The Federal Reserve Board has requested public comment on a proposal to establish payment accounts, sometimes referred to as “skinny” master accounts, that would broaden access to the central bank’s core payments infrastructure. The proposal would allow a wider range of financial institutions, including payment and crypto companies, to access these systems directly. President Donald Trump signed an executive order formally directing the Federal Reserve to explore the creation of such accounts.

When Congress returns from the Memorial Day recess, lawmakers will enter a compressed legislative window ahead of the July 4^th and August recesses. The CLARITY Act is among several high-priority items competing for limited floor time, and Republican negotiators have not yet reached agreement on the ethics provisions sought by some Democrats.

Meanwhile, the House Ways and Means Committee convened another closed-door bipartisan roundtable on crypto tax policy. Chairman Jason Smith (R-MO) has reiterated his goal of advancing a bipartisan bill through the House this year. However, committee Democrats continue to emphasize that substantially more member education is needed before meaningful legislative negotiations can move forward.

Read more below

Congress

Hearings

Last week

• On May 19, the House Select Strategic Competition Between the United States and the Chinese Communist Party Committee held a hearing on “Crime, Corruption, and Power: The Rise of CCP-linked Scam Networks Targeting Americans and Threatening U.S. Security.”

• On May 20, the House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee held a hearing on “Partnering for Innovation: How Bank-Fintech Collaborations Enhance Financial Infrastructure.”

• On May 21, the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions held a hearing on “Modernizing the BSA for Financial Crime in the 21st Century.”

Legislation

• Reps. Max Miller (R-OH) and Steven Horsford (D-NV), along with co-sponsors Reps. Mike Carey (R-OH) and Suzan DelBene (D-WA), introduced the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields (Digital Asset PARITY) Act to update the U.S. federal tax code for digital assets. (Text)

• Reps. Nick Begich (R-AK) and Jared Golden (D-ME) introduced the American Reserve Modernization Act of 2026 (ARMA) to establish a Strategic Bitcoin Reserve and modernize how the United States manages digital reserve assets. (Press release)

Correspondence

• Sen. Lisa Blunt Rochester (D-DE) sent a letter to the Federal Reserve Board of Governors requesting information regarding the decision to grant a limited-purpose Federal Reserve master account to Kraken Financial. The letter raises concerns that the approval appears to have occurred before the Federal Reserve finalized a broader policy framework governing such accounts. (Letter)

• Senate Banking, Housing, and Urban Affairs Committee Ranking Member Elizabeth Warren (D-MA) sent a letter to Comptroller of the Currency Jonathan Gould, raising concerns over his decision to grant national trust charters to companies that do not qualify under the National Bank Act and requesting the full charter application for all nine approved companies, legal analyses supporting the OCC’s decisions, and all communications between OCC officials and the White House or Trump family members regarding the charter approvals by June 1, 2026. (Letter)

Publications and Events

• The Government Accountability Office (GAO) released a report on Privacy-Enhancing Technologies (PETs). (Report)

Trump Administration

White House

• The President issued an executive order on Integrating Financial Technology Innovation into Regulatory Frameworks directing federal financial regulators to modernize their rules to better accommodate fintech and digital assets, and asking the Federal Reserve to consider broader access for non‑bank firms to Fed payment services. (Executive Order)

Federal Reserve Board

• The Federal Reserve Board requested public comment on a proposal to establish a “payment account,” also referred to as “skinny” master accounts, to open up the central bank’s foundational payments system to a wider range of financial institutions, including payment companies and crypto firms. The proposed payment account is substantially similar to the prototype outlined in the Board’s request for information issued in December 2025. Payment account holders would not have access to intraday credit or the discount window, would not earn interest on balances held at a Reserve Bank, and would only have access to payment services with automated controls to prevent overdrafts. The proposal would not expand or otherwise change legal eligibility for access to accounts or payments services from the Federal Reserve, and affirms that Reserve Banks would expect payment account holders to mitigate illicit finance risks. (Federal Register)(Press release)

Securities and Exchange Commission (SEC)

• Commissioner Hester Peirce will depart the SEC to join Regent University’s law school in November. (Statement)

Noteworthy Quotes and Events

ADMINISTRATION

Securities and Exchange Commission (SEC)

• SEC Commissioner Hester Peirce posted “I appreciate the interest in--but not the hyperbole about--the contemplated innovation exemption for the onchain trading of tokenized NMS stock. Keep in mind: I’ve always expected that it’d be limited in scope & would facilitate trading only of digital representations of the same underlying equity security that an investor could purchase in the secondary market today, not synthetics. If people want to understand what synthetics mean to me in this context, see the staff statement on tokenization, which distinguishes tokenized versions of issuer-sponsored stocks and of stocks that SEC-registered firms hold for their customers from synthetic instruments that provide exposure to stocks.”

CONGRESS

House Democratic Tax Writers’ Views on Digital Asset Tax Legislation

• On the slow pace of digital asset tax legislation and the need for more education for tax writers, Rep. John Larson (D-CT) said, “There seems to be a rush towards something that I’m not completely certain that I totally grasp all the liabilities.” (Punchbowl)

• Rep. Don Beyer (D-VA) said, “It’s the wild west out there. As long as it’s the wild west, it’s hard to understand how we’re going to do meaningful tax law. We should try.” (Punchbowl)

• Rep. Brad Schneider (D-IL) said, “We aren’t even at the game yet.” (Punchbowl)

• Rep. Brendan Boyle (D-PA) “This is something where the details really matter. Because there’s a right way to go about regulation and there’s a wrong way to go about it.” (Punchbowl)

• Rep. Steven Horsford (D-NV) said, “It’s important that we modernize our tax code in order to keep up with it.” (Punchbowl)

Ethics Language in CLARITY Act

• Sen. Cynthia Lummis (R-WY) said, “You can’t prevent adult children of members of Congress, or the president or vice president, from engaging in legitimate businesses. There’s no way to capture adult children.” (Punchbowl)

• Sen. Ruben Gallego (D-AZ) said, “Hard to cover any family, actually, just to be clear. What we’re negotiating is to make sure that the president is covered, and to whatever extent he is involved with — whether it’s a family or a business or anything else like that — that would also be covered.” (Punchbowl)

Miscellaneous

• On sponsoring the SAFE Crypto Act, Senate Finance Committee Chair Mike Crapo (R-ID) said, “Cryptocurrency scams accounted for roughly half of all cybercrime losses last year in the United States. This alarming trend underscores the need for better protections for Americans. The SAFE Crypto Act would establish a much-needed taskforce to strengthen collaboration among law enforcement and financial regulators, helping safeguard consumers from this growing threat.” (Press release)

• Senate Banking Chair Tim Scott (R-SC) posted “Financial innovation should work for, not against, everyday Americans. Stablecoins and digital assets have the potential to modernize our financial system, expand access to commerce around the world, and keep America leading in the future of finance!”

• Sen. Cynthia Lummis (R-WY) released a statement on the President’s Executive Order expanding access to Federal Reserve Master Accounts for digital asset companies, “This Executive Order puts the Federal Reserve on notice that it must follow the law and provide equal access to the payments system for all eligible fintech companies. For years, Fintech has been shut out while legacy institutions enjoyed privileged access, and the Trump administration is ensuring a level playing field, competition, and lower payments costs for consumers. American innovation cannot wait on bureaucratic inertia, and President Trump is making sure it does not have to.” (Press release)

• Lummis posted “Wyoming didn’t wait for Washington to figure out digital assets. We built the framework ourselves. I didn’t come to the U.S. Senate to slow that down, I came here to scale it—and that’s exactly what my bill, the Clarity Act, does.

• Lummis also posted “I’ve sat through years of hearings, negotiations, and rewrites to get the Clarity Act to this point, and the reason is simple: American consumers and industry deserve a real framework, not regulatory limbo.
  Lummis also posted “Credit Unions are embracing digital assets and know that they can now offer a wider array of services and opportunities to their members. It’s the future!”

• Sen. Jon Husted (R-OH) posted “Ohioans deserve a government that works smarter and costs less. Giving people the option to pay for state services with digital assets is common sense — it puts more choices in the hands of taxpayers, cuts unnecessary costs, and positions Ohio as a leader in the 21st-century economy. I applaud OhioTreasurer for his leadership on this. Ohio has always led the way, and initiatives like this that are forward-thinking are exactly why.”

• Rep. Pat Harrigan (R-NC) posted “Proud to be one of those cosponsors. Just as gold reserves anchored American financial security for generations, a Strategic Bitcoin Reserve positions the United States at the forefront of 21st century finance and out of reach of our adversaries.”

• Rep. Sylvia Garcia (D-TX) posted “During today’s hearing before the Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence, I pushed for financial innovation that helps working families get ahead, not leave underserved and underbanked communities behind. Innovation should expand opportunity, not deepen inequality.”

• Sen. Dave McCormick (R-PA) posted “The CLARITY Act is on a path to the president’s desk this summer. Kevin Warsh is about to bring a new day to the federalreserve. Republicans are laying the groundwork for America’s financial future.”

• House Committee on Agriculture posted “ONE WEEK OUT: Last Thursday, BankingGOP advanced the CLARITY Act out of committee, following in the footsteps of the House Committee on Agriculture, FinancialCmte, and SenateAgGOP. The digital asset landscape needs certainty and clear rules of the road. It’s time to get this landmark bill to President Trump’s desk.”

