” under 12 U.S.C. §5901(22), issued by a “permitted payment stablecoin issuer” under 12 U.S.C. §5901(23), pegged solely to the U.S. dollar, and has maintained market price within 1% of $1.00 for at least 95% of trading days over the prior 12 months, with the taxpayer’s acquisition price also within 1% of $1.00.​

Exception and deemed basis:

• The de minimis exclusion does not apply where the transaction price is outside $0.99–$1.01 per unit of stablecoin.​

• In those out‑of‑band cases, basis is deemed to be $1.00 per unit for gain/loss computation, unless Treasury (after consulting federal banking agencies) determines this rule does not reduce administrative burden and limits its use.​

Treasury authority and broker/dealer exclusion:

• Treasury may carve out specific taxpayers, transactions, or stablecoins from the exclusion if application would undermine policy objectives, including restrictions on brokers and dealers.​

• The exclusion does not apply to sales or exchanges by taxpayers who are brokers or dealers in securities or commodities under Exchange Act §§3(a)(4), 3(a)(5).​

Explanatory note:

• Still under technical drafting: Create a per‑transaction $200 de minimis threshold, mirroring §988’s foreign currency rule, to eliminate low‑value gain recognition from routine consumer payments in regulated payment stablecoins. Technical work is ongoing on whether to add an aggregate annual cap so the rule is an administrative simplification, not an investment gain shelter.​

• Regulations and guidance are expected to add targeted anti‑abuse rules, including treatment of transactions with related persons and coordinated arrangements designed to multiply the exclusion; Treasury may adopt attribution‑style rules analogous to §267 to address “exemption‑stacking” and similar schemes.​

• Guidance may cover recordkeeping and information reporting, basis allocation and characterization of appreciation where the exclusion does not apply, and mixed transactions involving both eligible property and other goods or services.​

• Does not foreclose future de minimis relief for other digital assets and is framed to follow existing statute (including references to GENIUS) rather than making a normative judgment about other asset types.​

Effective date:

• Applies to taxable years beginning after December 31, 2025.​

SEC. 2. SOURCES OF INCOME.

Expansion of §864(b)(2) trading safe harbor to digital assets:

• Inserts new §864(b)(2)(C) to treat certain trading in digital assets as not constituting a U.S. trade or business for non‑U.S. persons, paralleling the existing securities/commodities safe harbor.​

Safe harbor covers:

• Trading in digital assets through a resident broker, commission agent, custodian, digital asset exchange, or other independent agent.​

• Trading for the taxpayer’s own account (directly or via employees or agents with or without discretionary authority), except for dealers in digital assets, who are excluded.​

Definitions and limitation:

• “Digital asset exchange” is a centralized or decentralized platform that facilitates digital asset transfers; “digital asset” cross‑references §6045(g)(3)(D).​

• The safe harbor applies only where the digital assets are of a kind customarily dealt in on a digital asset exchange and the transaction is of a kind customarily consummated on such an exchange, anchoring the rule in standard market practice.​

Effective date:

• Applies to taxable years beginning after the date of enactment.​

SEC. 3. TAX TREATMENT OF DIGITAL ASSET LENDING AGREEMENTS AND RELATED MATTERS.

Extension of §1058 nonrecognition to digital assets:

• Amends §1058(a) to include “digital assets” alongside securities, so qualified lending of digital assets can occur without immediate recognition of gain or loss.​

• A drafting bracket suggests that for this section, digital assets would be those designated under §6045, limited to fungible tokens, with Treasury authority to carve out exceptions.​

Fixed‑term lending and basis adjustments:

• Clarifies that a “fixed‑term transfer that occurs in the ordinary course of a securities lending or investment management business” qualifies under §1058(b)(1), confirming ordinary lending structures are covered even with specified terms.​

• Requires appropriate basis adjustments as determined by Treasury upon return of lent securities (including digital assets), codifying basis continuity mechanics.​

Definitions and income inclusion:

• Redefines “securities” for §1058 to include any digital asset defined in §6045(g)(3)(D) and removes any call‑option requirement for digital assets.​

• Provides that income equivalent to what would have accrued to the lender but for the lending transaction must be included in the lender’s gross income, aligning tax treatment of substitute payments or similar income streams.​

Regulatory and classification limits:

• Includes an explicit rule of construction: nothing in this section implies any conclusion about whether a digital asset is a “security” under the Securities Act of 1933 or Exchange Act of 1934.​

• Grants Treasury authority to adopt rules implementing the amendments, including coverage of forks, airdrops, and similar subsidiary value associated with lent digital assets.​

Explanatory note – key policy details:

• The policy goal is to extend §1058 nonrecognition principles to bona fide lending of fungible, liquid digital assets where: (i) the lender is entitled to the return of identical digital assets; (ii) the lender’s risk of loss and upside are preserved; and (iii) the transaction is not used to effect a sale or disposition.​

• The intent is to exclude NFTs, illiquid or thinly traded assets, and tokenized or synthetic instruments (e.g., tokenized securities or derivative‑like products) that pose valuation, classification, or manipulation risks.​

• Treasury is expected to define administrable standards for fungibility and liquidity, and to issue rules preventing the use of digital asset lending arrangements for disguised sales, basis‑shifting, or other tax‑avoidance structures, potentially using rules that look through to underlying economic exposure rather than formal structure.​

Effective date:

• Applies to sales and exchanges in taxable years beginning after the date of enactment.​

SEC. 4. LOSS FROM WASH SALES OF DIGITAL ASSETS.

Rewrite of §1091 to “specified assets”:

• Replaces §1091 with a broadened wash sale rule disallowing loss deductions on dispositions of “specified assets” where the taxpayer acquires, contracts to acquire, or enters into long notional principal contracts for substantially identical specified assets within 30 days before or after the loss transaction.​

• Traders and dealers using the mark‑to‑market method for the specified asset are exempt from wash sale disallowance under the trader/dealer exception.​

Allocation rules and basis adjustments:

• Requires regulations to determine which losses are disallowed when the quantity of acquired specified assets is more or less than the quantity sold.​

• Increases basis of replacement assets (or contracts/options/long NPCs) by the amount of disallowed loss, with detailed priority rules for situations involving both contracts/options and direct acquisitions.​

Short sales and cash‑settled instruments:

• Extends wash sale principles to losses on closing short sales or terminating contracts/options/short NPCs where the taxpayer enters into another short or similar position in substantially identical assets within the 30‑day window.​

• Clarifies that cash‑settled contracts or options are still subject to wash sale rules.​

Definition of “specified asset”:

• Includes:

  • Any security as defined in §165(g)(2).​

  • Any actively traded digital asset (within §1092(d)(1)), any notional principal contract on such digital assets, and any evidence of interest or derivative in such digital assets (options, forwards, futures, shorts, similar instruments), subject to Treasury’s ability to narrow coverage.​

• By default, includes contracts/options to acquire or sell, and NPCs with respect to, any specified asset.​

Effective date:

• Applies to sales, dispositions, and terminations in taxable years beginning after enactment.​

SEC. 5. MARK-TO-MARKET ELECTION.

New §475(g):

• Creates an elective mark‑to‑market regime for digital asset dealers: a dealer in digital assets (as defined in §6045(g)(3)(D)) may elect to apply §475(a) mark‑to‑market treatment to digital assets held in the dealer business, paralleling securities.​

• Allows a person engaged in a trade or business as a trader in digital assets to elect into a mark‑to‑market regime under §475(f)(1) for digital assets held in that trading business.​

• Limits any such election to digital assets treated as “actively traded” under standards set by the Secretary.​

Effective date:

• Applies to taxable years beginning after the date of enactment.​

SECTION 6. CONSTRUCTIVE SALES.

Statutory placeholder:

• Provides that §1259 will be modified to also apply to digital assets, but the statutory text is bracketed [to be drafted].​

Explanatory note – key policy details:

• Recognizes that §1259 currently prevents gain deferral where taxpayers use short sales, forward contracts, futures, or notional principal contracts to lock in stock or other positions while deferring tax, but that analogous digital asset strategies are not clearly covered.​

• The policy goal is to treat a taxpayer as having made a constructive sale of a digital asset when the taxpayer enters into one or more transactions that substantially eliminate both risk of loss and opportunity for gain with respect to an appreciated digital asset, bringing digital asset positions within the same realization‑based anti‑deferral framework as equities.​

SECTION 7. DIGITAL ASSET [STAKING AND MINING ELECTION]

Statutory placeholder:

• Adds a new section at the end of Part II of Subchapter B of Chapter 1 to address digital asset staking and mining, but the statutory text is not yet drafted.​

Explanatory note – key policy details:

• Provision is intended to serve as a compromise between current law immediate taxation of rewards upon dominion and control and proposals that provide for full deferral until disposition, via an election that aims to resolve “phantom income”1 while preserving the tax base.​

• “Mining or staking activity” would mean “the act of validating transactions on a cryptographically secured distributed ledger, and any activities closely related thereto,” subject to Treasury’s ability to narrow or tailor the definition.​

• Taxpayers would be allowed to elect to defer recognition of rewards received from mining or staking until the end of the fifth taxable year after receipt; at that recognition point, income is ordinary, equal to the asset’s fair market value on the recognition date, with basis set accordingly and subsequent appreciation treated as capital gain—an approach analogized to §83(b) mechanics in terms of election structure and timing.​

• Taxpayers must report to IRS, each taxable year, the assets for which they have made the election, providing an administrative record for deferred rewards.​

• The note signals an intent not to apply the election to taxpayers using mark‑to‑market, subject to careful consideration, so that timing regimes do not conflict or create arbitrage opportunities.​

SEC. 8. CHARITABLE CONTRIBUTIONS AND QUALIFIED APPRAISALS.

Statutory amendment:

• Amends §170(f)(11)(A)(ii)(I) to add “actively traded digital assets (as defined in section 6045(g)(3)(D)” to the list of property types exempt from the qualified appraisal requirement, alongside publicly traded securities and qualified vehicles.​

Explanatory note – key policy details (bracketed as drafting direction):

• Provision is intended to modernize charitable contribution rules by distinguishing highly liquid, widely traded digital assets from speculative or illiquid ones, consistent with existing §170 substantiation principles.​

• Qualified appraisal waiver would apply only to a narrow class of digital assets with robust market pricing and information reporting, potentially limited to §6045(g)(3)(D) digital assets that also meet a minimum average yearly market capitalization (e.g., $10 billion), with possible additional thresholds like volume‑to‑market‑cap ratios or minimum annual trading volume over a multi‑year period.​

• For digital assets that do not meet liquidity/trading standards, the deduction would be deferred until the charity actually sells or disposes of the asset, and the donor’s deduction would be capped at the amount realized by the charity (net of customary selling expenses), aligning the tax benefit with the charity’s realized economic benefit and echoing the approach of §170(f)(12) for motor vehicles.​

• Treasury would be provided authority to refine liquidity thresholds and further limit appraisal waivers to assets with market quotations that are readily available and resistant to manipulation.​

[SEC. XX. CLARIFYING APPLICABILITY OF THE CORPORATE ALTERNATIVE MINIMUM TAX.]

• Would amend §56A to exclude unrealized gains and losses from investments marked to market solely for accounting purposes from the CAMT base, but this provision is entirely bracketed as a draft concept.​

[SEC. XX. GRANTORY TRUSTS AND PUBLICALLY TRADED PARTNERSHIPS.]

• Would amend §7701 to clarify treatment of investment vehicles holding digital assets.​

• Explanatory note states that passive, protocol‑level staking would not constitute a trade or business for §512 and §864, while active, customer‑facing validation would retain ordinary trade or business characterization, providing clarity for funds and structures with staking exposure.​

1

“Phantom income” in the mining/staking context refers to being taxed on value that exists on paper at the time of receipt, but that the taxpayer never actually realizes in cash or liquid value and may never be able to monetize.​ For example, because a digital asset may be highly volatile or may be illiquid, the USD value at receipt can quickly fall, leaving the taxpayer with a tax bill based on a higher historical value than the asset is actually worth or can be sold for later.

About Zero One Strategies

Zero One Strategies is a boutique government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com

www.ZeroOneStrategies.com

Check out Zero One Strategies’ weekly newsletter on AI federal policy:

DC/ai Decoded

Thanks for reading DC Decentralized! Subscribe for free to receive new posts and support my work.

As Congress enters its final week of the legislative year, market structure negotiations continue in the Senate. Most recently, Republicans provided a compromise offer making changes to the previous discussion draft. Democratic negotiators responded to Republicans with a counteroffer on outstanding policy issues, including token classification, ethics, quorum, illicit finance, and stablecoin yield. Negotiators call for patience as tricky issues are fully deliberated and provide assurances negotiations proceed in good faith, but frustrations are mounting, especially in the House.

The OCC issued guidance clarifying that a national bank may engage in principal crypto transactions as part of the business of banking. It also published preliminary findings from its supervisory review of debanking and announced conditional approval of applications for de novo national trust bank charters and national trusts.

The CFTC announced the withdrawal of guidance considered outdated related to the delivery of virtual currencies and announced its first round of CEO Innovation Council participants, as well as the launch of a digital assets pilot program. It also issued guidance on the use of tokenized assets as collateral in the trading of futures and swaps.

The SEC issued educational guidance for retail investors about the ways investors can hold crypto assets.

This week, the SEC’s Crypto Task Force is hosting a roundtable on financial surveillance and privacy.

Read more below

Congress

Hearings

Last week

• On December 10, the House Agriculture Committee held its annual Member Day.

• On December 11, the House Agriculture Committee held a hearing on CFTC (Commodity Futures Trading Commission) Reauthorization: Stakeholder Perspectives.

This week

• On December 16, the Senate Banking, Housing and Urban Affairs Financial Institutions and Consumer Protection Subcommittee holds a hearing on Ensuring Fair Access to Banking: Policy Levers and Legislative Solutions.