• Sen. Elizabeth Warren (D-MA) said, “I’m not often on the same side as the big banks, but when crypto billionaires want all the privileges of being a bank without any of the rules, that’s a threat everyone should be worried about.” (Politico)

• In floor remarks, Rep. Ryan Mackenzie (R-PA) said, “Mr. Speaker, I rise today to recognize officer Hunter Stromme of Bethlehem Police Department for his commitment to protecting members of our community while off duty at a local gas station. Officer Stromme noticed an elderly woman who appeared distressed while speaking on the phone near a bitcoin machine. Trusting his instincts and recognizing signs of a potential cryptocurrency scam, he stepped in to check on her well-being. Because of his quick thinking, Officer Stromme was able to stop the victim from sending additional money to scammers and help prevent further financial loss. He then ensured that the incident was properly documented and that the individual received assistance. Officer Stromme’s actions serve as a reminder that protecting and serving is more than a profession. It is a commitment that extends far beyond the badge and beyond the call of duty. As a member of the bipartisan stop scams caucus, I know how important it is to raise awareness and protect our communities from increasingly sophisticated scams that target vulnerable individuals. I commend Officer Stromme for his dedication to keeping the people of the Lehigh Valley and Poconos safe.”

What I’m Reading This Week

• What Happens When the Wash Sale Rule Meets Crypto?, Marie Sapirie, Tax Notes.

• How Prediction Markets and Crypto Firms Steamrolled a Watchdog Agency, Sharon LaFraniere and David Yaffe-Bellany, 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

Check out our other newsletter, DC/ai Decoded: A weekly newsletter on developments in artificial intelligence and quantum federal policy.

The Digital Asset Market Clarity Act advanced out of the Senate Banking Committee with bipartisan support, marking a significant step toward establishing clear rules of the road for digital assets. Sens. Ruben Gallego (D-AZ) and Angela Alsobrooks (D-MD) joined Republican colleagues in moving the legislation forward.

The bill still faces a lengthy path before becoming law, with limited time remaining in the Congressional calendar. It must first be reconciled with the version passed by the Senate Agriculture Committee. Additionally, Senate negotiators and the White House will need to reach agreement on key ethics provisions and secure sufficient Democratic support to meet the 60-vote threshold required for final passage. The bill must then be passed by the House before reaching the President for signature.

Meanwhile, across the Capitol in the House, the Ways and Means Committee held a closed-door bipartisan roundtable on digital asset tax policy with a small group of academics and tax experts.

Separately, the National Credit Union Administration (NCUA) released new guidance outlining requirements and expectations for credit unions seeking to issue stablecoins.

Read more below

Congress

Hearings

Last week

• On May 14, the Senate Banking, Housing and Urban Affairs Committee held a markup of the “Digital Asset Market Clarity Act of 2025.”

This week

• On May 19, the House Select Strategic Competition Between the United States and the Chinese Communist Party Committee holds a hearing on “Crime, Corruption, and Power: The Rise of CCP-linked Scam Networks Targeting Americans and Threatening U.S. Security.”

• On May 20, the House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee holds a hearing on “Partnering for Innovation: How Bank-Fintech Collaborations Enhance Financial Infrastructure.”

• On May 21, the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions holds a hearing on “Modernizing the BSA for Financial Crime in the 21st Century.”

Legislation

• The Senate Banking, Housing and Urban Affairs Committee passed the Digital Asset Market Clarity Act of 2025.

Correspondence

• Senate Banking, Housing, and Urban Affairs Committee Ranking Member Elizabeth Warren (D-MA) and Senate Committee on Armed Services Ranking Member Jack Reed (D-RI) sent a letter to Treasury Secretary Scott Bessent and Acting Attorney General Todd Blanche, requesting an investigation into World Liberty Financial following Wall Street Journal reporting that WLF partnered with a crypto venture whose flagship project had been led by U.S.-sanctioned individuals. (Letter)

• Reps. Ted Lieu (D-CA) and Sean Casten (D-IL) led 54 House Democrats in a letter to Acting Attorney General Todd Blanche urging the Department of Justice to pursue suspected insider trading on prediction market platforms more aggressively. (Letter)

Publications and Events

• The Senate Banking Committee published a series of fact sheets on the CLARITY Act. (Fact sheets)

Trump Administration

National Credit Union Administration (NCUA)

• NCUA released stablecoin implementation guidance on the requirements and guidelines for credit unions that issue stablecoins. The proposed rules are similar to those issued by the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency on capital and liquidity requirements, redemption rules, and application guidelines. The comment period ends on July 17. (Press release)

Noteworthy Quotes and Events

ADMINISTRATION

White House

• President’s Council of Advisors for Digital Assets Executive Director Patrick Witt posted “As they say, life is sometimes like a pie-eating contest where the reward for success is more pie. Yesterday’s bipartisan markup of the Clarity Act was a major step forward, but as Senators on both sides of the dais noted, there’s more work to be done before this legislation is ready for prime time. We’ll keep working in good faith to build the support needed to pass the bill on the Senate floor.“

• Witt also posted “Today, the Senate Banking Committee will vote to advance the CLARITY Act. I am proud of the countless hours that my team, Treasury, SEC, CFTC, and Senate Banking staff and members have put into shaping this product. ... This morning’s vote will reveal whether Democrats have genuinely moved on from their war on crypto, or whether they remain cowed by Elizabeth Warren. The choice is theirs.”

• Witt also posted “It’s not limited to the UK. The entire world is waiting for the U.S. to lead the way on regulatory treatment of digital assets.”

• White House advisor David Sacks posted “UPDATE: the Clarity Act has passed out of the Senate Banking Committee. Congrats to Chairman SenatorTimScott, SenLummis, BernieMoreno, and their staffs on a job well done. Thank you also to SenThomTillis for his efforts to ensure that today’s vote was bipartisan.”

• Sacks also posted “Tomorrow’s markup of the Digital Asset Market Clarity Act is a monumental step in making the U.S. the Crypto Capital of the World... There are roughly 50 million people in the U.S. who own or use crypto. This legislation will ensure that this ecosystem can innovate and flourish for years to come.”

Securities and Exchange Commission (SEC)

• SEC Chair Paul Atkins posted “Congratulations to Chairman SenatorTimScott and BankingGOP for advancing the Clarity Act with bipartisan support. I look forward to President realDonaldTrump’s signature & working with ChairmanSelig to implement this legislation.”

Commodity Futures Trading Commission (CFTC)

• CFTC Chair Mike Selig posted “Today’s vote for CLARITY brings us one step closer to cementing the US as the crypto capital of the world. With a bright line between digital asset securities and commodities, clear rules of the road for digital asset transactions, and an end to regulation-by-enforcement, America will remain the global hub for crypto innovation for years to come.”

• Selig also posted “Finance has continuously evolved, from trading pits to electronic markets, to blockchains. If the US doesn’t embrace this innovation, it will move offshore. Under POTUS’ leadership, I’m committed to keeping America the crypto capital of the world.”

• Selig also posted “Under my chairmanship, the CFTC is ready to regulate the new frontier of finance. Our Innovation Task Force is hard at work ensuring those developing the next generation of blockchain technologies, AI, prediction markets, and more have good reason to build them in America.”

• Selig also posted “Americans deserve future‑proof digital asset market structure legislation that protects their right to self-custody crypto assets and transact peer-to-peer using blockchain networks.”

Federal Reserve

• In remarks at the Federal Reserve Bank of Kansas City 2026 Future of Banking Conference, Vice Chair for Supervision Michelle Bowman said, “Turning to emerging challenges like artificial intelligence, custody of digital assets, and evolving payment systems, the Fed’s role is to understand and encourage risk management of the use of these technologies. Genuine collaboration is critically important—where supervisors bring risk-management perspective and regulatory expertise, and bankers bring market knowledge and a deep understanding of customer needs.” (Remarks)

CONGRESS

CLARITY Act Support

• Senate Banking Chair Tim Scott (R-SC) said, “Today, the Banking Committee showed the American people that Washington can still work together. We had a serious debate, worked through real differences, and came together around a shared goal: protecting consumers, supporting innovation, and keeping the future of finance in America. This legislation brings digital assets into the sunlight with clear rules, stronger safeguards, and better tools to stop bad actors. For me, this is personal. My mother raised my brother and me with faith, grit, and determination, and she taught me that the American Dream should be within reach for every family, including single mothers working hard to build a better life for their children. Today is a historic day for this Committee and a major victory for the American people.” (Press release)

• Sen. Cynthia Lummis (R-WY) said, “After nearly a year of around-the-clock negotiations, I am incredibly proud of the product we have passed out of Committee today,” said Lummis. “This is a historic step forward for digital asset innovation, and I am grateful to Chairman Scott for his tireless efforts to move this legislation through Committee and my colleagues on both sides of the aisle who chose to put American leadership ahead of politics. Today’s passage out of Committee sends an unmistakable signal that the United States is not ceding the future of digital finance to anyone. I want to thank the industry, stakeholders, and every colleague who spent countless hours working to ensure we produced a bill worthy of this moment, and I believe we accomplished that goal. The United States has long been a beacon of innovation, and with final passage on the Senate floor, we are going to make sure it stays that way. Let’s finish what we started and cement America’s digital asset space for generations to come.” (Press release)

• Sen. Angela Alsobrooks (D-MD) issued a statement saying, “The digital revolution is upon us, and it has presented a clear opportunity to support small businesses, generate wealth, spur innovation, and support younger Americans who want to be part of this revolution. And this digital revolution is happening with us or without us—we have a responsibility to regulate it to create rules of the road. That is why I’ve been at the table. I’ve been in negotiations for over nine months, working toward regulating digital assets in a way that protects consumers and reduces the risks of deposit flight and deceptive marketing. I have negotiated in good faith with colleagues on both sides of the aisle willing to meet this critical moment. I’ve worked to make this bill better. Let me be very clear: my vote today is a vote to keep working in good faith. It does not mean I will be voting for the passage of the CLARITY Act on the floor. We still have work to do. We need to find a workable way to address law enforcement’s concerns about financial crimes. I am a former prosecutor and know how important that is. We also need to include an agreement on ethics—that would apply not just to the President and Vice President but to all of us. The American people—especially my constituents—expect that from us. I will keep working with my colleagues to get this done. Americans—from every background and every community—deserve to benefit financially from this digital revolution and be protected from the risks that come with it. If we don’t act, we will be left behind. I won’t let that happen.” (Press release)

• Sen. Ruben Gallego (D-AZ) issued a statement saying, “Digital assets have grown to represent a significant portion of our financial system. With 1 in 4 Americans now invested in digital assets, this issue cannot be ignored. What Congress is attempting to do here – create regulations for an entirely new set of assets – is a massive undertaking. We cannot afford to wait, but we also cannot afford to get this wrong. Through serious, bipartisan negotiations, we have made incredible progress on this bill. We have narrowed the gap on many of the outstanding issues. We did serious work on genuinely difficult questions about regulatory jurisdiction, consumer disclosure requirements, insolvency protections, stablecoin yield, crypto ATMs, and many more. My vote today is so we can continue these efforts. But I want to be clear: my vote here does not guarantee a vote on the floor. We have many outstanding issues still to resolve. Toughest and most critical of all is coming to an agreement on ethics guardrails for elected officials. This remains my focus moving forward.” (Press release)

• Sen. Pete Ricketts (R-NE) said, “As Governor, I signed legislation into law that put Nebraska at the forefront of financial innovation. As Senator, I am proud to vote for the CLARITY Act. It establishes clear and enforceable guardrails for digital asset markets. It will counter illicit financial activity and national security threats and foster innovation. I also fought for provisions that will preserve Nebraska’s recently passed law that has helped curb crypto ATM scams.” (Press release)

• Sen. Bill Hagerty (R-TN) posted “Today I was proud to advance the Digital Asset Market Clarity Act. This legislation is vital to supercharging innovation and preparing our economy for the 21st century. What the GENIUS Act is doing for the stablecoin ecosystem, CLARITY promises to do for all digital assets. While today marks an important milestone, the legislative work continues.”

• Sen. Thom Tillis (R-NC) posted “The Clarity Act passed by the Senate Banking Committee is a strong bipartisan compromise to provide the regulatory certainty needed to advance financial innovation. I was proud to work with my colleagues on both sides of the aisle for the past few months, and more work remains in the weeks ahead to make this legislation even better. Let’s get it done.”

• Sen. Pete Ricketts (R-NE) posted “Today during a BankingGOP hearing, I voted in support of the CLARITY Act. This bill provides regulatory certainty, protects consumers, encourages American innovation, and strengthens national security.”

• Sen. Jim Banks (R-IN) posted “Proud to vote YES on the crypto market structure bill today. Washington shouldn’t be in the business of strangling American innovation. Clear rules, free markets, and U.S. leadership in digital assets. That’s a win.”

• Banks also posted “Just voted for the crypto market structure bill. If we don’t write the rules for digital assets, China will. American innovation doesn’t wait for Washington to catch up.”

• Sen. Jon Husted (R-OH) posted “The American financial system is the envy of the world and one of the drivers of our nation’s success. The CLARITY Act creates a trusted system with clear rules and consumer protections for cryptocurrency that will ensure our country continues to compete and win. I strongly support this bill and hope for quick passage in the Senate.”

• Sen. Dave McCormick (R-PA) posted “Just voted to advance the CLARITY Act out of the BankingGOP Committee with bipartisan support. This is a big step for crypto, consumer protection, and keeping the future of finance here in America. Now let’s get it to the Senate Floor and onto the POTUS’s desk.”

• Sen. Katie Boyd Britt (R-AL) posted “I am excited to vote for the Clarity Act this morning in the Senate Banking Committee. Digital assets need smart regulation and clear rules of the road to follow. We’re one step closer to ensuring a Gensler regime can never be repeated. Let’s get this done.”

• House Committee on Financial Services Chair French Hill (R-AR) and House Committee on Agriculture Chair Glenn “GT” Thompson (R-PA) issued a statement saying, “Last July, the House sent a strong bipartisan message when 78 Democrats joined 216 Republicans to pass the CLARITY Act. On January 29, 2026, Senate Agriculture Committee Chairman John Boozman (R-AR) took the first step and advanced digital asset market structure legislation. We commend Chairman Tim Scott (R-SC) and the Senate Banking Committee for continuing that momentum and moving this bill forward. This landmark bill brings long-overdue certainty to the digital asset ecosystem and solidifies the United States as the global leader in the future of blockchain use in financial services. A clear framework will protect consumers, encourage responsible innovation, and keep investment and technological development here in the United States. We look forward to continuing to work with our Senate colleagues as the Banking and Agriculture Committees finalize the CLARITY Act and advance this historic legislation to the Senate floor. We must get a strong, durable framework that reflects the priorities of both Chambers across the finish line and to President Trump’s desk.” (Press release)

CLARITY Act Opposition

• Sen. Chris Van Hollen (D-MD) released a statement saying, “As we’ve seen time and again, cryptocurrency and digital assets are rife with opportunity for abuse if left unchecked. That’s why any regulation surrounding digital assets must protect consumers, safeguard our financial system, and stamp out their use in corrupt and criminal activities. While the CLARITY Act may seek to do that, it not only fails to achieve those goals but also risks deregulating existing markets and opening the door to further corruption and abuse. In an effort to address some of these issues, I introduced several amendments, including one to ensure that no government official – not the President, not members of Congress – or their families can own, promote, or affiliate with digital asset issuers or platforms. As President Trump and his family rake in billions of dollars through illicit crypto deals with foreign governments, this provision is necessary to prevent self-dealing by those who are in positions to profit from their own decisions. But instead of choosing to stand up to this rampant corruption, Republicans blocked this amendment, siding once again with political cronyism and against the American people. I also offered an amendment to rein in the use of these assets for money laundering, sanctions evasion, and the financing of terrorism – a necessity as the use of digital assets, like DeFi, in illicit activities reached an all-time high last year. The Republican majority voted down this amendment. The other amendments I put forward would have increased consumer protections and transparency and taken additional steps to crack down on illicit finance and corruption; however, the Chair did not allow consideration of those amendments. Without adopting these and additional critical changes, the CLARITY Act will put our consumers, financial systems, and national security at risk. It’s for these reasons that I voted against the CLARITY Act.” (Press release)

• Sen. Andy Kim (D-NJ) said, “I strongly believe in harnessing innovation and opportunity from emerging technologies, and that we don’t have to sacrifice national security needs or ethical standards to do so. I worked for years countering terrorist financing and saw up-close how we can find this important balance. As cartels, state sponsors of terrorism like North Korea, and other terrorist organizations abuse this market to money launder and get around sanctions, it is critical we address the risks they pose to Americans’ economic and national security. I put forward provisions to modernize our counter terrorism financing and money laundering controls while also protecting developers, entrepreneurs, and others who are trying to innovate and develop creative new technologies in good faith. The bill voted on fell short of what we’re capable of delivering but I look forward to seeing how it can improve before it comes before the full Senate for a final vote.” (Press release)

• Sen. Lisa Blunt Rochester (D-DE) released a statement saying, “Digital assets and blockchain technology present real questions and real opportunities, and legislation of this magnitude must be done right. I appreciate the substantial work many of my colleagues put into improving this legislation through good-faith bipartisan negotiations. While several provisions improved during negotiations, I do not believe the bill adequately addresses several serious outstanding concerns related to consumer and investor protection, market integrity, illicit finance, conflicts of interest, and the broader stability of our financial system. We cannot separate this debate from the broader environment in which it is occurring. This administration and the people connected to it continue to engage with the crypto industry in ways that raise serious questions about corruption, self-dealing, and whether the rules are being written to benefit industry insiders rather than protect consumers and the public. This administration has a track record of unethical policymaking, and the provisions in this bill to crack down on insider trading and self-dealing fall incredibly short. Law enforcement groups at every level from across the country have also voiced their concern about their ability to identify bad actors and protect communities from harm if this legislation progresses. Law enforcement relies on existing authorities and regulatory frameworks to trace questionable transactions and recover illicit proceeds, creating gaps in oversight and accountability that sophisticated criminal actors may exploit. I remain concerned that parts of the bill could weaken existing investor protections and leave consumers and investors with fewer protections and remedies than they have under current law. This could have an outsized impact on my constituents, as Delaware has more crypto kiosks per capita than any other state. While our Attorney General, the Delaware Department of Justice’s Investor Protection Unit, and national groups like AARP have been sounding the alarm on the potential for cryptocurrency scams for years. Any federal legislation to regulate the digital asset market must adequately protect consumers from fraudulent use of cryptocurrency. Congress should not advance legislation of this scale and consequence without greater confidence that it will strengthen, rather than weaken, trust in our financial system. The consequences of getting this wrong could extend far beyond the digital asset industry itself. Congress has a responsibility to ensure that innovation does not come at the expense of financial stability, public trust, or the protections Americans rely on in their financial markets. For those reasons, I voted no.” (Press release)