Legislation

• Sens. Jerry Moran (R-KS) and Elissa Slotkin (D-MI) introduced the Strengthening Agency Frameworks for Enforcement of Cryptocurrency (SAFE Crypto) Act to establish an inter-governmental task force between federal agencies and the private sector to coordinate identifying and combating cryptocurrency fraud. (Text)

Correspondence

• Sens. John Kennedy (R-LA) and Jack Reed (D-RI) sent a letter to Senate Banking Committee Chair Tim Scott (R-SC) and Ranking Member Elizabeth Warren (D-MA) requesting the committee hold a hearing on market structure legislation before a markup on the legislation. (Letter)

Reports, Meetings, and Events

• Republicans negotiating on market structure legislation provided Democratic negotiators an offer in compromise making changes to the previous discussion draft. (Offer published by Politico)

• Senate Democratic negotiators responded with a counteroffer to Republicans on token classification, terrorist and illicit finance, ethics, quorum, and stablecoin yield issues. The counteroffer summary document opens with, “In an attempt to reach an agreement and proceed towards a mark-up on a bipartisan market structure bill within the Senate Banking Committee, Senate Democrats have put forth an offer to close out negotiations in a fair and equitable manner. We have accepted significant portions of RFIA – including meaningful concessions on major elements like token classification – in an effort to meet Republicans where they are. However, despite these substantial compromises, the offer Republicans sent on December 4th still fails to meet the core principles Democrats released in September. In response, Democrats transmitted a counteroffer on December 8th that would accept the vast majority of RFIA, either wholesale or with targeted edits, in exchange for a limited set of good-governance, consumer protection, and anti-terrorist financing safeguards. This document summarizes that counteroffer and explains key principles Democrats are fighting to preserve.” (Counteroffer published by Politico)

Trump Administration

Office of the Comptroller of the Currency (OCC)

• The OCC issued Interpretive Letter 1188 clarifying that a national bank may engage in principal crypto-asset transactions as part of the business of banking. (Letter)

• The OCC released preliminary findings from its supervisory review of debanking activities at the nine largest national banks it supervises, finding “between 2020 and 2023, these nine banks made inappropriate distinctions among customers in the provision of financial services on the basis of their lawful business activities by maintaining policies restricting access to banking services or requiring escalated reviews and approvals before providing certain customers access to financial services.” (Press release)

• The OCC announced conditional approval of applications for de novo national trust bank charters for First National Digital Currency Bank and Ripple National Trust Bank. The OCC also conditionally approved applications to convert from a state trust company to a national trust bank for BitGo Bank & Trust, National Association, Fidelity Digital Assets, National Association and Paxos Trust Company, National Association. (Press release)

Securities and Exchange Commission (SEC)

• The SEC’s Office of Investor Education and Assistance issued an Investor Bulletin to help educate retail investors about the ways investors can hold crypto assets, providing an overview of types of crypto asset custody and providing tips and questions to help investors decide how to best hold crypto assets. (Bulletin)

• On December 15, the SEC’s Crypto Task Force is hosting a roundtable on financial surveillance and privacy. (Press release)

Commodity Futures Trading Commission (CFTC)

• The CFTC announced the withdrawal of guidance considered outdated related to the delivery of virtual currencies. (Press release)

• The CFTC announced its first round of CEO Innovation Council participants. (Press release)

• The CFTC announced the launch of a digital assets pilot program for certain digital assets, including BTC, ETH, and USDC, to be used as collateral in derivatives markets. The CFTC’s Market Participants Division, Division of Market Oversight, and Division of Clearing and Risk also issued guidance on the use of tokenized assets as collateral in the trading of futures and swaps. In addition, MPD issued a no-action position with respect to certain requirements applicable to Futures Commission Merchants (FCMs) that accept non-securities digital assets, including payment stablecoins, as customer margin collateral or hold certain proprietary payment stablecoins in segregated customer accounts. (Press release)

Noteworthy Quotes and Events

ADMINISTRATION

Office of the Comptroller of the Currency (OCC)

• In remarks at the Blockchain Association Policy Summit, Comptroller of the Currency Jonathan Gould said, “It is important that we do not confine banks, including current national trust banks, to the technologies or businesses of the past. That’s a recipe for irrelevance.” (Remarks)

• The OCC posted “OCC Interpretive Letter 1188 confirms that a national bank may engage in riskless principal crypto-asset transactions as part of the business of banking.”

Securities and Exchange Commission (SEC)

• SEC Commissioner Caroline Crenshaw delivered remarks on The Rubble and the Rebuild: The Future of Financial Regulation Series at The Brookings Institute, saying, “We need to promote policies that encourage trading based on actual fundamentals: issuer operations, cash flows and real financial metrics of companies, not on tweets. Policies should favor long-term buy-and-hold investing. People invest in crypto because they see (some) others get rich overnight. Less visible are the more common stories of people losing their shirts. One thing that has consistently puzzled me about crypto is – what are cryptocurrency prices based on? Many (but not all) crypto purchasers are not trading based on economic fundamentals. I think it’s safe to say they’re speculating, reacting to hysteria from promoters, feeding a desire to gamble, wash trading to push up prices, or as one Nobel laureate has posited – betting on the popularity of the politicians who support, or stand to benefit personally from, the success of crypto. Regardless of asset class, our legal framework – including our tax framework (I’m looking at you, Congress) – must promote long-term investing based on sound economic principles.” (Remarks)

• The SEC posted “Curious about crypto wallets and how to store and access crypto assets? Check out our Crypto Asset Custody Basics Investor Bulletin.”

CONGRESS

House Financial Services Financial Institutions Subcommittee Hearing on Competitive Bank Capital

• Subcommittee on Digital Assets, Financial Technology, and Artificial intelligence Ranking Member Stephen Lynch (D-MA) asked, “So with all of that, let me also add Vice Chair Bowman also gave a speech in Madrid last month where she said that banks should be able to compete with non-banks in crypto currencies and digital assets, which introduces a whole pile of risk into the into the banking industry, and if we’re and I think we’re all in agreement that, as others have stated, capital requirements should, should reflect the risk that’s being engaged in. So, with all of that, aren’t we? Aren’t we heading back towards 2008?”

  • Simon Johnson, Professor of entrepreneurship in the MIT Sloan School of Management: “Well, we’re heading back towards the financial crisis of the magnitude or bigger than 2008 absolutely congressman. So, you’re right…. you’re right to it to emphasize crypto. Whatever you think about the future of crypto, whether it’s bright or not, it’s certainly highly volatile. And if the regulators are allowing the banks to become more intertwined, either directly with a crypto currency or with an entity that is itself speculating on crypto currencies, then that’s a lot more risk. The only way to handle risk from a financial system stability point of view, is to have more capital.”

• Rep. Stephen Lynch (D-MA): “So with all these added elements, especially with the crypto piece of this and the president, certainly the White House is inducing banks to get more involved with crypto. Wouldn’t it make sense to increase the capital requirements for those firms that are engaging in crypto activities?”

  • Simon Johnson: “Yes, absolutely. Crypto is dangerous, and I would point out that the leverage is going down in community banks and regional banks. It’s the too big to fail banks that are leveraging up, and they’re the ones that want to pile into crypto. It makes no sense.”

• Rep. Stephen Lynch (D-MA): “It’s super dangerous. Thank you, Mr. Chairman. I yield back.”

Central Bank Digital Currencies (CBDC)

• Rep. Keith Self (R-TX) posted “UPDATE: Regretfully, my amendment to include language banning Central Bank Digital Currencies (CBDCs) in the National Defense Authorization Act (NDAA) was not advanced and will not come to the House floor for a vote. Conservatives were assured that anti-CBDC language would be included. Instead, we have been forced into a take-it-or-leave-it bill that breaks that promise. Without that language, I’m inclined to leave it.”

• Self also posted “On President Trump’s third day in office, he signed an Executive Order banning Central Bank Digital Currencies (CBDCs). Republicans need to hold the line and codify this critical EO. We cannot let America become China!”

• Self also posted “A government programmable dollar is a surveillance and control tool—we cannot let it happen. I was one of only 18 conservative Republicans who voted NO on the NDAA. Enough Democrats crossed over to ram it through—without a single line banning a Central Bank Digital Currency (CBDC). I will keep fighting to force a CBDC ban into the next must-pass bill. Financial freedom is non-negotiable.”

• Self also posted “Conservatives were promised—explicitly—that strong anti-Central Bank Digital Currency (CBDC) language would be included in the National Defense Authorization Act (NDAA). That promise was broken. A CBDC is the ultimate tool for government surveillance and control over every American’s finances. It would hand the federal government unprecedented power to track, restrict, and even freeze transactions. Leaving out protections for the financial privacy of Americans is unacceptable. Due to this, I voted NO on the NDAA. We must demand better—and fight on in the next must-pass bill to ensure a CBDC never sees the light of day. Financial freedom isn’t negotiable.”

• Rep. Warren Davidson (R-OH) posted “He’s an unlikely Bond villain, but here we are. Congress just reneged on the promise to ban Central Bank Digital Currency. Meanwhile, the central banks are building it. Ban CBDC!”

OCC Guidance

• Financial Services GOP posted “NEW: The Committee welcomes USOCC’s newly issued guidance allowing banks to conduct principal transactions with digital assets. This is a positive step for banks and the digital asset ecosystem as the OCC’s guidance supports broader market participation as our regulators continue their work implementing the GENIUS Act.”

• Rep. Vern Buchanan (R-FL) posted “Thanks to POTUS’ America First agenda, U.S. banks can now serve as intermediaries for crypto transactions under clear rules. This keeps financial innovation here at home, strengthens consumer trust and ensures the future of finance is led by America, not foreign adversaries.”

Market Structure Negotiations

• House Financial Services Chair French Hill said about Senate negotiations on market structure, “They have to go through that process of member education, member debate, member discussion. But in my view, it’s also time to vote.” He added, “I still recommend that the Senate use the HR, CLARITY Act, as their base text from which to derive amendments… But that’s a decision they have to make. As I’ve said since the very beginning, they are two sides of the same coin… We need them both on the track, regulatorily, in order to have America be innovative… I think it’s important that members of the Senate really think through each section and understand it in order to support the need for market structure.” (Punchbowl)

• Sen. Elizabeth Warren (D-MA) posted “Any crypto regulatory framework coming out of Congress must have real safeguards to fight crime and protect our national security.”

• Rep. Sam Liccardo (D-CA) said, “It’s important to get this right. The risk to our entire financial system is too great to shoot from the hip. That being said, there should be enough overlap in the Venn Diagram of what Democrats and Republicans want to get this done. With a few tweaks from the House bill, I think we could get there.” (Punchbowl)

• Rep. Brittany Pettersen (D-CO) said, “The chairman worked really hard on this, and it seems like a big slap in the face that they’re going in a lot of different directions.” (Punchbowl)

• Rep. Dan Meuser (R-PA) said, “Yeah, a bit of frustration… Faith in [Senate Majority Leader] John Thune. They need to get it done. There’s really no excuse not to proceed.” (Punchbowl)

• Rep. Mike Lawler (R-NY) said, “The Senate obviously likes to have its imprimatur…I think they’re quickly getting their way back to basically where CLARITY is. They have to go through their five stages of grief.” (Punchbowl)

• Rep. Sean Casten (D-IL) said, “I feel like this is gonna be like the Iraq war vote where, in hindsight, everybody wishes they were Barbara Lee. There is going to be so much stink that’s gonna come out of this. And we’re either going to have a massive crisis that’s gonna make a lot of people, on a bipartisan basis, look really foolish, or we’re going to have a massive crisis before the Senate votes, and the Senate’s gonna say, oh shit, I have to act like an adult.” (Punchbowl)

• Rep. Barry Moore (R-AL) posted “’The marketplace is DESPERATE to have their product regulated.’ Crypto is a key industry that needs guidelines to operate. HouseGOP passed the CLARITY Act to accomplish this goal.”

• Rep. Young Kim (R-CA) posted “Crypto has countless applications from wealth creation to secure payments. Americans deserve the market certainty and consumer protections that the CLARITY Act provides. The Senate needs to pass CLARITY now.”

Potential Campaign Influence on Market Structure Negotiations

• Sen. Cynthia Lummis (R-WY) said, “Fortunately, no one has raised those issues in our meetings – and I hope it stays that way… We’ve just busted our britches to try to keep this bipartisan… No one can disagree that that’s a big bazooka. In some ways, I wonder whether it’s being misused — not by the industry, but by the politicians.” (Semafor)

• Lummis also said, “Sen. Scott and Sen. Gillibrand are in counterbalancing positions. I think that considering their dual challenges, they’re doing a very good job.” (Politico)

• Sen. Andy Kim (D-NJ) said, “I hope that we are going to approach this with the seriousness that it requires, and not be swayed by or pressured by the politics of this. There’s a lot to handle, and I hope it’s not being looked at or used as this political cudgel as we get into the midterm year.” (Semafor)

• Sen. Kirsten Gillibrand (D-NY) said, “The Democratic Party has and should continue to be the party of opportunity and innovation…our current bipartisan effort around market structure is around shared, universal goals…both parties are working in good faith right now.” (Semafor)

• Senate Banking Committee Chair Tim Scott (R-SC) said, “What I’m looking for are enough votes to get to ‘yes.’ The truth of the matter is, the less you think about the money, the better off we all are. And I think we do that by focusing on the key components of the legislation that get members on the Banking Committee to a big ‘yes’ sooner rather than later. If you do that with blinders, you do the right thing for the American people.” (Politico)

• Scott also said, “We looked at CLARITY and celebrated some of the success of CLARITY and embed their philosophy in the market structure that we have. I find it to be a strong product. And we are going to make sure that we embed the priorities on both sides of our aisle so that we have a bicameral legislative process that produces a presidential signature at the end.” (Politico)

• Scott also said, “Any time you’re doing something that’s never been done in the history of the country, it might be kind of challenging to get everybody on the same page.” (Politico)

• On Sen. Tim Scott’s role as a market structure negotiator and chair of the NRSC, an anonymous House Financial Services Republican said, “His political role has caused probably more speedbumps in all of this than anything. I need to work with you, but I’m trying to beat the shit out of you — that just structurally creates problems.” (Politico)

• Sen. Kevin Cramer (R-ND) said, “The chairman of the NRSC and the chairman of the [Democratic Senatorial Campaign Committee] are senators — every time, every cycle. There’s probably always some potential perceived challenge to that. But we’re all adults. Tim’s just one of the nicest people in the Senate. So I don’t think that’s a problem. It certainly hasn’t been to this point.” (Politico)

What I’m Reading This Week

• The S.E.C. Was Tough on Crypto. It Pulled Back After Trump Returned to Office., Ben Protess, Andrea Fuller, Sharon LaFraniere and Seamus Hughes, The New York Times.

• Treasury’s Bank Regulation Takeover Has a New Goal: Anti-Money-Laundering Rules, Dylan Tokar, The Wall Street Journal.