• Senate Banking, Housing, and Urban Affairs Committee Ranking Elizabeth Warren (D-MA) released a statement before the markup saying, “This bill puts investors, our national security and our entire financial system at risk – and it will turbocharge Donald Trump’s crypto corruption. In just one year in office, the President and his family have raked in at least $1.4 billion in gains from crypto deals alone, and yet this bill stunningly includes zero provisions to prevent that. The American people are watching. No Member of the Committee should support a bill that fails to stop the massive conflict of interests posed by Donald Trump and his family’s crypto ventures.” (Press release)

• Sen. Catherine Cortez Masto (D-NV) posted “It’s clear we need to pass market structure legislation, and I’ve worked for months with colleagues on both sides of the aisle to negotiate a bill that provides clear rules of the road for a growing industry. But the current version of the CLARITY Act undermines law enforcement’s ability to trace illicit finance and recover victims’ money, while at the same time creating a more challenging environment to prosecute criminals for knowingly transmitting illicit funds. It’s disappointing that my commonsense fixes discussed among stakeholders and supported by police and prosecutors nationwide weren’t adopted today. But I’m committed to finding solutions that allow us to take on bad actors – the criminals not the everyday coders – while giving the millions of U.S. crypto users the certainty they need.”

CLARITY Act Miscellaneous

• Senate Banking Chair Tim Scott (R-SC) posted “This week, the Senate Banking Committee proved Washington can still work together. Passing the bipartisan Clarity Act was historic and personal to me. My mother raised my brother and me with faith, grit, and determination, teaching us that the American Dream should be within reach for every family. Proud of BankingGOP for taking a step forward to make America the crypto capital of the world!”

• Scott also posted “Families, small businesses, investors, and innovators deserve clear rules of the road for digital assets. The Senate’s version of the CLARITY Act delivers certainty, safeguards, and accountability, while protecting Main Street, strengthening national security, and keeping innovation in America.”

• Scott also posted “The future of finance should be built in America, under American laws, and with American values. The Clarity Act takes the side of everyday Americans, protects investors, strengthens national security, and keeps America leading the world.”

• Scott also posted “If someone in South Carolina invests in digital assets, they deserve real, enforceable legal protections. The Clarity Act puts everyday Americans first with clear disclosures, safeguards against fraud, and rules that keep markets open and fair.”

• Scott also posted “Headed to BankingGOP to advance the CLARITY Act - a major step forward in ensuring America is the global leader in financial innovation and opportunity. Today, we take one step closer to making America the crypto capital of the world!”

• Sen. Cynthia Lummis (R-WY) posted “The risks the Ranking Member spoke of exist right now because there’s no regulatory framework. The Clarity Act creates one by establishing clear rules at the SEC and CFTC to protect good actors, punish bad ones, and bring the digital asset industry back to America.”

• Lummis also posted “Without the Clarity Act, the digital asset industry will move offshore to any nation that has regulators willing to engage. Every day that we stall is a day we hand our competitors an advantage we won’t get back. The Clarity Act is critical to securing our financial future.”

• Lummis also posted “For nearly 250 years, America has been the land of innovation. The Clarity Act continues that tradition by ensuring financial innovation happens here on U.S. soil under clear pro-growth, pro-consumer guidelines.”

• Lummis also posted “One small step for the Clarity Act and one giant leap for digital assets”

• Lummis also posted “Thank you ChuckGrassley for ensuring BRCA/sec 1960 protections for software developers are included in the Clarity Act while giving law enforcement tools they need. Clarity Act is the most pro-law enforcement digital asset bill Congress has ever considered. Let’s get this done!”

• Lummis also posted “Big week for digital assets. After nearly a year of bipartisan work, this markup brings us one step closer to cementing America’s place as the global leader in financial innovation. Wyoming showed the way, now Washington is following.”

• Lummis said the Clarity Act was “the hardest piece of legislation I’ve ever worked on.” (Punchbowl)

• Sen. Elizabeth Warren (D-MA) said, “A rich and powerful industry drives the agenda in the United States Senate. The senators didn’t spend tens of thousands of hours on a crypto bill because back home, their constituents were demanding it. They spent that time because the crypto industry wanted a bill.” (Punchbowl)

• Sen. Bernie Moreno (R-OH) posted “In just 15 months SenWarren has predicted economic Armageddon more than six times! Today apocalypse: the CLARITY Act will ‘blow up the economy.’ Same script, different target. Maybe the only thing crashing is her credibility. Innovation over fear!”

• Sen. Angela Alsobrooks (D-MD) said, “I have constituents who will be scammed out of their money if we do not regulate this industry. The horse is out of the barn.” (Punchbowl)

• Sen. Mike Rounds (R-SD) said, “Time will tell. It may very well be a shirts and skins effort where you have Republicans wanting to vote it out and then trying to fix it on the floor vs. Dems who would prefer to simply vote it down and start over again.” (Politico)

• Sen. Thom Tillis (R-NC) said of his stablecoin yield compromise, “It’s funny how transactions do things. Probably 99 out of 100 banking decisions around here, the banks are with me, and I’m with them. The one I’m not, they’re with Warren. Knock yourselves out.” (Politico)

• Sen. Dave McCormick (R-PA) posted “Happening today at 10:30 AM EST. BankingGOP and I are voting to advance the CLARITY Act out of Committee. It’s time to bring clear rules, responsible innovation, and American leadership to the future of finance.”

• McCormick also posted “Big day for American financial innovation. After months of bipartisan work, today’s BankingGOP markup on the CLARITY Act brings us closer to cementing America’s place as the global leader in the future of finance. Let’s get it through markup and to the Senate Floor.”

• McCormick also posted “Every day Congress fails to act on the CLARITY Act is another day that investment and digital asset innovation move overseas. It’s imperative that the CLARITY Act passes tomorrow in the Senate Banking markup.”

• McCormick also posted “This Thursday, the Senate Banking Committee and I will vote on the CLARITY Act. We’re voting on a bill that protects consumers, gives digital asset innovators certainty, and keeps the future of crypto in America, not offshore. Let’s get this done.”

• Sen. Kevin Cramer (R-ND) posted “Today’s successful bipartisan markup of the Clarity Act in BankingGOP establishes American regulatory guardrails around this emerging technology. We’ve already watched the majority of the industry leave for unregulated overseas markets, leaving consumers completely vulnerable to fraud or abuse. There’s more to be done to perfect this bill, but we’re working with Democrats on the committee to refine this framework and incubate a promising industry.”

• Sen. Mike Crapo (R-ID) posted “The CLARITY Act would provide investors & consumers the regulatory certainty needed to flourish in a digital economy.”

• Senate Banking Committee Ranking Member Elizabeth Warren (D-MA) posted “Around midnight, BankingGOP unveiled new crypto legislation. Among other flaws, it will turbocharge the massive conflict of interests posed by Donald Trump and his family’s crypto ventures. No bill should move through the Banking Committee without real ethics guardrails.”

• Sen. Chris Van Hollen (D-MD) posted “Today, I offered an amendment that would have shut this scam down. My amendment would’ve prevented self-dealing by public officials — including the President & members of Congress — who own or promote digital asset companies, including crypto. Every Republican voted against it.”

• Rep. Tom Emmer (R-MN) posted “Congrats to the Senate Banking Committee and Sen.TimScott for advancing the CLARITY Act out of committee, taking us one step closer to making America the crypto capital of the WORLD. We look forward to making sure POTUS signs the most significant, transformative piece of crypto legislation EVER!”

• Rep. Haley Stevens (D-MI) posted “Thank you to everyone working so hard in good faith to get this critical legislation done. Our innovators need clear rules of the road, that’s why I was proud to be one of the earliest supporters of the Clarity Act in the House. Still work ahead, but let’s keep the momentum going!”

• Rep. Young Kim (R-CA) posted “Great step toward bringing the CLARITY Act to the Senate floor. We need to get market structure to POTUS ’s desk ASAP.”

• Financial Services GOP posted “WATCH: Chairman RepFrenchHill on the CLARITY ACT: “I’m very encouraged. I want to congratulate Chairman Sen.TimScott and those members that have worked so hard, so diligently over the last many months… all of them have worked to find a bipartisan compromise to move our digital asset ecosystem forward and it’s exciting to see… So, I am very pleased to see the progress made by the Senate bill and really look forward to how the markup goes this week in BankingGOP.’”