About Zero One Strategies

Zero One Strategies is a boutique government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, digital assets, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us at Stacey@ZeroOneStrategies.com

www.ZeroOneStrategies.com

Check out Zero One Strategies’ weekly newsletter on AI federal policy:

DC/ai Decoded

A small group of Senate market structure negotiators reportedly met privately last week, including Sens. Cynthia Lummis (R-WY), Angela Alsobrooks (D-MD), Kirsten Gillibrand (D-NY), Bernie Moreno (R-OH), Mark Warner (D-VA) and Ruben Gallego (D-AZ), in addition to market structure skeptic Sen. John Kennedy (R-LA). According to reports, Kennedy said he came away from the discussion more positive.

The House Committee on Financial Services released a final majority staff report detailing Operation Choke Point 2.0.

Read more below

Congress

Hearings

Last week

• On December 2, the House Financial Services Committee holds a hearing on Oversight of Prudential Regulators.

This week

• On December 10, the House Agriculture Committee holds its annual Member Day.

• On December 11, the House Agriculture Committee holds a hearing on CFTC (Commodity Futures Trading Commission) Reauthorization: Stakeholder Perspectives.

Reports, Meetings, and Events

• House Committee on Financial Services Chair French Hill (R-AR) and Oversight Subcommittee Chair Dan Meuser (R-PA) released a final staff report titled “Operation Choke Point 2.0: Biden’s Debanking of Digital Assets” detailing “how Biden Administration regulators used vague rules, excessive discretion, informal guidance, and aggressive enforcement actions to pressure banks away from serving digital asset clients, resulting in at least 30 digital asset entities or individuals losing access to financial services.” (Report)

Trump Administration

Securities and Exchange Commission (SEC)

• The SEC’s Crypto Task Force has announced the agenda and panelists for its rescheduled Roundtable on Financial Surveillance and Privacy on December 15. (Press release)

Consumer Financial Protection Bureau (CFPB)

• On December 10, the CFPB holds a virtual meeting of the Consumer Advisory Board to discuss fair lending and debanking. (Register)

Noteworthy Quotes and Events

ADMINISTRATION

White House

• White House AI & Crypto Czar David Sacks posted “President Trump deserves all the credit for building an amazing team and prioritizing AI and crypto as cutting-edge technologies where America must lead the world.”

CONGRESS

Market Structure

• Sen. John Kennedy (R-LA) said of his meeting with Senate market structure negotiators, “I think both sides are trying to get to yes, and we’ll probably have another meeting next week.” He added, “We’re not there yet, but I was very impressed.” (Punchbowl)

• Kennedy said of traditional banks’ opposition to stablecoin yields, “It’s one of the outstanding issues, and we talked some about it, but we haven’t resolved it yet.” (Punchbowl)

• In an interview with Punchbowl, Senate Banking Chair Tim Scott (R-SC) said of market structure negotiations with Senate Democrats, “We’ve had drafts out since [July], and then we had another one come out a couple months ago in September. And yet we’re still waiting for them to finish figuring out where they want to go on the process. Five months seems to be long enough for me to read a page a day and be OK with it.” He added, “I think they are getting to a place where they finally have gotten serious about getting something done.” (Punchbowl)

• Scott said of conversations with Kennedy, “I’ve had as many conversations with Senator Kennedy as probably anybody on the topic of market structure, and he certainly is very keen to be fully informed. Good news is, his staff and my staff have met days on end. So the information that he needs is now what’s in his office.” (Punchbowl)

House Financial Services Debanking Report

• Financial Services GOP posted “Chairman RepFrenchHill on RepMeuser & the Committee’s digital asset debanking report: “This report identifies all the ways former SECGov Chair Gensler, former bank supervisors like Michael Barr and others, to systematically debank legal businesses in the US engaged in the digital asset innovative space. This was terrible for American competitiveness and it led me during the course of the Biden Admin to offer my market structure bill which gives clear rules of the road for digital assets so people know how to innovate and count on the federal government to not debank them, but encourage the use of blockchain technology inside financial services.”

• Rep. Bryan Steil (R-WI) posted “Chokepoint 2.0 stalled Web3 innovation, drove jobs overseas, and politicized access to our banking system. I’m working to provide clear rules for digital assets and ensure law-abiding Americans have access to our banking system.”

• Rep. John Rose (R-TN) posted “This report confirms the worst: Joe Biden worked to debank the digital assets of conservatives, Christians, and firearm businesses because of their politics. Just as they did when the last administration weaponized banks against its political opponents, this pattern of abuse must end. I look forward to working with Chairman RepFrenchHill, Subcommittee Chairman RepMeuser, and my FinancialCmte colleagues to ensure this never happens again.”

• Rep. María Elvira Salazar (R-FL) posted “Today’s House GOP report makes one thing clear: the Biden Administration’s debanking campaign strangled legitimate digital-asset companies, killing jobs and driving America’s best talent overseas. I’m proud to stand with my colleagues on the Financial Services Committee. Miami’s crypto economy relies on a banking system that is fair, accessible, and free from political targeting. Restoring clarity, strong rules, and equal treatment is essential to keeping Miami a global leader in digital innovation.”

• Rep. Dan Meuser (R-PA) posted “As FinancialCmte Oversight Subcommittee Chair, our team worked under RepFrenchHill’s direction to compile the first full accounting of how the Biden Administration’s coordinated debanking of lawful digital-asset firms hurt American workers, innovators, and competitiveness. Read the full report to see the evidence, how President realDonaldTrump’s leadership is restoring fairness to bank supervision, and how we will end debanking once and for all.”

• Rep. Andy Barr (R-KY) posted “Debanking of digital asset firms under the Biden Administration was real and unacceptable. I’m leading the charge with SenatorTimScott to make sure no one is debanked b/c of their politics—including Christian organizations, crypto, energy, and firearms businesses.”

Digital Asset Tax Framework

• Rep. Max Miller (R-OH) told Tax Notes, “More than likely, it’s going to be a priority for next year, due to the government shutdown and us losing almost two months of working legislative days. I think that’s the only reason it’s taken this long.” (Tax Notes)

• Sen. Steve Daines (R-MT) said, “Next year we’ll have a framework… This is a global race, and whoever gets there the fastest is going to win.” (Tax Notes)

Miscellaneous

• Rep. Keith Self (R-TX) posted “As we expect the NDAA text to be released in the near future, let us remember that language banning a Central Bank Digital Currency (CBDC) was promised to be included. I, and many other members, will be watching over the coming days to make sure promises were kept.”

• House Judiciary Dems posted “Trump pardoned a narco-dictator who helped move 400 tons of cocaine into the U.S. to ‘stick up the noses of the gringos.’ Tech-crypto oligarchs reportedly helped secure the pardon as a thank-you to President Hernandez for creating a private, for-profit city ruled by the Broligarchs. The pardon exposes the emptiness of Trump’s War on Drugs rhetoric, and the corruption of his Administration that hands out pardons to the friends of the President’s wealthiest donors at the expense of public safety and the American people.”

• Rep. Steve Cohen (D-TN) posted “Memphis households already spend more of their income on power bills than almost anywhere in the country. My Clean Cloud Act would keep data centers and crypto miners from pushing those bills even higher.”

• Rep. Bryan Steil (R-WI) posted “Breaking Crypto Update NCUA Chair kylehauptman confirms we are on track to implement the GENIUS Act by July 18.”

What I’m Reading This Week

• What are Stablecoins? Your Money Could Soon Be Tied Up In This $300 Billion Crypto Market, Aaron Krolik, The New York Times.

• How a Cryptocurrency Helps Criminals Launder Money and Evade Sanctions, Aaron Krolik, The New York Times.

About Zero One Strategies

Zero One Strategies is a boutique government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as digital assets, blockchain, decentralized technologies, artificial intelligence, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

Contact us: Stacey@ZeroOneStrategies.com

ZeroOneStrategies.com

If you like DC Decentralized, check out our other weekly newsletter on artificial intelligence federal policy:

DC/ai Decoded

This week in digital asset federal policy, Congress returns from the Thanksgiving recess for the legislative sprint to the end of the year. While finalizing legislative priorities like the National Defense Authorization Act (NDAA) will dominate attention, Congress will also attempt to catch up on lost time from the government shutdown. Among Senate priorities will be resolving the bracketed tough provisions in the Senate Agriculture market structure draft and readying both the Senate Banking and Agriculture bills for markup, as well as continuing to educate tax writers on both sides of the Capitol on digital asset tax policy.

Read more below

Congress

Hearings

Last week

• Congress was in recess for the Thanksgiving holiday.

This week

• On December 2, the House Financial Services Committee holds a hearing on Oversight of Prudential Regulators.

Legislation

• Reps. Chris Pappas (D-NH) and Tony Gonzales (R-TX) introduced the Dark Web Interdiction Act of 2025 to prohibit the delivery of opioids through the dark web and establish the Joint Criminal Opioid and Darknet Enforcement Task Force within the FBI to detect, disrupt, and dismantle illicit marketplaces. The bill includes a mandated report to Congress on virtual currency use in opioid trafficking. (Text)

Reports, Meetings, and Events

• House Judiciary Committee Ranking Member Jamie Raskin (D-MD) released a staff report on “how President Donald Trump and his family have transformed the presidency into a personal money-making operation, adding billions of dollars to his net worth through cryptocurrency schemes entangled with foreign governments, corporate allies, and criminal actors.” (Report)

Trump Administration

Securities and Exchange Commission (SEC)

• On December 4, the SEC’s Investor Advisory Committee holds a virtual meeting on Regulatory Changes in Corporate Governance and the Tokenization of Equity Securities. (Event)

Commodity Futures Trading Commission (CFTC)

• Acting Chair Caroline Pham announced that the CFTC is seeking nominations for the CFTC CEO Innovation Council, which will advise on digital asset policy. The deadline for submissions is December 8. (Press release)

Consumer Financial Protection Bureau (CFPB)

• On December 10, the CFPB holds a virtual meeting of the Consumer Advisory Board to discuss fair lending and debanking. (Register)

Noteworthy Quotes and Events

ADMINISTRATION

Securities and Exchange Commission (SEC)

• Commissioner Hester Peirce posted “ICYMI: the SEC staff recently issued a common-sense no-action letter for another DePIN project, this one related to decentralizing the provision of energy and optimizing its use”

Commodity Futures Trading Commission (CFTC)

• Acting Chair Caroline Pham posted “Are you locked in? CFTC CEO Innovation Council will ensure we hit the ground running to take on our expanded mission over crypto and prediction markets with responsible regulation. America’s Golden Age of Innovation is here. Nominations due Dec 8.”

• In a statement, Pham said, “The U.S. is leading a new era in market structure, and the CFTC is at the forefront of this renaissance accelerated by innovation and technology. The CFTC stands ready to carry out our mission over expanded markets and products, including crypto and digital assets, and ensure our markets remain vibrant and resilient while protecting all participants. In order to hit the ground running, it is critical that the CFTC drives public engagement with the support of expert industry leaders and visionaries who are building the future. That is why today I am calling upon CEOs to join us in shaping responsible regulations that will lay the foundation for America’s Golden Age of Innovation.” (Press release)

CONGRESS

• House Judiciary Dems posted “An explosive new House Judiciary Committee report exposes the Trump family’s multi-billion-dollar crypto empire, fueled by self-dealing and corrupt foreign interests, the dismantling of anti-corruption safeguards, and pardons for corporate cronies.”

• Rep. Young Kim (R-CA) posted “Crypto innovation shouldn’t be crushed by unclear rules. That’s why I backed the CLARITY Act and its fix to protect everyday developers and blockchain users. Encouraged to see Chairman Scott preparing a vote in the Senate.”

• Sen. Cynthia Lummis (R-WY) posted “Operation Chokepoint 2.0 regrettably lives on. Policies like JP Morgan’s undermine confidence in traditional banks and send the digital asset industry overseas. It’s past time we put Operation Chokepoint 2.0 to rest to make America the digital asset capital of the world.”

What I’m Reading This Week

• IRS crackdown on popular crypto ‘tax cheat’ begins with 2025 filing year, Cheryl Winokur Munk, CNBC.

• Cryptoasset Taxation and Market Structure Developments, Lee A. Sheppard, Tax Notes.

• The Fashion in Crypto Staking Accommodation, Lee A. Sheppard, Tax Notes.

As the House and Senate finalize the annual must-pass National Defense Authorization Act (NDAA), one area to watch is the inclusion of language prohibiting the Federal Reserve from considering a central bank digital currency (CBDC). The House included the anti-CBDC provision in its version of the NDAA, but the Senate did not include a similar measure over concerns it would endanger leaders’ ability to garner the required 60 votes for Senate passage.

Senate Agriculture Committee negotiators released its long-anticipated draft of CFTC-focused market structure rules. In addition to providing insight into areas of bipartisan agreement, the discussion draft highlights the many policy areas still under negotiation; bracketed sections illuminated unresolved issues including anti-money laundering controls and decentralized finance.

The nomination of Mike Selig to lead the CFTC is on its way to a full Senate vote, as the Senate Agriculture Committee considered and approved his nomination. Meanwhile, SEC Chair Paul Atkins delivered forward-leaning remarks on the progress of Project Crypto.

The IRS issued guidance allowing investment funds organized as grantor trusts to stake digital assets without violating current investment tax rules, as well as draft instructions for digital asset broker information reporting in 2026, while their proposed rule implementing cross-border digital asset information reporting is under final review.

Read more below

Congress

Hearings

Last week

• On November 19, the Senate Agriculture Committee considered the nomination of Michael Selig to be chairman and commissioner of the Commodity Futures Trading Commission (CFTC)

This week

• Congress is in recess for the Thanksgiving holiday.

Upcoming

• On December 2, the House Financial Services Committee holds a hearing on Oversight of Prudential Regulators.

Legislation

Senate Committee on Agriculture, Nutrition, and Forestry Chair John Boozman (R-AR) and Sen. Cory Booker (D-NJ) released a discussion draft of market structure legislation that would provide new authority to the Commodity Futures Trading Commission (CFTC) to regulate digital commodities. (Text)

Rep. Warren Davidson (R-OH) introduced the Bitcoin for America Act to allow Americans to pay federal taxes in Bitcoin and direct all such payments into the Strategic Bitcoin Reserve. (Press release)

Rep. Steve Cohen (D-TN) introduced The Clean Cloud Act to amend the Clean Air Act to establish requirements on the collection of electricity consumption data and emissions standards for servers and other computing equipment used for cryptocurrency mining. (Text)

Correspondence

Sen. Todd Young (R-IN) sent a letter to Treasury Secretary Scott Bessent urging the IRS revisit their 2023 guidance on the tax treatment of staking rewards, specifically requesting details on how the guidance was developed and asking the IRS to verify if they are reviewing their analysis, per recommendation of the Presidential Working Group on Digital Asset Markets. (Bloomberg)

Sens. Elizabeth Warren (D-MA) and Jack Reed (D-RI) sent a letter to Treasury Secretary Scott Bessent and Attorney General Pamela Bondi requesting information into any efforts to investigate World Liberty Financial (WLF) in light of recent reports that it sold its governance tokens to buyers linked to North Korea, Russia, and other illicit actors. (Letter)

Sens. Chris Murphy (D-CT) and Elizabeth Warren (D-MA) sent a letter to the White House and Office of Government Ethics (OGE) requesting information about inconsistencies in U.S. Special Envoy to the Middle East Steve Witkoff’s ethics disclosure forms, concerns related to a deal that allows the United Arab Emirates (UAE) to acquire U.S.-made AI chips, and potential crypto-related conflicts of interest. (Letter)

Sens. Adam Schiff (D-CA), Ed Markey (D-MA), Chris Van Hollen (D-MD), Elizabeth Warren (D-MA), Peter Welch (D-VT), Raphael Warnock (D-GA), and Richard Blumenthal (D-CT) sent a letter to Federal Energy Regulatory Commission (FERC) Chair Laura Swett urging FERC to ensure that energy demand from data centers does not result in rate hikes for American households, including the question “What steps is the Trump Administration and its partners in the artificial intelligence and cryptocurrency industries taking to compensate American households for drastic increases in their utility bills?” (Letter)

Publications, Events, and Meetings

The House Committee on Ways and Means Majority briefed Republican members on foundational digital asset tax policy, in preparation for a comprehensive crypto tax package. (X.com)

Trump Administration

Securities and Exchange Commission (SEC)

On December 15, the SEC’s Crypto Task Force will host a discussion on financial surveillance and privacy.

Internal Revenue Service (IRS)

The IRS proposed rule on the implementation of the OECD’s Crypto Asset Reporting Framework (CARF) is under review at the White House, signaling impending release. (OIRA)

The IRS issued guidance allowing investment funds organized as grantor trusts to stake digital assets without violating current investment tax rules. (Guidance)

The IRS released draft instructions for digital asset broker reporting for tax year 2026 on Form 1099-DA Digital Asset Proceeds From Broker Transactions. The instructions provide a preview of how cost basis reporting will be treated for cryptocurrency transactions. (Draft instructions)

Department of Justice

U.S. Attorney Jeanine Ferris Pirro, Acting Assistant Attorney General Matthew R. Galeotti of the Department of Justice, FBI Deputy Assistant Director Gregory A. Heeb, and Assistant Director Kyo Dolan of the United States Secret Service, Office of Field Operations announced the creation of a Scam Center Strike Force to protect Americans against Southeast Asian cryptocurrency-related fraud and scams. (Press release)

Consumer Financial Protection Bureau (CFPB)

On December 10, the CFPB will hold a virtual meeting of the Consumer Advisory Board to discuss fair lending and debanking. (Register)

Noteworthy Quotes and Events

ADMINISTRATION

Securities and Exchange Commission (SEC)

SEC Chair Paul Atkins delivered remarks on the SEC’s Approach to Digital Assets: Inside “Project Crypto” before the Federal Reserve Bank of Philadelphia, saying, “Investment contracts can be performed and they can expire. They do not last forever simply because the object of an investment contract continues to trade on a blockchain. Yet over the last several years, too many have asserted the view that if a token was ever subject to an investment contract, it would forever be a security. This flawed view extends even further presuming that every subsequent trade, everywhere and always, is a securities transaction. I struggle to reconcile that view with the text of the law, with Supreme Court precedent, or with common sense. Meanwhile, developers, exchanges, custodians, and investors have been trying to navigate in a fog, without SEC guidance, but obstruction. They see tokens that function as payment instruments, governance tools, collectibles, or access keys. They see hybrid designs that do not fit neatly into any existing box. And they see a stance that, for too long, has treated all of these tokens as if they were shares of common stock. That perspective is not sustainable or practicable. It comes with substantial costs, yet little benefit. It is not fair to market participants or to investors, and it is not consistent with the law. It also invites a destructive race to move offshore. The reality is that if the United States insists on making every on-chain innovation run the through a securities-law minefield, those innovations will migrate to jurisdictions that are more willing to distinguish among different kinds of assets, and more willing to write down the rules in advance. Instead, we are going to do what regulatory agencies are supposed to do. We are going to draw clear lines and explain them in clear terms.” (Remarks)

SEC Division of Trading and Markets Director Jamie Selway gave remarks on digital assets and trust at SIFMA’s Market Structure Conference, saying, “In recent years, marketplace trust was again challenged. Unlike the Great Depression, this loss of trust was not caused by a marketplace failure. This time, through poor policy choices, regulation by enforcement, and a lack of good faith engagement, the marketplace trust in the public sector was impaired. This loss was most acute with investors active in digital assets. The Chairman intends to repair this damage. On July 31, Chairman Atkins announced ‘Project Crypto,’ building on the leadership of Commissioner Peirce and the Crypto Task Force, to ‘help ensure that the United States remains the best place in the world to start a business, develop cutting-edge technologies, and participate in capital markets.’ Competition, amongst and between incumbents and innovators, is central to this initiative…Since the summer, the Division has engaged a wide variety of market participants regarding digital assets, across a number of functions such as primary issuance, secondary trading, and custody. Our goal is to advise the Commission on how to facilitate ‘innovation without arbitrage.’ As policy is modernized to accommodate digital assets, I believe neither new entrants nor legacy providers should be advantaged. We should not impose ourselves between commercial competitors. And we should trust market forces as the ultimate arbiter of value.” (Remarks)

Treasury Department

In a speech at the U.S. Treasury Market Conference at the Federal Reserve Board of New York, Treasury Secretary Scott Bessent said, “…we are closely monitoring growth in money market funds and the stablecoin market, which are both large investors in Treasury bills. Money market funds are now valued at about $7.5 trillion, having grown by nearly $1 trillion in the last year alone. The stablecoin market, meanwhile, is valued around $300 billion and could grow tenfold by the end of the decade thanks to the innovation made possible by the GENIUS Act. As money market funds and stablecoins grow, so too will the demand for Treasury bills.” (Remarks)

Bessent posted, “Today USTreasury and the IRSnews issued new guidance giving crypto exchange-traded products (ETPs) a clear path to stake digital assets and share staking rewards with their retail investors. This move increases investor benefits, boosts innovation, and keeps America the global leader in digital asset and blockchain technology.”

CONGRESS

Market Structure

Senate Banking Chair Tim Scott (R-SC) said, “Next month, we believe we can mark up in both” Senate Banking and Agriculture committees and “get this to the floor of the Senate early next year so that President [Donald] Trump will sign the legislation, making America the crypto capital of the world.” (Politico)

Scott also said, “The Democrats have been stalling and stalling and stalling because they don’t want President Trump to make America the crypto capital of the world. They don’t want to give him the win. It’s not just for President Trump — it’s for the American people.” (Politico)

Scott posted “Our crypto market structure work is about empowering the American people - including single moms like the one who raised me. We’re aiming to markup bipartisan legislation next month and get it to President Trump’s desk to keep America economically dominant for decades.”

Sen. Cynthia Lummis (R-WY) said, “Obviously, we need sufficient votes on a bipartisan basis to get to cloture. It’s legislation that Democrats needed some more time to just absorb and process, put their fingerprints on. I think they’re diving in, and I’m encouraged.” (Punchbowl)

House Committee on Agriculture posted “The push for clear digital asset rules continues gaining steam. Bipartisan work in the House and Senate is moving us closer to a strong, transparent market structure that protects consumers, fosters innovation, and ensures America remains a global leader.”

Trump Conflicts of Interest

Rep. Frank Pallone (D-NJ) posted “Trump’s net worth has increased by 70% since he took office because of his backroom deals, crypto scams, and favors for foreign governments.”

Sen. Jeff Merkley (D-OR) posted “Of course Trump’s pardon of the Binance CEO was corrupt! Trump isn’t going to let anything get in the way of his family’s crypto grift.”

Rep. Greg Casar (D-TX) posted “Trump gets: $5 billion in crypto deals, a $400 million plane, a $300 million ballroom, millions in deals from Facebook, Amazon, CBS. Everyone else gets: higher prices for health care, electricity, and groceries. Corruption, plain and simple.”

Sen. Adam Schiff (D-CA) posted “Donald Trump’s ‘good friend’ is helping enrich the Trump family with new real estate and crypto deals. In return, Trump rolls out the red carpet for the Crown Prince of Saudi Arabia.”

Rep. Ted Lieu (D-CA) posted “Personalized gold bars from the Swiss. Used jumbo jet from Qatar. Huge amounts of $$$ from crypto. The amount of corruption in the White House is at unconscionable levels. We need some real serious ethics across the federal government.”

Sen. Dick Durbin (D-IL) posted “Pardoning crypto criminals. Coddling January 6th rioters. Purging career prosecutors. Firing FBI agents. Lining his pockets with $230 million in taxpayer money. All while the American people grapple with high costs. Corrupt.”

Sen. Chris Murphy (D-CT) posted “The scope of dirty money (terrorists, criminals, sex predators) moving through crypto exchanges is dizzying. And as this article describes, Binance - the company at the the heart of Trump’s crypto corruption - continues to be one of the worst offenders.”

Rep. Don Beyer (D-VA) posted “Trump’s family is lining their pockets with crypto profits and his administration is full of billionaires and hedge fund managers.”

Rep. Jason Crow (D-CO) posted “These people couldn’t be more out of touch. While working Americans are watching their costs go up, the Trump family is bragging about their crypto deals. Sick stuff.”

Miscellaneous

Rep. Steve Cohen (D-TN) posted “I introduced the Clean Cloud Act today. Cryptominers & AI data centers are growing fast and straining grids—and Memphis families already face some of the highest energy burdens in the country. My bill ensures new data-center growth is powered by real clean energy, not higher bills for ratepayers.”

Rep. Warren Davidson (R-OH) posted “I’m introducing the Bitcoin for America Act to strengthen long-term national financial resilience and position the U.S. at the forefront of global asset leadership! This marks an important step forward in embracing the innovation that millions of Americans use every day.”

Davidson also posted “The Bitcoin for America Act: + Codifies the Strategic Bitcoin Reserve EO + Exempts Bitcoin payments of tax liabilities from capital gains + Holds Bitcoin tax payments in the Strategic Bitcoin Reserve + Tax payments could then be saved rather than spent Sound money is essential to defending freedom.

On the inclusion of a Federal Reserve ban on creating a central bank digital currency (CBDC) in the National Defense Authorization Act (NDAA), House Financial Services Chair French Hill (R-AR) said, “That’s a commitment that was important to both Speaker [Mike Johnson (R-LA)] and President [Donald] Trump.” (Politico)

Hearings: Nomination Hearing of Mike Selig for CFTC Chair

In his opening statement before the nomination hearing of Mike Selig to lead the CFTC, Senate Agriculture Chair John Boozman (R-AR) said, “I want to repeat what I have said multiple times before this committee: the CFTC is the right agency to regulate spot digital commodity trading. The CFTC – and only the CFTC – should regulate the trading of digital commodities. This is because only the CFTC understands the unique characteristics of commodities and commodity-based contracts. While the CFTC has the right regulatory approach, expertise, and skill set to handle this new responsibility, it is up to Congress to grant the agency this new authority to regulate spot digital commodity trading. Failure by Congress to do so will leave U.S. consumers vulnerable to bad actors and will keep the U.S. behind the rest of the world. Though a regulatory framework for spot digital commodities has yet to be authorized by Congress, the markets and underlying technology are fast at work. Absent a comprehensive U.S. regulatory framework, bad actors will continue to go unchecked, and legitimate entities will be disincentivized from participating in U.S. markets. All the while, U.S. consumer participation will continue to grow, as will the risk faced by consumers. This committee has an opportunity to advance its portion of a regulatory framework that protects U.S. customers, allows U.S. businesses to grow, and recognizes the importance of innovative blockchain technology and fundamental principles like the right to self-custody. I want to thank Senator Booker for his partnership on our bipartisan discussion draft, and I look forward to working with him and the rest of this committee to advance a bipartisan proposal out of this committee. The time to act is now, and I look forward to working with each of you towards advancing this goal.” (Press release)

Digital asset policy was a major focus in the Senate Agriculture Committee hearing to consider the nomination of Mike Selig for CFTC Chair, including the below Q&A:

Sen. John Boozman (R-AR): “Mr. Selig, as this committee deliberates on granting the CFTC spot digital commodity regulatory authority, what key considerations should we weigh, and why do you feel the CFTC is the right regulator for spot digital commodity trading?”

Michael Selig: “Thank you, Senator and thank you for the time that we spent in your office discussing these matters. I think it’s a critical opportunity for this committee and for our country to move forward with digital asset market structure legislation. It’s been a priority of the President, and of course, is something that’s great for this country. You know, we have so many entrepreneurs and builders and developers that have been pushed off shore, and this has been due to the lack of clarity. We need clear, simple guidelines. We need consumer protection, and we need to stop with the regulation by enforcement. And I think this is a real opportunity to develop a framework that can allow for software developers to thrive, for new exchanges to crop up that are going to protect investors and have the types of controls that you would expect in an exchange and make sure that we have the right disclosure and requirements that we have typically in our financial markets.”

Sen. John Boozman (R-AR): “As the committee deliberates granting the CFTC spot digital regulatory authority. How should we think about DeFi and ensuring that activities with respect to technology are not subject to inappropriate intermediate, intermediary registration regimes?”

Michael Selig: “Thank you, Senator. As I mentioned, I think there is this issue of regulation by enforcement, and sometimes we take a one size fits all approach to all types of financial products and services. But really, blockchain enables such a broad swath of new types of products, services, applications, and so it may not make sense in many cases to apply financial regulation, for example, to a video game app that runs on a blockchain. So, I think when we’re thinking about defi. It’s something of a buzz, buzz word, but really we should be looking to on chain markets and on chain applications, and thinking about the features of these applications, as well as where there’s an actual intermediary involved, where we have some operator administrator, and in many cases, that may not be and so we have to think about the best approach. And I look forward to working with your office to figure that out.”