Crypto Tax

• House Ways and Means Chair Jason Smith (R-MO) said, “Crypto, digital assets tax structure is not easy. It’s extremely difficult. A lot of members — it’s about education and getting them in an informed status. And today was a good step towards it.” (Punchbowl)

• At the House Ways and Means roundtable, Rep. Max Miller (R-OH) said, “Today is very introductory. Getting the other members comfortable with where we are in the digital age and getting out of the analog era is very important. We know we have to make this a bipartisan process, and that’s why we’re bringing the Democrats in.” (Tax Notes)

• Miller also said, “I understand bitcoin may not like me for seven out of the 10 things that I do, but at the end of the day, I’m batting 300 and it’s going to get them more people who are going to invest in cryptocurrency.” (Tax Notes)

• Rep. Steven Horsford (D-NV) said, “Doing nothing is a policy choice as well, because that allows the uncertainty; it allows potential abuse and corruption.” (Tax Notes)

• Rep. Mike Thompson (D-CA) said of the bipartisan roundtable, “This is an issue that is new to a lot of people and briefings like this are important so everyone can get up to speed.” (Politico)

Politico Poll Showing Crypto of Little Interest to Voters

• Sen. Cynthia Lummis (R-WY) said, “It’s still too new. For the industry, this is a big step forward, because it does really help embed this industry in the U.S. But for the average person, I mean, they’re thinking about the fact that gasoline is $4.18 in Wyoming. They’re worried about their daily lives.” (Politico)

• Sen. Thom Tillis (R-NC) said, “They don’t care. For people who grew up like me, I hope to God they’re not talking about crypto right now. Get a savings and loan account and try and get some minimum guaranteed return, period.” Tillis added, “Honestly, most people do not even know the distinctions between bitcoin, stablecoins, blockchain — the whole architecture of this space. A lot of people here don’t.” (Politico)

• Rep. Mike Flood (R-NE) said, “Younger voters especially [care]. They want innovation. They want to operate that way. The financial marketplace is changing as we see it.” (Politico)

• Rep. Dusty Johnson (R-SD) said, “Most voters don’t care about digital assets. But those who do care a lot. It is a high-intensity issue. And I think it’s going a little bit more mainstream. The number of people who ask me about it is still very small, but I would say growing.” (Politico)

Miscellaneous

• Sen. John Cornyn (R-TX) posted “North Korean operatives stole $2 billion in digital assets last year—and financial firms are the next target”

• Sen. Jim Justice (R-WV) posted “Scammers are targeting our seniors and stealing hard-earned savings through Bitcoin ATMs and crypto kiosks. No real government agency will ever tell you to put cash into one of those machines. We’re going after these crooks and fighting every day to protect our seniors and their money. NationalSeniorFraudAwarenessDay”

• Rep. Nikki Budzinski (D-IL) posted “Between senior officials profiting off prediction markets, crypto scams, & the Supreme Court’s lack of a code of ethics – corruption is rampant in DC. As Vice-Chair of Policy for the NewDemCoalition, my colleagues & I have a plan to fix this.”

• Rep. Tom Emmer (R-MN) posted “Congrats to Kevin Warsh on his confirmation as chair of the Federal Reserve. Kevin will be a great partner as we move towards solidifying America’s status as the world’s leader in digital assets and ensuring the United States never adopts a dangerous, anti-American CBDC surveillance tool we see in Communist China.”

• Sen. Bernie Sanders (I-VT) posted “When Andreesen Horowitz, a Silicon Valley firm with $100 billion in assets, can spend over $115 million to buy politicians who oppose regulating AI & crypto, you know our campaign finance system is broken. End Citizens United, ban Super PACs & get Big Money out of politics-NOW!”

• Rep. Tom Kean (R-NJ) posted “I’m pleased to join the Congressional Crypto Caucus. The United States must lead on digital assets - driving innovation, delivering regulatory clarity, and protecting consumers. I look forward to working with this bipartisan group of colleagues to advance that agenda.”

• Rep. Steven Horsford (D-NV) posted “The conversation around digital assets is no longer happening on the sidelines. It’s shaping how people think about business, banking, investment, and the future of the economy. Glad to join the discussion at XRP Las Vegas and hear directly from the innovators, developers, and entrepreneurs driving that change. As Congress works through the future of crypto policy, my focus stays clear: protecting consumers, supporting responsible innovation, and making sure working families and small businesses aren’t left behind as technology moves forward.”
  

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

In the ongoing bipartisan negotiations on market structure legislation, Sens. Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) released final text of their compromise agreement on stablecoin yield. The deal bans rewards “on a payment stablecoin balance in a manner that is economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit” and would allow “rewards or incentives based on bona fide activities or bona fide transactions that are not economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.”

Banking Republicans indicated they could achieve unified partisan support for the committee’s market structure bill at a yet-unscheduled markup in May.

While bipartisan agreement has been reached on stablecoin yield, Alsobrooks emphasized that other issues, including language around illicit finance and ethics, needed to be worked out in negotiations before Democrats could support a markup.

House Republicans attached an anti-CBDC measure to the Foreign Intelligence Surveillance Act (FISA) reauthorization bill, but the Senate stripped it out and sent the FISA bill back to the House for final passage.

I’ll be at Consensus in Miami this week. DC Decentralized will return on May 18.

Read more below

Congress

Hearings

Last week

• On April 29, the House Financial Services Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity Subcommittee hearing on “Examining Derivatives’ Role in the Treasury Market.”

Upcoming

• On May 19, the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions holds a hearing on “Modernizing the BSA for Financial Crime in the 21st Century”

• On May 20, the House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee holds a hearing on “Partnering for Innovation: How Bank-Fintech Collaborations Enhance Financial Infrastructure.”

Legislation

• The Senate unanimously passed a measure banning Senators and staff from participating in prediction markets.

• Sens. Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) released final text of their compromise agreement on stablecoin yield. (Punchbowl)

Correspondence

• Senate Banking, Housing, and Urban Affairs Committee Ranking Member Elizabeth Warren (D-MA) and Senate Committee on Finance Ranking Member Ron Wyden (D-OR) sent a letter to Commerce Secretary Howard Lutnick and Tether CEO Paolo Ardoino requesting information about a reported loan from Tether to a trust benefiting Secretary Lutnick’s four children. (Letter to Commerce) (Letter to Tether)

Trump Administration

Federal Reserve

• On May 8, Federal Reserve Board Governor Lisa Cook will deliver remarks “Perspectives on Tokenization and Implications for the Financial System” at the Central Bank of West African States Conference on Digital Assets.

Commodity Futures Trading Commission (CFTC)

• The CFTC filed lawsuits against New York and Wisconsin in response to the states’ lawsuits against CFTC-regulated prediction markets. (Press release)

• CFTC Chair Mike Selig published an op-ed in the Wall Street Journal entitled “Prediction Markets Aren’t a New Vegas,” saying “Claims that “insider trading is rampant,” and that our insider trading rules are “fuzzier” than others are simply untrue. I’ve made it clear time and time again that anyone who engages in insider trading will be found and prosecuted to the full extent of the law. The agency has a proven track record in preventing and enforcing actions against insider trading. During my first 100 days leading the agency, we strengthened and modernized our strategies to address any bad actors in these markets and have brought enforcement actions against those who violated federal laws.” (Op-Ed)

Noteworthy Quotes and Events

ADMINISTRATION

Commodity Futures Trading Commission (CFTC)

• CFTC Chair Mike Selig posted “Markets are evolving, and the CFTC is evolving with them. We’re developing fit-for-purpose rules, supporting innovation, and strengthening oversight. Our focus is clear: markets that set the global standard.”

• Selig also posted “Claims that “insider trading is rampant” in prediction markets because the CFTC’s antifraud rules are “fuzzier” than others are simply untrue. During my first 100 days leading the agency, we’ve strengthened and modernized our strategies for detecting illicit activity and taken legal action against bad actors. Read my full letter to WSJ correcting the record”

• Selig said, “We can certainly allow for a broad range of financial products and instruments to trade in our markets, but make sure that we tailor rules and regulations to protect investors and protect customer funds.”

• Selig posted “Innovation is rooted in the freedom to challenge convention and pursue new ideas. In the US, economic freedom is foundational and continues to drive our markets forward as we define the next frontier in finance.”

• Selig also posted “The government’s job is to embrace innovation and adapt regulations accordingly, not strangle it through neglect or over-enforcement. I’m committed to developing policies that help ensure innovation takes root on American soil, under American law, in service of American investors, businesses, and consumers.”

• Selig said, “As Chairman of the CFTC, I established an Innovation Task Force to engage directly with innovators in the digital asset space to support innovation, not stifle it. ITF works with industry stakeholders and other government officials to build a durable and collaborative foundation that keeps digital asset innovation onshore.”

• Selig posted “Self-custody must be protected. The United States was founded on the principle of private property, and the seizure of assets is something we must guard against. At the CFTC, that means protecting Americans’ ability to hold and control their own digital assets.”

• Selig also posted “Prediction markets are derivatives regulated exclusively by the CFTC. We’re not a merit policeman that picks and chooses which contracts people should or should not be able to trade. Exchanges are free to list for trading any contract that complies with federal law and regulations.”

• Selig also posted “Prediction markets provide measurable value to market participants who use them to hedge and speculate on event outcomes as well as the public at large, which benefits from more reliable information about current events. The CFTC is committed to setting the gold standard for regulation of these markets.”