Sen. Amy Klobuchar (D-MN): “Do you think you can do that with your existing resources when you add the potential crypto portfolio on some of the new things that are coming your way for regulation?”

Michael Selig: “Senator I’m looking forward to getting into the seat and, if confirmed, I’m really I’m going to take a hard look at the resource needs of the agency, and hope to do that assessment, and then get back to your office and work to make sure we have the resources to fulfill our critical mission.”

Sen. Amy Klobuchar (D-MN): “Okay, what specific regulatory tools or approaches would use to ensure that innovation in crypto markets does not come at the expense of basic safeguards to protect the public?”

Michael Selig: “So, it’s vitally important that we have a cop on the beat. It’s critical that we can’t have another big loss of customer funds. So we’ve seen Ms. global Pere grant and most recently, FTX, the CFTC has always been a regulator that’s focused on protecting customer funds, making sure that we have appropriate disclosure where required to do so, and protecting consumers, because at the end of the day, these are critical markets, and they affect, as I mentioned, the price of the groceries as well as of course, now, as we’re embarking into new digital domains, they could affect things like GPU costs and digital asset costs. And so I feel that we’ve massively over regulated the real-world economy, as I mentioned. This affects agriculture, energy, crypto and so much more. And so if we can figure out what works, what doesn’t work, that’s going to be the key to unlocking really great markets for individual, for every individual, and making sure that we don’t constrain our businesses and push them offshore.”

Sen. Amy Klobuchar (D-MN): “So you represented numerous derivatives and crypto clients while in private practice. How are you going to deal with conflicts of interest, especially when you will be the only person if confirmed on the commission?”

Michael Selig: “Of course, I think that’s a critical issue. Having come from a law firm where, in practicing law for many years, I will always hold myself to the highest ethical standards. I have, of course, been through a process with a non-partisan office of government ethics as well as the ethics staff at the CFTC. I have an ethics agreement that I’ve signed and plan to adhere to all the terms of that. You know, as a lawyer, you know, I’m very much one that follows the guidelines in the contract.”

Sen. Cindy Hyde-Smith (R-MS): “Thank you, Mr. Chairman and I sure enjoyed our meeting earlier. I appreciate your willingness to serve. As I said before, and I all the issues that we talked about, is very important to Mississippi, so I’m sure we will have a lot to work on together, but as products and markets participants emerge, the agency must adapt to rising demands and increasing pressure on its limited resources. The Commission deserves recognition for how effectively it is managed these emerging duties so far, however, the Congress now weighing market structure legislation that may expand the CFTC jurisdiction, the challenges ahead are likely to become even more significant.

So my question is, how do you plan to ensure the CFTC remains focused on its core mission of protecting hedgers and supporting transparent, well functioning futures markets, especially for our farmers and ranchers, while also establishing a new regulatory framework and taking an increased responsibility for rapidly evolving digital asset market. And what makes the CFTC well suited to take on this responsibility?”

Michael Selig: “Thank you, Senator, and I too very much enjoyed our conversation this morning. If the CFTC is not doing its job at making sure that our markets are working for our agricultural firms, our farmers, our ranchers, our digital economy now as well, it’s simply not working, and so we need to make sure that these are well functioning markets, and it’s my responsibility, if confirmed as Chairman to get that job done. I believe that we need to be vigilant in our surveillance efforts, in our examination efforts of market participants, and make sure that we’re policing fraud and manipulation these markets. And it’s the CFTC critical responsibility for overseeing that these markets are well functioning and efficient, and I take that very seriously and intend to do that job. As I mentioned in my opening statement, I think some of the there’s just massive over regulation of participants, and as we discussed this morning, particularly the FCM community, where many of America’s farmers and ranchers are reliant on these entities to access the derivatives markets, and if it’s too expensive, if we’re over regulating them, and they don’t have access, they’re not going to be able to hedge their risks. And that’s very concerning. That can result in a lot of volatility in the markets, and that can affect everyday consumers. And so I’m committed to making sure that these markets are well functioning and that appropriate risk management tools are available to our nation’s farmers, ranchers and everybody else.”

Sen. Tina Smith (D-MN): “I want to just start by associating myself with the questions that Senator Hyde-Smith and Senator Klobuchar asked about the big potential change in the mission of the CFTC with regard to digital commodities, and what that would mean for the CFTC if it were to take on that additional challenge. What do you think it would take? What would be the first two or three things that you would do? How would you approach this with a little bit more detail as the CFTC takes on this, you know, significant new focus, potentially depending on what happens in Congress?”

Michael Selig: “Thank you for that question. I think it’s vitally important, as I mentioned, that we have certainty, clarity and consumer protection in these markets. They’re being used by everyday Americans, and having real guard rails around what these markets look like is critical. And I really do applaud the efforts of this committee, as well as others within the Congress, for putting together comprehensive, bipartisan market structure legislation.

And I think that’s the first step once we get market structure legislation in place, I think it’s vitally important that we implement with haste, because these markets are going to keep developing, and we have to keep in pace with the rapid speed of innovation, there are a lot of things that we can do with our existing authority, and I would very much take on the mission of making sure that our investors are protected in these markets. The CFTC has authority to police fraud and manipulation in the crypto spot markets. It has authority to regulate the futures markets, and also when there’s leverage and financing involved in these transactions.”

Sen. Tommy Tuberville (R-AL): “I’d like to hear your thoughts on something. I hear a lot from our bitcoin miners that bitcoin is a commodity. If we sell corn, if we sell cotton, we pay taxes on it when we sell that commodity, but when a bitcoin is mined from a miner, IRS is standing next door, ready to get their money from this bitcoin. What’s your thoughts on that?”

Michael Selig: “Well, Senator, I think that blockchain enables all new modes of commerce and really great economic mechanism design where people can participate in these networks like the Bitcoin network, earn rewards and really earn a living by contributing to these networks. I think they’re vitally important infrastructure. We should have them built in the United States. We should make sure that we’re protecting our minors and infrastructure in the United States in terms of some of these areas that are really beyond the scope of the CFTC remit, around tax and other things. I think it’s vitally important that we work together with the Treasury and with our other agencies within the administration to make sure that we’re providing the right incentives to these market participants.”

Sen. Tommy Tuberville (R-Ala.): “Yeah, it just seems a little unfair to me that if you’re a miner, you’ve got to pay taxes on it immediately and not wait till you sell it. You know, we hear that complaint all the time. I hope it’s something we look into and encourage more mining.”

Sen. Ben Ray Luján (D-NM): “As we’re working to provide the CFTC with new authorities over digital assets, spot markets with tokens like bitcoin, trading over 50 billion per day, the new authority would be an enormous new duty. The CFTC is a small agency compared to the SEC. Mr. Selig, yes or no. Do you believe the CFTC would need more funding and staff to properly oversee digital asset spot market?”

Michael Selig: “Senator thank you for that question. I really enjoyed taking the time to meet with you yesterday and having the opportunity to talk through crypto and lots of other issues. I think that once I’m in the seat, I will be able to take a much better look, if confirmed, of course, at the resource needs of the agency. And so I’m very eager to get into the seat and be able to make that determination.”

Sen. Ben Ray Luján (D-NM): “I’ll take that as a yes, I appreciate that. Now, one of the areas I’m concerned about we spoke about this was the FTX debacle. The relationship between Almere research FTX presented many conflicts of interest and ultimately led to massive fraud. What are your views on the deeply integrated structures of major digital asset companies, and should exchanges be allowed to be vertically integrated?”

Michael Selig: “Thank you, Senator One of the great things that kind of came out of FTX, as much as it was a massive disaster, is that the CFTC regulated DCM, the previously ledger acts and became and that that DCM in the in the Clearinghouse and the DCO were not lost, which is great. I mean, and Congress for moving forward with bipartisan market structure legislation. I think it’s vitally important that we protect investors and protect customer funds, and intend to do so if confirmed as Chairman.”

Sen. Ben Ray Luján (D-NM): “Does vertical integration create risk?”

Michael Selig: “Senator, vertically integrated structures are one of the novelties that we’re seeing in our markets today. The CFTC principles-based regime really allows for more innovation in the way that businesses are structured. But of course, we need to comply with the same sorts of principles and requirements, so to the extent, of course, that a vertically integrated structure raises, for example, conflicts, issues, they might be addressed differently, or there might be additional requirements in place to protect against those issues, but the bottom line is that we should be always making sure that the same protections are in place, that investors are just as safe with a vertically integrated structure as without, and if confirmed, that’s something I very much look forward to considering and figuring out the best way forward.”

Sen. Ben Ray Luján (D-NM): “There is it fair to say, Mr. Selig, that under your watch you will not allow an FTX to happen again?”

Michael Selig: “Senator, as I mentioned the other day, you know, manipulation and fraud are only you know, bounded by the ingenuity of man, and so it’s very hard to always be able to prevent.”

Sen. Ben Ray Luján (D-NM): “Under your watch, is it fair to say that if you identify a loophole that would allow an FTX fraud, criminals, crooks to exist that you’ll close them?”

Michael Selig: “The CFTC will be a cop on the beat, a strong cop on the beat. Under my leadership, and I intend to always adhere to the law, make sure we’re enforcing the law.”

Sen. John Hoeven (R-ND): “In the digital asset space, have you looked at both the House legislation and the proposed Senate legislation, and does it provide you, in your opinion, does that provide the statutory and regulatory or the ability to build the regulatory framework in a way that will make sure that, again, there’s transparency and that people understand what’s going on with these digital markets, and that, as Senator Lujan said just a minute ago, that people are adequately protected?

Michael Selig: “One of the areas that we discussed earlier today is really the breadth of what’s happening in these digital asset markets. There’s a wide range of new types of blockchain networks, applications and assets, and so the legislation, I think this, is a great, great effort to bring clarity, certainty and consumer protection to these wide ranging, novel markets. I believe that the legislation, you know, the efforts in this committee, as well as the Clarity Act, the efforts in the house are just absolutely critical. They provide the scaffolding and the infrastructure that we need to make sure that we have a registration regime, that we have requirements around consumer protection, and also provide a lot of authority to the CPC and its sister agency, the SEC to flexibly regulate. There’s going to be a lot of work to be done in implementing these statutes, so I really am excited for you all to get the legislation done, and I think these are both great efforts.”

Sen. John Hoeven (R-ND): “And are you prepared to help members of this committee make sure they understand what is being done in this space and accomplish with this legislation, but also what additional safety measures may need to be in place to get the job done fully and well?”

Michael Selig: “Yes, I think one of the benefits of having spent many years in private practice, working with digital asset firms and then working as Chief Counsel at the crypto task force at the SEC has been that I’ve seen and met with many of these crypto businesses understand both the good and the bad, and what we need to do to make sure that we’re protecting our investors.”

Sen. Raphael Warnock (D-GA): “We are currently negotiating this legislation, and many of us who are engaged in these negotiations have called for provision that commissioners from both parties be appointed for the CFTC to implement any crypto legislation through new rules or regulations. And when I speak to leaders in the crypto industry, they tell me that it’s critical to them that crypto laws and regulations have bipartisan support. This is what we’re hearing from the industry. Do you agree that having bipartisan support behind new crypto currency regulations would help ensure stability and durability of these policies beyond this administration, and be better for both the industry and the investors long term, so that you’re not suffering from whiplash depending on whether it’s a Democratic administration or Republican administration. Is that a fair assessment?”

Michael Selig: “Senator, as I mentioned earlier, I really commend the efforts of this committee to develop bipartisan crypto market structure legislation. I think both voices in the room are critical to getting this right, and if confirmed as Chairman and assuming this legislation were to pass and be signed by the President, the notice and comment rulemaking process is a great way to get a diversity of viewpoints through comments.”

Sen. Raphael Warnock (D-GA): “We’re not getting any minority input from the agency on how it would implement such a complex piece of legislation, and that’s making this whole process harder and harder. I’m going to turn to another subject matter, basic consumer and investor protections are the pillars of a sound financial system. Regulatory clarity is needed for consumers who trade in digital commodities, and last week, Chair Boozman and Senator Booker released a bipartisan discussion draft to regulate digital assets. This discussion draft is an important starting point, but key sections remain under negotiation, including what new consumer protections are necessary to protect consumers from bad actors. Investor protection is critical, and the crypto markets are heavily focused on retail investors. What new authorities does the CFTC need from Congress to ensure consumers are treated fairly, in your view?”

Michael Selig: “Thank you, Senator as I mentioned earlier, the CFTC has existing authority to police fraud and manipulation in these markets, but bipartisan legislation really can take that to a further level by ensuring that we have market regulation for these markets, so things like invest registration examinations of these platforms, making sure that consumer funds are safe and secure. Segregation of funds, things of this nature that we have and expect in our markets today, and of course, coming from the SEC currently working well with the SEC on the disclosure requirements to the extent that there are securities that are being offered in connection with a digital asset, making sure there’s disclosure there. All these things can work really well together to making sure that we have a robust and resilient regime around crypto.”

Sen. Raphael Warnock (D-GA): “One last question, the CFTC is the only financial regulator that is funded entirely by appropriations, and in the Boozman Booker discussion draft, they authorize an additional 150 million dollars to the CFTC to hire new staff, improve their technology and prepare the agency to implement a massive new regulatory structure. Do you support the authorization of 150 million dollars to the CFTC to implement a crypto regime as designated by the Boozman Booker discussion draft?”

Michael Selig: “If confirmed, I really want to get in the seat and understand the needs of the agency. So, it would be premature for me to take a view on the exact amount and what I support.”

Sen. Tommy Tuberville (R-AL) posted “Pleased to meet with CFTC Chairman nominee MikeSeligEsq this afternoon. I am confident he will be a strong advocate for access to competitive and financially sound markets, digital commodities, and will fight to improve our rural communities.”

Sen. Joni Ernst (R-IA) posted “Great to meet with Michael Selig ahead of his CFTC Chairman nomination. We discussed focusing the commission on its core mission: protecting farmers through fair, transparent markets and also overseeing emerging digital markets. As he agreed, it’s about putting farmers first!”

What I’m Reading This Week

A State Tax Perspective on Proposed Federal Cryptoasset Guidance, Walter Hellerstein and Andrew Appleby, Tax Notes.

Were Taxpayers Fleeced by the GENIUS Act of 2025?, Paul H. Kupiec, AEI.