CONGRESS

Market Structure Stablecoin Yield Compromise

• Sen. Thom Tillis (R-NC) said of the stablecoin yield compromise text, “It is locked. Any time somebody can articulate a clear and present danger — not, ‘I think this is bad,’ but a clear and present danger — I’ll consider that for markup or after it moves onto the floor.” (Politico)

• On banking industry opposition, Tillis said, “Let’s do a wayback machine and just eliminate Tillis-Alsobrooks, and then ask them, have we made any progress? The industry, that knows I’ve worked very hard to support them, needs to understand that I believe that we’re close. And the fact that they think we’re so far away — they haven’t done a good job of articulating exactly why.” (Politico)

• Sen. Angela Alsobrooks (D-MD) said, “Everybody’s going to be unhappy.” (Politico)

• On the release of compromise language, Alsobrooks said she is “proud of our bipartisan compromise, which will reduce the risk of deposit flight and deceptive marketing while preserving genuine rewards and innovation for payment stablecoins.” (Politico)

• Sen. John Kennedy (R-LA) said, “It’s hard to gauge and hard to discuss metrics when you’re talking about pissed off-ed-ness, I know there are many crypto folks that are pissed. I can tell you the banking guys are setting new records.” (Politico)

Market Structure

• Sen. Bernie Moreno (R-OH) said, “Every Republican is fully united to get this across the finish line.” (Politico)

• On his potential opposition, Sen. John Kennedy (R-LA) said he couldn’t “comment on a bill intelligently without reading it — especially not something this important and this complicated.” (Politico)

Anti-CBDC Surveillance State Act

• On House passage of the Anti-CBDC Surveillance State Act as attached to the Foreign Intelligence Accountability Act, Rep. Tom Emmer (R-MN) released a statement saying, “House Republicans and President Trump recognize the threat a CBDC poses in the United States. CBDCs stand against everything we love in this country - privacy, freedom, and free market competition. We must never allow this weaponized surveillance tool to be adopted here. The House has done its job; it’s time for the Senate to pass our CBDC ban.” (Politico)

• On Senate Majority Leader John Thune rejecting the House’s FISA extension bill that included a ban on a central bank digital currency, Rep. Warren Davidson (R-OH) said, “He didn’t even bring this to the floor for a debate. He keeps throwing up excuse after excuse. Anyone can find an excuse. Leaders find a way. And it’s time for John Thune to do that or step aside.” (Punchbowl)

• Rep. Bill Huizenga (R-MI) said he wants a CBDC ban “probably more than a lot of folks do… people are not necessarily using the proper time, proper place.” (Politico)

• Sen. Mike Rounds (R-SD) said, “I understand if there is a fear out there on it, but right now we’ve got some other fish to fry, and we need their help to get these other issues done. Let’s take the wins that we can get.” (Politico)

• Rep. Keith Self (R-TX) posted “Warrantless spying via FISA, Government purchase of Americans’ data, Flock cameras, Automobile kill-switches, Central Bank Digital Currency (CBDC). The surveillance state is alive, well, and growing. Americans have had enough. Our Fourth Amendment is not up for grabs!”

• Self also posted “If our Founding Fathers heard about CBDCs, kill switches, FISA, and geofences, they would probably overthrow the government all over again. Protect the Fourth Amendment at ALL costs.”

• Self also posted “Current state of the U.S. Senate: Refuses to pass CBDC ban, the SAVE America Act, FULL DHS funding, or anything of actual importance. Either enforce the talking filibuster or NUKE the zombie filibuster. We have a country to save.”

• Self also posted “The Senate keeps rejecting the House’s legislation, sticking their noses in the air, and skipping town when it matters. They’ve done it with the SAVE America Act and now they are doing it with the Central Bank Digital Currency (CBDC) ban we just passed. The Senate needs to get a grip and get to work. The American people demand it.”

• Self also posted “Americans do not want to be spied on by their own government. Americans do not want the government telling them what they can or cannot buy. Americans want privacy. Americans want their Fourth Amendment protected. Reform FISA and ban Central Bank Digital Currency (CBDC).”

• Rep. Nick Begich (R-AK) posted “Americans built the strongest economy in the world on the foundation of free markets, private enterprise, and individual liberty, not government control. Central Bank Digital Currencies (CBDC) pose a serious threat to those values. The federal government has no business inserting itself between Americans and their financial freedom. Tonight, the House acted to defend the Constitution and advanced the Anti-CBDC Surveillance State Act. Now, it’s time for the Senate to act.”

• Rep. Anna Paulina Luna (R-FL) posted “Attention America: John Thune has said he will not support a CBDC ban in any of the legislation we send over. He also has said No Save America.”

• Luna also posted “I voted no on FISA this evening. There was no SAVE America attached and the Senate said they wouldn’t pass the anti-CBDC language. Reforms were no good.”

• Rep. Michael Cloud (R-TX) posted “A Central Bank Digital Currency would be the ultimate surveillance tool. Last night’s vote on FISA presented the best opportunity to force the Senate to address CBDC. As one of the primary members pushing for the inclusion of a ban on CBDC, I supported the passage of FISA with the ban on a CBDC out of the House.”

• Cloud also posted “The sleepy Senate had hoped to send us a FISA extension with no changes that would be passed by UC to an empty House chamber. Today, we forced a vote on the Senate’s ‘clean’ FISA extension that ignored our House bill that included a ban on a CBDC — I voted No. And so, even in our “loss,” the battle is not over, and we are forcing the fight in the right direction. We now have 45 days to continue to work for 1) a permanent ban on a Central Bank Digital Currency, 2) FISA warrant protections, and 3) the 4th Amendment not-for-sale protections (to stop the mass-purchasing of your data by intel agencies). And with the extra time, we should open up the FISA discussion beyond 702 to include reforms to Title 1 (where much of the previous bad actions have occurred).”

• Rep. Warren Davidson (R-OH) posted “Who can resist the one ring to rule them all? Central Bank Digital Currency (CBDC) corrupts money into a dystopian tool for surveillance, coercion, and control. Ban CBDC!”

Prediction Markets

• On the House considering a prediction market ban, House Majority Leader Steve Scalise (R-LA) said, “We’ll surely take a look at it.” (Semafor)

• House Administration Committee Chair Rep. Bryan Steil (R-WI) said, “We’ve been working on that. I want to make sure we get the language right.” (Semafor)

• On passage of the Senate bill, Rep. Nikki Budzinski (D-IL) said of her companion bill with Rep. Adrian Smith (R-NE), “I think this will push leadership in the House to do the right thing and get even more Republicans inclined to support our bill.” (Semafor)

• Smith said, “I’m hoping to move forward on that approach.” (Politico)

Miscellaneous

• Sen. Elizabeth Warren (D-MA) posted “WLF, the Trump family crypto company, reportedly partnered with a crypto venture tied to the same people recently sanctioned for scamming Americans. As the Trump family puts themselves first, Congress needs to ensure that digital asset legislation protects our national security.”

• Sen. Dick Durbin (D-IL) posted “Cryptocurrencies are volatile and untested—the exact opposite of an asset you want backing a mortgage. I joined SenWarren and SenJeffMerkley to demand that FHFA Director Pulte explain why Fannie Mae decided to accept crypto-backed mortgages when it will be taxpayers holding the bag if these risky loans fail.”

• Sen. Cynthia Lummis (R-WY) posted “Kevin Warsh has the vision to execute fundamental reforms at the Federal Reserve that are long overdue. I urge my colleagues to confirm him so the Fed can finally become a partner in sound digital asset policy & put an end to the weaponization of banking regulators once & for all.”

What I’m Reading This Week

• AI Agent Forms its Own Company, Gets Ready to Trade Crypto, Olivier Acuna, CoinDesk.

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

Sen. Thom Tillis (R-NC) reportedly told Senate Banking Committee Chair Tim Scott (R-SC) the committee should hold off on advancing market structure legislation until at least May, citing unresolved disagreements in bipartisan negotiations he has been leading with Sen. Angela Alsobrooks (D-MD). The latest sticking point: bank opposition to a mid-April draft compromise on stablecoin yield.

House Ways and Means Chair Jason Smith (R-MO) says his crypto tax bill is nearing completion, with timing dependent on bipartisan support.

U.S. Indo-Pacific Commander Admiral Samuel Paparo made headlines this week when he testified that INDOPACOM operates an active node on the Bitcoin network, the first public confirmation that a U.S. combatant command is directly participating in the Bitcoin peer-to-peer network. Paparo was careful to frame the effort in non-financial terms, describing Bitcoin not as a reserve asset but as a computer science tool, with military applications in cryptography, immutable ledger technology, and proof-of-work protocols for securing networks.

Read more below

Congress

Hearings

Last week

• On April 21, the House Homeland Security Subcommittees on Cybersecurity and Infrastructure Protection and Border Security and Enforcement held a hearing on “Online Scams, Crypto Fraud, and Digital Extortion: An Examination of How Transnational Criminal Networks Target Americans.”

• On April 22, the House Small Business Subcommittee on Innovation, Entrepreneurship, and Workforce Development held a hearing on “Main Street Meets Crypto: What Digital Assets Mean for Small Businesses.”

• On April 22, the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions held a hearing on “Evaluating the Effectiveness of U.S. Sanctions Programs.”

This week

• On April 29, the House Financial Services Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity Subcommittee hearing on “Examining Derivatives’ Role in the Treasury Market.”

Upcoming

• On May 19, the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions holds a hearing on “Modernizing the BSA for Financial Crime in the 21st Century”

• On May 20, the House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee holds a hearing on “Partnering for Innovation: How Bank-Fintech Collaborations Enhance Financial Infrastructure.”

Legislation

• Reps. Sam Liccardo (D-CA) and Young Kim (R-CA) introduced the Payments Access and Consumer Efficiency (PACE) Act to streamline federal registration for qualified payment companies, protect consumer funds, and provide direct access certain federal payment systems. (Text)

Correspondence

• Sen. Richard Blumenthal (D-CT) sent a letter to Commodity Futures Trading Commission (CFTC) Chair Michael Selig requesting information about disputed outcomes of prediction market bets and concerns that prediction markets’ mechanisms for resolving controversial bets are insufficient. (Letter)

• Sens. Elizabeth Warren (D-MA) and Chris Van Hollen (D-MD) sent a letter to Securities and Exchange Commission (SEC) Chair Paul Atkins expressing concern that recent interpretive guidance “Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets” takes the view that broad swaths of the crypto market are exempt from securities laws. (Punchbowl)

Publications and Events

• The Congressional Research Service (CRS) published a report on Cryptocurrency Mining and the Electricity Sector. (Report)

Noteworthy Quotes and Events

ADMINISTRATION

White House

• President’s Council of Advisors for Digital Assets Executive Director Patrick Witt posted “What are the odds the anonymous sources cited in this article have deep ties to China? Because if the US fails to lead on crypto by passing a comprehensive regulatory framework, the prime beneficiary will be the CCP.”

• President Donald Trump said, “We want to beat China at the industry. We’re leading with crypto, we’re leading with AI, and I really feel I have an obligation... as a President, I have to be able to make sure that all of our industries do well. Crypto’s a big industry.”

Treasury Department

• On Treasury’s budget request to Congress, Secretary Scott Bessent testified, “Treasury’s Office of Terrorism and Financial Intelligence is at the forefront of America’s fight against foreign adversaries, and the additional funding would expand Treasury’s ability to trace, detect, and sanction financial networks acting in bad faith. The request also includes a small investment to advance institutional expertise in digital assets, housing finance, and global financial markets within Treasury’s Departmental Offices. This is particularly important for the implementation of the GENIUS Act, landmark legislation that created the first-ever regulatory framework for stablecoins.” (Statement)

Securities and Exchange Commission (SEC)

• Chair Paul Atkins posted “One year ago, I was sworn in as SEC Chairman. Since then, we’ve put forth a strategy to advance modern frameworks, clarify jurisdictional lines, & transform our rulebook. One year ago, I declared that it’s a new day at the SEC. I meant it then. And I can speak to it now. Our efforts to ADVANCE modern frameworks include: Setting the foundation for making America the crypto capital of the world, Upholding market integrity and protecting American investors, Modernizing capital markets regulation. Our efforts to CLARIFY jurisdictional lines include: Ending decades-long turf wars between the CFTC and SEC, Scaling Project Crypto. Our efforts to TRANSFORM our rulebook include: Working to Make IPOs Great Again and return to materiality, Ending regulation by enforcement to pursue matters of real investor protection. By rejecting the institutional drift that the previous admin had normalized, we are recalibrating the agency in line with its statutory mission. But our work is far from over. An aggressive rulemaking agenda in the coming year will build on the work that we have begun. Our capital markets must continue to reflect our national character, leading the world in their capacity to translate ingenuity into prosperity. That is the promise our markets have long represented. In this new era at the SEC, that is the promise they will continue to keep.”

CONGRESS

Market Structure

• Sen. Ruben Gallego (D-AZ) said, “There is no final bill — there is no final movement — unless there is a bipartisan agreement when it comes to the ethics provision.” (Politico)

• Sen. Adam Schiff (D-CA) said, “We’re making progress. We have been talking for a long time without making much progress, and now that other parts of the bill are starting to come together, we’re narrowing our differences.” (Politico)

• Sen. Thom Tillis (R-NC) said, “There has to be ethics language in the bill before it leaves the Senate, or I’ll go from one of the people working on negotiating it to voting against it.” (Politico)

• On postponing a markup until May, Tillis said, “It’s very important to me not to accelerate things, to hear everybody and give them a rational basis for what we do accept and what we don’t accept.” (Punchbowl)

• Sen. Bernie Moreno (R-OH) said, “I really think we’re gonna get it done… [but] the schedule’s not with us really after May.” (Punchbowl)

• On Tillis’s proposed timeline, Moreno said, “He operates in a lower gear than me, in terms of — he’ll say he’s dramatically more patient than I am.” (Punchbowl)

• On the Senate’s ongoing efforts to reach agreement, Rep. Mike Lawler (R-NY) said, “The fact is, all of their machinations, frankly, have just been a waste of time. They need to land the plane here. (Punchbowl)

Miscellaneous

• On his committee’s developing digital asset tax draft, House Ways and Means Chair Jason Smith (R-MO) said, “We’ve been putting in months of work. We’re at the 1-yard line… I want it to be bipartisan and so we’re still having conversations with the other side. I’m ready to go now, but I want to be sure we get everyone on the same page.” (Punchbowl)

• On his upcoming legislation banning members of Congress from prediction markets, Sen. Bernie Moreno (R-OH) said, “Just take the whole thing out of it. And by the way, you should be decently busy that you don’t have time to go on Kalshi and make bets.” (Punchbowl)

• On prediction market regulation, House Financial Services Chair French Hill (R-AR) said, “We are asking the questions of the regulatory agencies and stakeholders about — is there a need for any imminent statutory change?” (Punchbowl)

• Sen. Cynthia Lummis (R-WY) posted “Boundless possibilities. I’m incredibly impressed by Adm. Paparo’s foresight & use of Bitcoin for natl security. We’re watching digital assets integrate into global power infrastructure. It’s time we welcome them back on our soil. Pass the Clarity Act, secure America’s future.”

• Lummis also posted “Digital assets are being woven into the fabric of America’s financial system. I look forward to a Federal Reserve chair who not only understands that, but embraces it.”

• Sen. Elizabeth Warren (D-MA) posted “The Trump Administration is pushing private equity, private credit, and crypto into retirement accounts. Wall Street wants to dump its risky assets in your 401k – putting your retirement at risk.”

House Armed Services Committee Hearing on “U.S. Military Posture and National Security Challenges in the Indo-Pacific Region” Q&A

Rep. Lance Gooden (R-TX)

• Rep. Lance Gooden (R-TX): “Admiral Paparo, yesterday you testified that Bitcoin held potential as a tool for national security. Recent research from the Bitcoin Policy Institute estimates China has approximately 194,000 Bitcoins, while the United States has approximately 328,000 Bitcoins. In this era of digital competition, would it be to our strategic advantage to maintain a lead in this regard as we do with other strategic resources like gold and oil?”

  • U.S. Indo-Pacific Commander Admiral Samuel Paparo: “Sir, our interest in Bitcoin is as a tool of cryptography, a blockchain, and reusable proof of work as an additional tool to secure networks and project power. And so, I think this protocol is here to stay. I think the computer science of it has direct implications for the projection of power—not financial, but from a computer science standpoint—from the securing of networks. And so, I am supportive of those applications. All instruments of national power are important, but from the military application standpoint, my interest in Bitcoin is as a computer science tool as a projection of power.”

• Gooden: “I appreciate that. I agree with you, and I’d also like to hear your thoughts on monetary competition over the coming decades. What role does Bitcoin play in spreading digital property rights?”

  • Paparo: “Well, you know, people use Bitcoin today, right now, to protect their own digital property, and that’s the reusable proof-of-work protocol that’s combined with blockchain for accountability and cryptography for security. And so, that’s the role that I see for it. I see direct national security implications, and then I’m supportive of anything that maintains our own dollar dominance worldwide.”

• Gooden: “I appreciate that. Do you think we’re adequately prepared to counter China’s strategic direction regarding digital assets?”

  • Paparo: “I think that our recent act with the GENIUS Act is a great step forward that moves us in that direction.”

• Gooden: “Lastly, I’ll ask you as we continue to craft the NDAA, what authorities and resources does INDOPACOM need to address in respect to the national security dimensions of digital assets?”

  • Paparo: “Presently, we’re in experimentation, so I’ll give you a deeper look into that. Presently, we have a node on the Bitcoin network right now. We’re not mining Bitcoin. We’re using it to monitor, and we’re doing a number of operational tests to secure and protect networks using the Bitcoin protocol.” (Press release)

Senate Banking, Housing and Urban Affairs Committee Hearing on the Nomination of Kevin Warsh to be a Member and Chairman Designate of the Federal Reserve Board of Governors Q&A

Chair Tim Scott (R-SC)

• Chair Tim Scott (R-SC): “I think it’s really important for us to dig into that issue as well digital assets. The future of finance in the world seems to have a major component of it, being artificial, being digital assets, the market structure, legislation. We don’t want your comment on but the important role of the blockchain in the future is another really important part of the future of our economy.”

Sen. Jim Banks (R-IN)

• Sen. Jim Banks (R-IN): “You wrote in an op ed in 2021 and the Wall Street Journal that I recommend everyone reads, it’s one of the reasons that I wholeheartedly support you, because of what you it says a lot about you in this op ed, but you, you talked about how the PRC is actively promoting its digital Yuan currency with the explicit goal of creating an alternative payment system that side steps US sanctions. You’ve been very clear that China is not playing by the rules. China is buying over 80% of Iran sanctioned oil in Chinese currency through Chinese banks, completely outside swift the Iranian government says it is charging ships to transit the Strait of Hormuz and collects payments via crypto and Chinese currency. What tools does the Federal Reserve have to defend the dollars role as countries route payments through the Chinese financial systems to do business with Iran and other adversaries?”

  • Kevin Warsh: “As we talked about before, monetary policy is independent. But outside of monetary policy, the Federal Reserve can be working hand in hand with the rest of the government. The Federal Reserve is independent inside of government, not independent of government. What the US can do with respect to the dollar is have a more robust payment system. The Fed has a number of payment systems that most financial participants in the world use. I would say they all are in need of substantial reform. There’s a system called Fed now, which some describe as Fed yesterday. There’s a series of new technologies that the Fed needs to oversee and needs to architect so that the payment system in the US is the safest, most efficient, most capable in the world. Otherwise, we’ll be losing, losing to adversaries around the world in being the lynchpin of the global economy.”