This week in digital asset federal policy, Senate Agriculture Chair John Boozman (R-AR) and Sen. Cory Booker (D-NJ) spoke with White House Crypto & AI Czar David Sacks as they finalize a discussion draft of the Committee’s CFTC-focused portion of market structure legislation. Booker is reportedly advocating for language that would enforce the existing requirement that the CFTC include minority members, and raised the priority on the call with Sacks. After the call, Boozman said he was feeling “95 percent” aligned on the bill.

In the Administration, the IRS released new FAQs on digital asset broker information reporting.

Read more below

Congress

Hearings

LAST WEEK

No relevant hearings were scheduled last week.

THIS WEEK

No relevant hearings are scheduled this week.

Correspondence

Rep. Sean Casten (D-IL) led 27 House Democrats in a letter to Attorney General Pam Bondi and Treasury Secretary Scott Bessent opposing President Trump’s pardon of Changpeng Zhao, the founder and former CEO of Binance, who was convicted of violating U.S. anti-money laundering laws. (Letter)

Trump Administration

Internal Revenue Service (IRS)

The IRS released new FAQs on digital asset broker information reporting. The informal guidance confirms the requirement of reporting sale transactions that a broker facilitates for its customers, including kiosks. The guidance also states brokers can only use customer-provided acquisition information for lot ordering purposes only and may not rely on it to report a customer’s basis, but purchase price information from transferring brokers can be used for determining which digital assets were sold; brokers should file separate Forms 1099-DA when a customer sells a specified NFT they minted as well as a specified NFT they didn’t mint; and the broker only needs to consider if a stablecoin de-pegged on its own trading platform during the 10-day measurement period. According to analysis, the FAQs highlight an existing point of confusion on the Form 1099-DA regarding sales of NFTs. (FAQs)(Tax Notes)

Federal Reserve

Fed Governor Stephen Miran delivered remarks on A Global Stablecoin Glut: Implications for Monetary Policy at the BCVC Summit 2025 in which he said, “My thesis is that stablecoins are already increasing demand for U.S. Treasury bills and other dollar-denominated liquid assets by purchasers outside the United States and that this demand will continue growing. All else equal, this new demand lowers borrowing costs for the U.S. government. However, as a central banker, my focus is on what I believe may be a substantial and long-term force putting downward pressure on a crucial guideline for monetary policymakers known as r*… There are several open questions with respect to the impact of stablecoins on U.S. monetary policy: How many assets will be managed by stablecoin issuers? Will the funds come from domestic or foreign sources, and where might substitution pull funds out of the banking system? What are the systemic risks related to runs on stablecoins? Since monetary policy must be forward looking, my colleagues and I would be best served exploring these topics now.” (Remarks)

Treasury Department

The comment period for the advance notice of proposed rulemaking (ANPRM) on implementation of the GENIUS Act closed on November 4 with 449 comments submitted. Comments can be viewed here.

Noteworthy Quotes and Events

ADMINISTRATION

White House

When asked during an interview on CBS’ 60 Minutes about his pardon of Changpeng Zhao, President Trump said “Are you ready? I don’t know who he is… Here’s the thing, I know nothing about it… He’s a very successful guy. I was told that he was a victim, just like I was and just like many other people, of a vicious, horrible group of people in the Biden administration.”

AI & Crypto Czar David Sacks posted “Thank you Chairman JohnBoozman & Senator CoryBooker for a constructive discussion today about the crypto market structure legislation before Senate Ag Committee. I am encouraged by the great progress so far, and look forward to a bipartisan draft in the near future.”

CONGRESS

Market Structure Legislation

Senate Agriculture Chair John Boozman (R-AR) said of the committee’s forthcoming bipartisan market structure discussion draft, “There’ll probably be some areas that we don’t totally agree on, and those will be highlighted.” (Politico)

Sen. Cory Booker (D-NJ) said of Ag Committee negotiations, “Senator Boozman and my staff are working well together and we’re making a lot of progress… I want to keep these conversations private.” (Punchbowl)

Sen. Roger Marshall (R-MS) said he is “still concerned that crypto is used by a lot of criminals.” He added, “They need to help me understand how we’re going to know our customers better and how we can not let it be such a tool for organized crime.” (Politico)

Sen. Cynthia Lummis (R-WY) said of staff-level progress on legislation, “They’re lengthy, they’re ongoing and the spirit of the negotiations is one of real camaraderie in terms of finding language that both parties can agree on.” (Politico)

Lummis posted “Market structure is the most important piece of digital asset legislation in United States history, and the time is now. SenGillibrand and I have been working on this since 2022, and our ideas are battle tested.”

Sen. Thom Tillis (R-NC) said, “Right now, everybody’s watching virtually every comment we make. I’m not going in with any preconceived basic language that I’m acting on. People got to start talking to each other, not past each other.” (Punchbowl)

Sen. Bernie Moreno (R-OH) said the remaining time for Senate action this year, “The only thing that could impede us is understanding where we are on the calendar, just to be able to get things on the floor.” (Punchbowl)

House Committee on Agriculture posted “Despite the ongoing government shutdown, momentum continues to build behind the CLARITY Act—our bipartisan effort to create clear rules for digital assets.”

Rep. Bryan Steil (R-WI) posted “It’s time to pass CLARITY and make the US the global leader in Digital Assets!”

CZ Pardon

Of crypto industry influence in the Trump Administration, Sen. Chris Murphy (D-CT) said, “I hope my Democratic colleagues will notice what’s happening around us. The industry is buying pardons and currying favor by helping Trump illegally knock down the White House, funding his military parades. I don’t know that Democrats are well served by just looking the other way on all of that behavior.” He added, “If we write a bill that continues to create a legal structure for the president’s corruption, we will live to rue the day that we did that. I just hope nobody is looking at the GENIUS Act as a model for the broader regulatory framework of the industry.” He also said, “Their industry is going to be an important industry in this country and in this economy and yes, of course, we want to regulate them.” (Punchbowl)

Sen. Elizabeth Warren (D-MA) said “The people who have provided assistance to drug traffickers and terrorists and people who sell access to human beings have learned that if they offer enough money and enough flattery to Donald Trump, evidently, they can once again be major players in the crypto world. It looks a lot like bribery, right out in the open for everyone to see.” (Politico)

Sen. Cynthia Lummis (R-WY) said, “I weighed in two years ago, and I still think that what I did two years ago was appropriate at the time. But what the president does with his pardon authority is up to the president and the president alone, and I’m not going to second-guess it.” (Politico)

Rep. Kelly Morrison (D-MN) posted “Trump pardoned a crypto billionaire who laundered money for terrorist organizations -- but claims he ‘doesnt know who he is.’ So is he lying? Or who is issuing these pardons?”

Rep. Lori Trahan (D-MA) posted “First, a billionaire crypto executive turned a blind eye to money laundering and pleaded guilty. Then, he funneled billions to Trump to get a pardon. Now, Trump claims he doesn’t know who he is. They think we’re stupid.”

Sen. Jeff Merkley (D-OR) posted “The Trump family crypto grift and the Binance pardon boil down to one thing: CORRUPTION. Trump is profiting off the presidency every day, while leaving Americans out in the cold.”

Rep. Pramila Jayapal posted (D-WA) posted “A crypto billionaire pled guilty to money laundering. Trump then pardoned him, but said “I know nothing about the guy” and that he has “no idea who he is.” Is he lying or clueless?”

Rep. Bonnie Watson Coleman (D-NJ) posted “On Friday, I released the latest episode of my Trump Corruption World Tour series about Trump’s pardon of a criminal crypto billionaire who padded Trump’s pockets. Now Trump says he knew nothing about the pardon he signed. What BS!”

Miscellaneous

In a profile in CQ Roll Call, Senate Banking Chair Tim Scott (R-SC) spoke about the role of digital assets in broadening economic opportunities, “The goal is creating greater access points because essential authority has been removed by an open ledger, giving more people real-time access to resources for a significantly lower transaction price point. That’s just music to my ears. It’s about single moms like the one that raised me, giving her greater access and opportunities in the financial system.” (Politico summary)

Sen. Cynthia Lummis (D-WY) posted “Digital assets are the future, and we need to make sure community banks are embracing the opportunity to bank both fiat currency and digital assets.”

Lummis also posted “Wyoming leads the nation in growth of start-up companies, and digital assets are paving the way. I am proud to work every day to diversify Wyoming’s economy and ensure the future of the Cowboy State is bright.”

On Circle’s decision to facilitate firearm purchases, Lummis said, “Circle’s decision to allow legal purchases of firearms using its stablecoin takes a powerful stand against the discrimination targeting lawful gun owners. By aligning its terms of service with existing legal requirements rather than imposing additional restrictions, Circle is defending our constitutional rights and ensuring our financial systems cannot be weaponized against law-abiding gun owners and legal industries.” (Crypto in America)

On Circle’s decision, Sen. Bill Hagerty (R-TN) said, “This is a reversal of Choke Point–inspired mechanisms to end run the legislative process and surreptitiously achieve liberal partisan goals. America will no longer stand for this weaponization of our financial system.” (Crypto in America)

What I’m Reading This Week

Digital Asset Reporting Triply Highlighted, Part 2, Carrie Brandon Elliot, Tax Notes.

New FAQ Clarifies Crypto Broker Reporting Requirements, Mary Catherine Browne, Tax Notes.

How is Cryptocurrency Taxed? Current Rules and Outstanding Questions, Bipartisan Policy Center.

This week in digital asset federal policy, the OCC and FDIC published a notice of proposed rulemaking to codify the elimination of reputation risk from supervisory programs; the public comment period ends December 29, 2025. Treasury Secretary Scott Bessent discussed efforts in increasing the use of digital assets and U.S. dollar stablecoins with the Prime Minister of Singapore. The comment period on Treasury’s GENIUS Act implementation ANPRM closes November 4.

In Congress, Senators opine about the chances of market structure passage this year and question the viability of a de minimis tax exemption for digital asset capital gains.

Speaking of market structure, all eyes are on the Senate Agriculture Committee and the potential impending release of their CFTC-focused market structure draft text.

Read more below

Congress

Hearings

Last week

• On October 30, the Senate Banking Committee held a hearing to consider the nomination of Travis Hill to be Chairperson of the Board of Directors of the Federal Deposit Insurance Corporation (FDIC).

This week

• No relevant hearings are scheduled this week.

Legislation

• Rep. Scott Fitzgerald (R-WI) introduced a bill to strengthen the authority of the United States Secret Service to investigate various crimes related to digital asset transactions and to counter transnational cybercriminal activity, including unlicensed money transmitting businesses, structured transactions, and fraud against financial institutions. (Text)

• Rep. Tom Suozzi (D-NY) introduced the Market Choice Act, which contains a provision establishing an interagency task force to create recommendations targeting money laundering related to human trafficking, including changes to “existing statutory law to more effectively detect and deter money laundering relating to severe forms of trafficking in persons, where such money laundering involves the use of emerging technologies and virtual currencies.” (Text)

• Rep. Ro Khanna (D-CA) announced he would introduce the Ban Crypto Corruption resolution to “prohibit the issuance, sponsoring or endorsing of digital assets (including cryptocurrency, meme coins, stablecoins, tokens, NFTs, digital trading cards, and decentralized finance platforms) by the President, Vice President, Members of Congress, candidates for public office, elected public officials, high-ranking executive branch employees and special government employees, and their immediate family members; require politicians and their immediate family members to place any digital assets they hold in a qualified blind trust inaccessible during their candidacy, public service, and 2 years after an individual’s service; prohibit foreign investment in any digital assets issued, promoted, or controlled by politicians and their immediate family; and mandate the full and timely disclosure of all cryptocurrency transactions by politicians and their immediate family. (Text)

• Sen. Thom Tillis (R-NC) released a discussion draft of the Ensuring Fair Access to Banking Act to prevent both regulator and financial institution-initiated de-banking by establishing a federal fair access standard, enforcement mechanisms, and additional targeted reforms to the examination and supervision process. (Press release)

Correspondence

• Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee Elizabeth Warren (D-MA), Ranking Member of the Senate Committee on Health, Education, Labor and Pensions Bernie Sanders (I-VT), Ranking Member of the Senate Judiciary Committee Dick Durbin (D-IL), and Ranking Member of the Senate Finance Committee Ron Wyden (D-OR), and Sens. Jeff Merkley (D-OR), Chris Murphy (D-CT), Tina Smith (D-MN), sent a letter to Labor Secretary Lori Chavez-DeRemer and Securities and Exchange Commission Chair Paul Atkins raising concerns about President Donald Trump’s executive order allowing alternative assets in Americans’ retirement plans. The letter says, “The Executive Order exposes these hard-earned savings to volatile financial instruments, while attempting to rebrand them as ‘alternative assets,’ although they lack transparency and have exaggerated claims of high returns.” (Letter)

• Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee Elizabeth Warren (D-MA), Ranking Member of the Senate Committee on Health, Education, Labor and Pensions Bernie Sanders (I-VT), Ranking Member of the Senate Armed Services Committee Jack Reed (D-RI), and Sens. Chris Van Hollen (D-MD), Mazie Hirono (D-HI), Richard Blumenthal (D-CT), and Jeff Merkley (D-OR) sent a letter to Attorney General Pamela Bondi and Treasury Secretary Scott Bessent expressing concerns on how President Donald Trump’s pardon of Binance founder Changpeng Zhao will affect their agencies’ ability to hold criminals accountable. (Letter)

Trump Administration

The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC)

• The OCC and FDIC published a notice of proposed rulemaking to codify the elimination of reputation risk from supervisory programs. The proposed rule would prohibit the agencies from taking adverse action against an institution on the basis of reputation risk, and from requiring, instructing, or encouraging an institution to close an account, refrain from providing an account, product, or service, or modify or terminate any product or service on the basis of a person or entity’s political, social, cultural, or religious views or beliefs, constitutionally protected speech, or solely on the basis of politically disfavored but lawful business activities perceived to present reputation risk. The notice was originally announced on October 7, 2025. The public comment period ends December 29, 2025. (Federal Register)

Consumer Financial Protection Bureau (CFPB)

• The CFPB issued a final rule to rescind its rule requiring certain types of nonbank covered persons subject to certain final public orders obtained or issued by a government agency in connection with the offering or provision of a consumer financial product or service to report the existence of the orders and related information to a Bureau registry. The CFPB originally announced the recission in May. (Federal Register)

Internal Revenue Service (IRS)

• The Treasury Inspector General for Tax Administration (TIGTA) released a report on IRS management challenges that highlights tax compliance efforts around digital assets, saying, “The IRS had made progress addressing the tax implications of virtual currencies, another emerging industry. In the last 15 years, virtual currencies have grown into a trillion-dollar industry and have proven challenging for the IRS from both a guidance and an enforcement perspective. The IRS considers virtual currency as property, that when sold, can create taxable consequences each time the virtual currency is used. For some taxpayers, the anonymity of virtual currency is appealing, and it complicates the IRS’s enforcement efforts. We reported that IRS Criminal Investigation used analytics to address virtual currency noncompliance. Between FYs 2018 to 2023, IRS investigated 390 cases involving virtual currencies. In that period, 224 cases were completed with a recommendation for prosecution.” (Report)

Treasury Department

• The comment period for the advance notice of proposed rulemaking (ANPRM) on implementation of the GENIUS Act closes on November 4, 2025. (Federal Register)

• During Secretary Scott Bessent’s meeting with Prime Minister Lawrence Wong of Singapore, the Secretary recognized Singapore’s efforts in increasing adoption and use of digital assets and U.S. dollar stablecoins. (Press release)

Noteworthy Quotes and Events

ADMINISTRATION

Securities and Exchange Commission (SEC)

• Commissioner Hester Peirce posted “Congratulations to MikeSeligEsq on your nomination to be CFTC Chairman. Having had the opportunity to work with you on the Crypto Task Force, I know the CFTC will be in good hands”

CONGRESS

Market Structure Legislation

• On the ability to get market structure done this year, Sen. Thom Tillis (R-NC) said, “Unless something happens in the first quarter, it’s unlikely to happen. And with everything else going on, I just don’t see how they have enough runway to land.” (Punchbowl)

• On the same question, Sen. Cynthia Lummis (R-WY) said, “I think it’s still feasible. Now, remember: I’m a perennial optimist. I’m a glass-half-full girl.”

• When asked by Punchbowl News if President Trump’s pardon of Changpeng Zhao would make bipartisan negotiations on market structure legislation more difficult, Sen. Cynthia Lummis (R-WY) said, “I can’t think of any way that we can make the politics of market structure more difficult.” (Punchbowl)

• On market structure negotiations, Sen. Catherine Cortez Masto said, (D-NV) “Time is of the essence. We get that. But setting an arbitrary deadline without having the ability to work through it, with all the issues with our colleagues, is not helpful.” (Punchbowl)

• On negotiating market structure legislation during the government shutdown, Sen. Mark Warner (D-VA) said, “We should be able to freaking multitask a bit.” (Punchbowl)

• When asked by Punchbowl News if market structure legislation pass before the end of the year, Warner said, “I don’t know. The one thing that’ll guarantee it won’t happen is if we can’t get Democratic and Republican staff back in the room together.” He added, “Republicans on the Banking committee — you know, they’ve got questions too, because this is really complicated.” (Punchbowl)

• Sen. Ruben Gallego (D-AZ) told Punchbowl, “I don’t think anything’s changed. [Scott’s] problem is that his own members don’t support the markup date.” (Punchbowl)

• Asked about Sen. Elizabeth Warren’s calls for addressing corruption connected with presidential pardons, Gallego said, “She’s not wrong. It does need to be addressed, and the president and Binance are causing the issue.” (Punchbowl)

• Sen. Katie Britt (R-AL) told Punchbowl she has concerns about ancillary assets and impacts on community banks, saying, “That is kind of an outstanding question — of just making sure that we preserve those institutions, knowing they are the ones that so often are giving the home loan to achieve the American dream or giving that line of credit to create this small business.” (Punchbowl)

• On market structure generally, Sen. Josh Hawley (R-AR) said, “I don’t know the details. But it seems to me like some sort of regulatory framework that is predictable is going to be necessary. And right now, it’s sort of the Wild West.” (Punchbowl)

• Of crypto industry executives, market structure legislation skeptic Sen. John Kennedy (R-LA) said, “I invited them to send me their white papers. I haven’t yet received anything. I met with the White House czar [David Sacks]. Nice guy. Really smart. He has promised to send me something. I’m sure he will. He hasn’t sent it to me.” (Punchbowl)

Digital Asset Tax Legislation

• On potential consideration of a de minimis exemption for nominal digital asset transactions, Sen. Elizabeth Warren (D-MA) said, “Why should crypto get a special deal?” She continued, “They don’t want to follow the same income rules that all stock brokers and other traders have to follow… They can’t play the game both ways.” (PoliticoPro)

• Sen. Cynthia Lummis (R-WY) responded, “Otherwise American businesses and consumers will face ridiculous recordkeeping requirements.” She added, “This isn’t about giving a ‘tax break’ to digital asset uses, it’s about giving digital assets the same treatment as foreign exchange transactions so they can be used for payments.” (PoliticoPro)

• On support for a de minimis exemption, Senate Finance Ranking Member Ron Wyden (R-OR) said, “I have some due diligence to do.” (PoliticoPro)

• On support for a de minimis exemption, Senate Finance Chair Mike Crapo (R-ID) said, “We have to decide that, but I have not yet taken a position on it.” (PoliticoPro)

• On the potential for bipartisan legislation, Crapo said, “I hope that we will be able to get a bipartisan approach and, if and when that comes together, then we could put out a discussion draft, but I can’t predict.” (PoliticoPro)

Miscellaneous

• Sen. Roger Marshall (R-KS) said about China, “Don’t underestimate them. And I know you don’t. I’m much more concerned about the cyber-attacks from China and what they’re doing with crypto. The Chinese triad, the Chinese mafia that’s throughout the United States. They do all the money laundering for the cartel. They’ve taken over the marijuana industry across the country as well. And they are very involved in human trafficking in many ways as well. So, all I can tell you is, however bad you think it is, it’s worse, and it’s a full-time job just trying to keep track of the CCP in the country.” (Press release)

• House Financial Services Ranking Member Maxine Waters (D-CA) issued a press release on the pardon of Changpeng Zhao, saying, “Since taking office, Trump has made it his priority to excuse crypto criminals while weakening the very regulators responsible for holding these bad actors accountable and protecting American investors. One of his earliest actions was to gut the SEC and dismantle the Justice Department’s National Cryptocurrency Enforcement Team—the specialized unit responsible for prosecuting crypto-related crimes. In fact, in just the first month of his presidency, the Administration dropped investigations or cases against at least 89 companies.” (Press release)

What I’m Reading This Week

• Digital Asset Tax Treatment Doubly Highlighted, Part 1, Carrie Brandon Elliott, Tax Notes.

DC Decentralized is back – now on Substack!

This week decoded

Last week in digital asset federal policy, Senators and industry tried to regain legislative momentum following the public leak of a draft Democratic proposal to impose illicit finance regulations on DeFi. Pro-crypto Senate Democrats held a closed-door meeting with a group of digital asset industry executives for a frank discussion on how to best satisfy key policy concerns within developing market structure legislation. Republican Senators held their own meetings together and with industry executives, joined by White House AI & Crypto Czar David Sacks. The day ended with renewed optimism that bipartisan negotiators could return to the negotiating table.

This week, we enter week five of the deeply partisan government shutdown, which creates a chilling effect on those bipartisan market structure negotiations.

After weeks of speculation, the White House announced the nomination of Mike Selig to lead the CFTC. The announcement was potentially overshadowed by news of President Trump’s pardon of Binance founder CZ, sparking intense reactions from Democratic lawmakers.

At the Federal Reserve’s first Payments Innovation Conference, Fed Governor Christopher Wallace announced the creation of new payment accounts for financial services transforming the U.S. payments system.

Treasury will begin processing public comments submitted in response to their request for comment on innovative methods to detect illicit activity involving digital assets. Public comments on their advance notice of proposed rulemaking for the GENIUS Act are due November 4, 2025. Stakeholders are watching closely whether the shutdown will measurably impact Treasury’s rulemaking timelines.

Read more below

Congress

Hearings

• Last week

  • The October 22 House Financial Services Committee hearing on Oversight of Prudential Regulators was postponed.

  • The October 23 Senate Banking, Housing and Urban Affairs Committee hearing on Update from the Prudential Regulators: Rightsizing Regulation to Promote American Opportunity was postponed.

• This week

  • No relevant hearings are scheduled this week.

Legislation

• Reps. Troy Downing (R-MT), Byron Donalds (R-FL), Warren Davidson (R-OH), Marlin Stutzman (R-IN), Buddy Carter (R-GA), and Barry Moore (R-AL) introduced the Retirement Investment Choice Act to codify President Trump’s Executive Order (EO) 14330 by directing the Department of Labor (DOL) and Securities and Exchange Commission (SEC) to allow investments like private equity, real estate, and digital assets from being eligible for inclusion in 401(k) retirement plans. (Text)

• Sens. Adam Schiff (D-CA) and Elizabeth Warren (D-MA) introduced a resolution condemning President Trump for pardoning Changpeng Zhao, the founder and majority owner of the crypto exchange Binance, and calling for Congress to use its authority to stop corruption. (Text)

Correspondence

• Sens. Adam Schiff (D-CA), Ron Wyden (D-OR), Andy Kim (D-NJ), Catherine Cortez Masto (D-NV), Dick Durbin (D-IL), Gary Peters (D-MI), Elissa Slotkin (D-MI), and Cory Booker (D-NJ) sent a letter to Steve Witkoff, Assistant to the President and Special Envoy, requesting information on his failure to divest World Liberty Financial (WLF). (Letter)

• Senate Banking Subcommittee on Digital Assets Chair Cynthia Lummis (R-WY) sent a letter to the Consumer Financial Protection Bureau (CFPB) in support of the current open banking rule mandated by section 1033 of the Dodd-Frank Act, saying, “Large banks have shown they’ll restrict access for political reasons, targeting industries and individuals they disagree with, including gun manufacturers, digital assets, churches, and even President Trump. We cannot empower the opponents of digital assets to rewrite the rules in their favor, stifle innovation, and increase costs. Throwing up barriers would drive entrepreneurs overseas and weaken America’s leadership in financial technology.” (Letter)

• Senate Banking, Housing, and Urban Affairs Committee Ranking Member Elizabeth Warren (D-MA) sent a letter to Treasury Secretary Scott Bessent providing feedback on the Treasury Department’s advance notice of proposed rulemaking on its plans to implement the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), saying, “Experts, policymakers, and Democratic and Republican members of Congress have raised the importance of fixing flaws in the GENIUS Act as written. It is critical that Treasury take steps to implement and enforce the law in a manner that attempts to limit severe risks to U.S. financial stability, consumers, taxpayers, and national security.” (Letter)

• Rep. Bennie Thompson (D-MS) sent letters to various corporations, including crypto companies, requesting information regarding alleged donations to fund the White House State Ballroom Project. (X)

Trump Administration

White House

• President Trump nominated Mike Selig as Chair of the Commodity Futures Trading Commission (CFTC). Selig has been serving as chief counsel for the Securities and Exchange Commission’s Crypto Task Force.

• The Office of Management and Budget (OMB) released a memo entitled Streamlining the Review of Deregulatory Actions to provide guidance to agencies on streamlining the deregulation of prior government regulations and to establish new timelines and guidelines for review of deregulation efforts by the Office of Information and Regulatory Affairs (OIRA). The memo details benefits of deregulation, including, “The collective value of a group of deregulatory actions and the synergies between deregulation across multiple areas of the law and across the entire web of ensuing causal effects as they spread throughout the national economy may be greater than the sum of its parts. For instance, deregulating the energy sector will not simply make driving cars and use of electricity to power our homes less costly, it also benefits America’s tech sector, increasing AI innovation and improving the development of new cryptocurrency assets — benefits that in turn would further profit consumers in a virtuous cycle.” (Memo)

Treasury Department

• The deadline for public comments on the Treasury Request for Comment on Innovative Methods to Detect Illicit Activity Involving Digital Assets were due October 17, 2025.​ Submissions can be viewed at Regulations.gov.

• The extended deadline on the Advance Notice of Proposed Rulemaking (ANPRM) on GENIUS Act Implementation is November 4, 2025, as published in the Federal Register on October 1, 2025.​ (ANPRM)

Federal Reserve

• The Federal Reserve Board held its first Payments Innovation Conference to encourage collaboration between traditional financial institutions, emerging digital asset and fintech companies, and regulators. At the conference, Fed Governor Christopher Wallace announced the availability of a new “skinny” master account for financial services transforming U.S. payments systems. (Press release)

Noteworthy Quotes and Events

ADMINISTRATION

White House

• On the President’s pardon of Binance founder Changpeng Zhao, White House spokesperson Karoline Leavitt said in a statement, “President Trump exercised his constitutional authority by issuing a pardon for Mr. Zhao, who was prosecuted by the Biden Administration in their war on cryptocurrency. In their desire to punish the cryptocurrency industry, the Biden Administration pursued Mr. Zhao despite no allegations of fraud or identifiable victims.” (Axios)

Federal Reserve

• Fed Governor Christopher Waller delivered a keynote address at the Payments Innovation Conference on Embracing New Technologies and Players in Payments in which he said, “…I believe we can and should do more to support those actively transforming the payment system. To that end, I have asked Federal Reserve staff to explore the idea of what I am calling a ‘payment account.’ Today, Federal Reserve Banks provide access to master accounts and financial services to legally eligible entities following our Guidelines for Evaluating Account and Services Requests. The payment account would be available to all institutions that are legally eligible for an account and could be beneficial for those focused primarily on payments innovations. This payment account concept would be targeted to provide basic Federal Reserve payment services to legally eligible institutions that right now conduct payment services primarily through a third-party bank that has a full-fledged master account…To be more concrete, let me describe a possible prototype for this type of payment account or, as I sometimes call it, a “skinny” master account. The account would provide access to the Federal Reserve payment rails while controlling for various risks to the Federal Reserve and the payment system.” (Remarks)

CONGRESS

Market Structure Legislation

• Sen. John Kennedy (R-LA) delivered remarks on Senate floor about the future of digital asset market structure legislation in Congress, saying, “The Senate Banking Committee is in the process, as we should be, of considering market structure legislation for digital assets, for Bitcoin, for crypto. And it’s important because there’s an enormous amount of confusion out there. I remember when blockchain technology started, many of us do. Today, one in five Americans own cryptocurrency. Its growth has been nothing short of breathtaking. But as oftentimes happens when you have an innovation, it creates enormous confusion on the way that the subject of that innovation integrates with the federal government, and that’s the case here. Those who are in the cryptocurrency business and in the blockchain technology business don’t know who to talk to in the federal government. The Securities and Exchange Commission has announced, under President Biden, that it has jurisdiction over digital assets, and so did the Commodity Futures Trading Commission, the CFTC. And there’s been a lot of litigation, and there have been a lot of court cases, and it’s been enormously confusing. Those in the crypto business understandably have the reaction, ‘Look, we don’t mind being regulated. We have nothing to hide, but we’d like to know who to talk to. Is it the CFTC? Is it the SEC? What do we do?’ That’s why we need legislation. That’s why we need market structure legislation. Not because the government needs to stick its nose in everything, but because there has to be some certainty here. Clearly, there’s a turf war between the CFTC and the SEC, and it’s Congress’s role to delineate who has jurisdiction over what... We need to hold hearings. This is a complicated piece of legislation. I’ve spent a lot of time on it, and it’s one of the most complicated pieces of legislation I’ve ever seen. This is just one person’s opinion as a member of Banking: I think it’s going to take at least two hearings for us to be able to understand the pros and the cons of this legislation and understand the legislation itself…These are not issues that you raise and solve over a weekend. But I wanted to start talking about this bill, Mr. President, because it’s one of the most important pieces of legislation that this body will consider. It may not be the sexiest, it may not be the most interesting for some, but when one in five Americans own cryptocurrency, it’s certainly important. So, I will probably be talking about this issue several more times on this floor, but as the Senate moves forward with our digital assets market structure legislation, I hope we’ll move it quickly, but I hope we’ll move deliberately. I hope we’ll take the time to hold the hearings and, again, I think it’s going to take more than one hearing to address these weighty topics—and then additional time, once we get a bill, to mark it up, as we say, to amend it and make sure that we do the job for the American people.” (Press release)

• Sen. Thom Tillis (R-NC) said, “I’ll be shocked if we make much progress in the crypto space [this Congress], because it’s become a political lightning rod.” (Semafor)

• Sen. Cynthia Lummis (R-WY) said at the SALT Wyoming Blockchain Symposium that she expects a market structure bill to become law “before the end of the year — hopefully before Thanksgiving.” (Bitcoin Magazine)

• Rep. Bryan Steil (R-WI) posted “US leadership in digital assets shouldn’t be a partisan issue. It’s time for the Senate to pass CLARITY.”

• House Committee on Agriculture posted “It’s undeniable that momentum is building to finally bring certainty to the digital asset space. The CLARITY Act is a big step toward a commonsense framework that fosters innovation instead of stifling it.”

Senate Democrats / Industry Executives Meeting

• Sen. Ruben Gallego (D-Ariz.) reportedly said to executives in the meeting, “Don’t be an arm of the Republican Party. They used you all and your megaphones to fuck us.” (Punchbowl)

• Sen. Cynthia Lummis (R-WY) said, “We didn’t hear from either side that we don’t want to get to yes.” (Punchbowl)

• Lummis posted “Had a productive day focused on market structure and how we keep the momentum going to get it across the finish line by the end of this year. I look forward to working with all my colleagues to bring this critical digital asset legislation to POTUS’ desk.”

• Rep. Haley Stevens (D-MI) posted, “Happy to hear about positive bipartisan movement in the Senate to create clear rules of the road for digital assets and hold bad actors accountable. Crypto is not a Republican or Democratic issue, it’s about securing American innovation.”

President Donald Trump Pardon of Binance Founder Changpeng Zhao

• Senate Banking, Housing, and Urban Affairs Committee Ranking Member Elizabeth Warren (D-MA) issued a statement saying, “First, Changpeng Zhao pleaded guilty to a criminal money laundering charge. Then he boosted one of Donald Trump’s crypto ventures and lobbied for a pardon. Today, Donald Trump did his part and pardoned him. If Congress does not stop this kind of corruption in pending market structure legislation, it owns this lawlessness.”

• House Financial Services Committee Ranking Member Maxine Waters (D-CA) released a statement, saying, “As the government remains shut down, federal workers go without pay, and Americans watch their health care costs skyrocket, Donald Trump continues to show no interest in negotiating with Democrats to reopen the government and relieve the pain Americans are feeling. Instead, Trump is doing massive favors for crypto criminals who have helped line his pockets. Trump’s pardon of Binance founder Changpeng Zhao—who pleaded guilty to enabling money laundering and facilitating suspicious transactions with child abusers, drug dealers, and terrorists—is an appalling but unsurprising reflection of his presidency: one defined by corruption, self-interest, and loyalty to criminals over working-class American families. Let’s be clear about why this happened. CZ has spent months lobbying Trump and his family while funneling billions into Trump’s personal crypto company, World Liberty Financial. The pardon was the payoff and a blatant example of the kind of pay-to-play corruption that Trump and his Administration continue to engage in. Taken together, the Administration’s actions effectively legitimize the crypto crime CZ was convicted of, giving him the green light to continue operating his crypto platform with virtually no guardrails to protect the hard-earned funds of everyday investors. These actions are yet again proof that Trump is more than willing to allow crypto crime to flourish so long as it boosts his personal fortune.” (Press release)

• Sen. Chris Van Hollen (D-MD) posted, “Trump pardoning the guy who helped boost his family’s crypto scheme is par for the course, but we can’t look away. He’s abusing his power again and again to enrich himself and his family. The most corrupt president in history — and it’s not even close.”

• Sen. Jeanne Shaheen (D-NH) posted, “Binance processed billions worth of illicit finance, including from known terrorist organizations and drug traffickers. POTUS pardoning Binance’s CEO after the company boosted President Trump’s own crypto venture is a corrupt and blatant betrayal of American interests.”

• Sen. Mazie Hirono (D-HI) posted, “Once again, the law doesn’t apply to you as long as you’re enriching the Trump family. Yesterday, Trump pardoned Changpeng Zhao, a convicted crypto CEO, after Zhao offered to boost the Trump family’s own crypto company. It’s pure corruption.”

• Sen. Chris Murphy (D-CT) posted, “The White House is a 24/7 pay-to-play enterprise. The latest? Trump is pardoning Changpeng Zhao, who built a company that allowed terrorists and sex predators to launder money. Why? Because Zhao made a huge investment in Trump’s corrupt crypto business. Pay-to-play.”

• Sen. Richard Blumenthal (D-CT) posted “Pardoning CZ rewards corruption. Money laundering & narcotics trafficking is condemnable, except if you’re a partner in Trump family’s corrupt crypto racket. It makes this Administration look like a RICO organized crime enterprise.”

• Rep. Jim Clyburn (D-SC) posted, “Let’s recap Trump’s week: Demolished the East Wing of the White House—without any Congressional approval—to make room for a $300 million ballroom funded by wealthy donors. Pardoned a crypto company founder convicted of enabling crimes tied to terrorist groups and child exploitation, after the company helped boost Trump’s own cryptocurrency. Refused to meet with Democrats to end the government shutdown and save health care. In short: Trump spent the week busy helping himself—not helping you.”

• Rep. Greg Casar (D-TX) posted “Trump’s crypto corruption is staggering. Congress must investigate and hold him accountable, and we must pass new rules of the road that prevent corrupt crypto deals in future.”

• Rep. Chris Deluzio (D-PA) posted “The President just pardoned a convicted money launderer—Changpeng Zhao—who spent months pumping up the Trump family crypto business. Stinks like corruption to me”

• Rep. Joe Morelle (D-NY) posted “Betraying your country to enrich yourself sounds like the work of tyrants like Putin, Marcos, or Maduro—the ranks of which Donald Trump is seemingly desperate to join. It’s disgraceful.”

• Rep. Jerry Nadler (D-NY) posted “Binance CEO CZ allowed Hamas’ Al-Qassam Brigades and other terrorist groups to use his platform, pled guilty, and owed billions in fines. Then Trump pardoned him, just months after a $2 billion stablecoin deal between Binance and his family’s crypto venture. Trump is selling pardons to anyone who can personally profit him. It’s a shameful abuse of power and a mockery of justice.”

• Rep. Mark Takano (D-CA) posted “Trump has turned his Administration into a pay to play system. Crypto bros, tobacco companies, and military contractors get to the front of the line since they have bankrolled Trump’s demolition of the East Wing to make space for his ballroom.”

• Rep. Don Beyer (D-VA) posted, “Donald Trump and the Trump family’s self enrichment from crypto dealings are one of the worst corruption scandals in American history and this is one of the most blatant and corrupt acts in pursuit of those payouts that Trump has ever done. Trump is taking vast sums of money from foreign governments and corporate interests, and then giving them what they want. It’s some of the worst corruption this country has ever seen, and Congress absolutely has to investigate it. But Republicans keep turning a blind eye. This man’s company facilitated financing of terrorist organizations like Hamas, ISIS, and Al Qaeda, helped evade sanctions on Iran and North Korea, and enabled ransomware attackers. He put money in the pockets of the Trump family and Trump pardoned him.”

• House Judiciary Dems posted “Trump just pardoned Binance founder Changpeng Zhao, whose online crypto exchange allowed Al Qaeda, Hamas, and ISIS, other terrorists, hackers, and vicious drug cartels to launder billions of dollars in criminal proceeds. Now that Zhao has helped Trump get filthy rich off his own crypto schemes, all these dangerous criminal deals are forgiven and Zhao is free to offend again. Another day in the Gangster State.”

Miscellaneous

• House Financial Services Ranking Member Maxine Waters (D-CA) issued a statement on the October 10 flash crash in crypto markets, saying, “While crypto has recovered slightly, both average and institutional investors still suffered huge losses. This highlights the volatility in the crypto market that Ranking Member Waters has long warned about. These risks are only amplified as Trump and Republicans in Congress work to integrate crypto into the traditional financial system without first establishing the proper guardrails—increasing the likelihood of future crashes just like this one that could more rapidly spread to traditional finance.” (Press release)

• Rep. Ilhan Omar (D-MN) posted “Trump loves to brag that he’s not taking a presidential salary. But let’s be honest, that’s pocket change compared to what he’s made using the presidency to enrich himself through crypto deals and now angling for millions in taxpayer dollars from a Justice Department he controls. It’s corruption in plain sight.”

• Sen. Jim Justice (R-WV) posted “Honored to speak at the MARA Summit! We need Toby and Edith to jump on the Bitcoin train, then watch it spread like wildfire. The potential in crypto is off the charts!”

• House Foreign Affairs Committee Democrats posted “Despite killing USAID + huge StateDept reorg/staff purge + corrupt crypto deals + Ukraine/Gaza + China trade war + bombing boats in the Caribbean—HFAC GOP has held just 4 oversight hearings w/ Trump officials this year Republicans dont even pretend to care about doing their jobs”

• Rep. Nancy Mace (R-SC) posted “Outdated mortgage rules don’t belong in a digital economy. Our American Homeowner Crypto Modernization Act makes sure crypto investors can still chase the American Dream.”

• Rep. Zach Nunn (R-IA) posted “The DOJ just cracked the biggest crypto scam in history, seizing $15B from fraudsters operating out of Cambodia. Our bipartisan GUARD Act would give local law enforcement the same tools the DOJ uses, increasing fraud protection in local communities.”

• Sen. Tina Smith (D-OR) posted “The only people doing well right now seem to be AI executives, crypto bros and the Trump family.”

• Sen. Elizabeth Warren (D-MA) posted “Americans lost over $240 million of their hard-earned savings to crypto ATM scams this year. The companies running these machines profit while doing little to stop it. We need rules that protect people, not profits and scammers.”

• Warren also posted “We need rules in place to protect regular investors in crypto and private equity – not a shadowy system that lines the pockets of crypto billionaires and giant private equity firms. A downturn in these markets could put our whole economy at risk.”

• Rep. Greg Casar (D-TX) posted “Trump gets $5 billion in corrupt crypto deals, a $400 million “palace in the sky”, millions in payouts from Amazon and Meta. But when Democrats demand affordable health care for working people? Republicans shut down the government.”

• Sen. Sheldon Whitehouse (D-RI) posted “Trump is purposely driving up your electric bills to cater to his big crypto, AI, and fossil fuel donors — money from your pockets to theirs. He’s also driving up your homeowners insurance, hurting property values.”

• Sen. Cynthia Lummis (R-WY) posted “Large banks have shown they’ll restrict access for political reasons, targeting industries & individuals they disagree with, including gun manufacturers, digital assets, churches, & even POTUS. I sent a letter to the CFPB expressing my strong support for the open banking rule. We cannot empower the opponents of digital assets to rewrite the rules in their favor, stifle innovation, and increase costs. Throwing up barriers would drive entrepreneurs overseas and weaken America’s leadership in financial technology.”

• Lummis also posted “Another POTUS win and a victory for human rights, financial integrity, and American leadership. The seizure of 127,000 bitcoin underscores two urgent priorities for Congress: first, passing clear digital asset market structure legislation to ensure law enforcement can act decisively against bad actors while protecting innovation. Second, codifying how seized bitcoin is stored, returned to victims, and safeguarded for future generations. Turning criminal proceeds into assets that strengthen America’s Strategic Bitcoin Reserve shows how sound policy can turn wrongdoing into lasting national value.”

Zero One Strategies in the News

• I had a great time talking with Eleanor Terrett, Jacquelyn Melinek, and Gerard Gallagher on Crypto in America Live. (Video)

• I was quoted in Unchained, in an article by Jason Brett entitled, Landmark Crypto Bill Set to Take a Big Step in the Senate Despite Shutdown: “Optimistically, we’re at about eight out of ten,” said Stacey Rolland, founder and CEO of Zero One Strategies, a government relations firm focused on U.S. federal policy in emerging technologies. “Everybody who needs to be at the table is at the table. If you listen to the daily noise, it can sound like things are about to fall apart — but Democrats are still offering suggestions, Republicans are still engaging, and we’re nowhere near a shutdown-style impasse.” (Unchained)

• Zero One Strategies appeared in:

  • The Cryptocurrency Regulatory Future Hangs in the Balance by OneSafe.

  • BREAKING: Bullish Crypto Bill May Pass Despite US Government Shutdown by Bitcoin Sistemi.

  • Senate Progresses on Crypto Bill as Industry Awaits Trump’s Approval by Coindoo.

What I’m Reading This Week

• State of Crypto 2025: The Year Crypto Went Mainstream, Daren Matsuoka, Robert Hackett, Jeremy Zhang, Stephanie Zinn, and Eddy Lazzarin, a16z.