Sen. Bernie Moreno (R-OH)

• Sen. Bernie Moreno (R-OH): “Let’s move on to Central Bank digital currencies. Do you agree that the Federal Reserve has no legal right to issue a central bank digital currency?”

  • Kevin Warsh: “Senator, I agree that they don’t have the right, and I think it would be a bad policy choice.”

• Moreno: “Somebody just put an exclamation mark on that. Under your chairmanship of the Federal Reserve, you will not have the Federal Reserve explore any way move towards a central bank digital currency if it’s within.”

  • Warsh: “The power of the Chairman of the Federal Reserve. I agree with that statement, perfect.”

Sen. Cynthia Lummis (R-WY)

• Sen. Cynthia Lummis (R-WY): “Yes or no. Do you believe that digital assets should be incorporated into our financial industry so Americans have new investment opportunities and consumer protections.”

  • Kevin Warsh: “Senator, digital assets are already part of the fabric of our financial services industry in the United States.”

What I’m Reading This Week

• A Bitcoin Evangelist Tries to Convert Me, Ross Douthat, The New York Times.

• My Quest to Solve Bitcoin’s Great Mystery, John Carreyrou, 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

FinCEN has issued a proposed rule to implement provisions of the Anti-Money Laundering Act of 2020, alongside a joint FinCEN/OFAC proposal to apply Bank Secrecy Act requirements under the GENIUS Act. The prudential regulators have also released complementary proposals to align with these frameworks. Comments on all proposals are due June 9. Meanwhile, the SEC published a staff statement outlining a time-limited, conditional pathway for certain front-end crypto interfaces to operate without registering as broker-dealers.

On Capitol Hill, pressure is building to bring market structure negotiations to a close.

Read more below

Congress

Hearings

Last week

• On April 15, the Senate Special Committee on Aging held a hearing on “Empowering Seniors through Financial Literacy: Tools to Protect Savings, Prevent Fraud, and Promote Independence.”

• On April 15, the House Financial Services Capital Markets Subcommittee held a hearing on “Safeguarding Main Street: Combatting Fraud and Exploitation in Our Capital Markets”

• On April 16, the House Agriculture Committee held a hearing on oversight of the U.S. Commodity Futures Trading Commission.

This week

• On April 21, the House Homeland Security Subcommittees on Cybersecurity and Infrastructure Protection and Border Security and Enforcement will hold a hearing on “Online Scams, Crypto Fraud, and Digital Extortion: An Examination of How Transnational Criminal Networks Target Americans.”

• On April 22, the House Small Business Subcommittee on Innovation, Entrepreneurship, and Workforce Development holds a hearing on “Main Street Meets Crypto: What Digital Assets Mean for Small Businesses.”

• On April 22, the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions holds a hearing on “Evaluating the Effectiveness of U.S. Sanctions Programs.”

Upcoming

• On April 29, the House Financial Services Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity Subcommittee hearing on “Examining Derivatives’ Role in the Treasury Market.”

Legislation

• Reps. Sam Liccardo (D-CA) and Mike Lawler (R-NY) and introduced the SAFER Act to prevent the unwarranted seizure of individuals’ securities, digital assets, and investment accounts by states under escheatment laws. (Text)

Correspondence

• Sens. Jeff Merkley (D-OR), Elizabeth Warren (D-MA), Chris Van Hollen (D-MD), and Bernie Sanders (I-VT) sent a letter to Secretary of State Marco Rubio requesting information regarding reports that the Trump Administration’s Board of Peace may develop a US dollar-backed stablecoin for Gaza as part of post-war reconstruction efforts. (Letter)

• Rep. Eugene Vindman (D-VA) sent a letter to Polymarket CEO Shayne Coplan requesting the immediate preservation and disclosure of all records tied to bets on U.S. military actions, following reports that traders have profited from wagers linked to sensitive operations. (Press release)

Trump Administration

Financial Crimes Enforcement Network (FinCEN)

• FinCEN published a proposed rule to implement provisions of the Anti-Money Laundering Act of 2020 (AML Act) to “ensure that financial institutions establish and maintain effective AML/CFT programs that better achieve the purposes of the BSA and lead to more effective outcomes for financial institutions as well as law enforcement and national security agencies” and add “measures to modernize and reform Federal supervision of AML/CFT programs by enhancing FinCEN’s role in AML/CFT supervision and enforcement in coordination with Federal banking regulators” and “regulatory amendments to promote clarity and consistency across FinCEN’s program rules for different types of financial institutions.” The comment period ends June 9. (Federal Register)

• FinCEN and the Office of Foreign Assets Control (OFAC) jointly issued a proposed rule to implement the GENIUS Act’s directive to treat permitted payment stablecoin issuers (PPSIs) as financial institutions for purposes of the Bank Secrecy Act, proposes anti-money laundering obligations for PPSIs, and proposes certain specific obligations required by the GENIUS Act for PPSIs; and requires PPSIs to maintain effective sanctions compliance programs. The comment period ends June 9. (Federal Register)

Prudential Regulators

• The Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) issued a proposed rule to concurrently align with the changes proposed by FinCEN to implement provisions of the AML Act, detailed above. The rule also intends to modernize and reform Federal supervision of AML/CFT programs by enhancing FinCEN’s role in AML/CFT supervision and enforcement. The comment period ends June 9. (Federal Register)

• The OCC, FDIC, and NCUA also issued a proposed rule to concurrently align with the changes proposed by FinCEN and OFAC to implement the GENIUS Act, detailed above. The comment period ends June 9. (Federal Register)

• The OCC and FDIC published the final rule to codify the elimination of reputation risk from their supervisory programs. (Federal Register)

• FDIC issued a proposal on to implement certain GENIUS Act requirements and standards applicable to FDIC-supervised permitted payment stablecoin issuers and insured depository institutions, clarify deposit insurance coverage for deposits held as reserve assets for payment stablecoins, and clarify the treatment of tokenized deposits. The comment period ends June 9. (Federal Register)

Securities and Exchange Commission (SEC)

• The SEC published a staff statement on “Broker-Dealer Registration of Certain User Interfaces Utilized to Prepare Transactions in Crypto Asset Securities,” carving out a time‑limited, conditional path for certain “front‑end” crypto interfaces to operate without registering as broker‑dealers under Exchange Act Section 15(a). (Statement)

Noteworthy Quotes and Events

ADMINISTRATION

White House

• The President’s Council of Advisors for Digital Assets Executive Director Patrick Witt posted “Protecting software developers is one of the most important aspects of the bill. It’s a core pillar of making the US the crypto capital of the world. Criminalizing code does nothing but drive innovation offshore.”

• Witt also posted “The dominant players in almost every crypto vertical are foreign. Stablecoin issuer, centralized exchange, DeFi protocol, etc. Without a durable market structure framework in place, the US will continue to fall behind in the digital assets race.”

• Witt also posted “Democrats say they’ve moved on from their war on crypto. Soon, we’ll find out if they really mean it. For the sake of America’s global financial leadership, let’s hope so.”

Commodity Futures Trading Commission (CFTC)

• In testifying before the House Agriculture Committee, CFTC Chair Michael Selig said about oversight of prediction markets, “What I will say is that under the prior administration, there was a lack of clarity on a lot of these contracts, and the floodgates really opened.” (Punchbowl)

Securities and Exchange Commission (SEC)

• The SEC posted “As part of Project Crypto, the Division of Trading and Markets issued a staff statement providing its views on broker-dealer registration requirements in connection with certain interfaces used to prepare transactions in crypto asset securities.”

CONGRESS

Market Structure

• Regarding the release of the latest text on stablecoin yield, Sen. Thom Tillis (R-NC) said, “We’re probably not going to put the text out this week.” He added, “I do think we have to start talking about a target markup date so we can have a forcing mechanism, and still obviously publish the text before the markup — and not the night before.” (Politico)

• On the new agreement, Tillis said, “From the banking community, we’ve gotten a little bit of pushback. And so, I think we have to dig deeper into the text.” (Politico)

• Sen. Angela Alsobrooks (D-MD) said, “I think we’re in a good place where yield is concerned, where we are convinced that we can prevent some of the deposit flight we were concerned about, while also protecting the innovation. I know that this won’t be loved by either industry. The point of the matter is that I think everybody’s going to be just a little unhappy.” (Politico)

• Tillis added that the provisions related to software developer protections are another outstanding issue yet to be resolved, saying, “We’ve got to do that to address some of the concerns of the Democrats — Sen. Cortez Masto, who’s got extraordinary experience in this field. I think she’s been a helpful contributor.” (Politico)

• Earlier in the week, Tillis said, “Anti-evasion was an issue that we’ve made progress on. And enforcement is an area that we’re still working on. I think that people are apprehensive because they haven’t seen the full text. But I think, directionally, it has been instructed by what we consider to be the legitimate issues that we have around deposit flight when we’re talking about yield.” (Politico)

• Regarding a crypto-palooza meeting between industry stakeholders, “We may have a few open switches that we need to pin down. But then, if we’ve still got a disagreement from either banking or crypto — and there’s some concern out of crypto, too — then we’re going to get the people in the room and call balls and strikes on the final pieces and see if we can get a mark done.” (Politico)

• Sen. Cynthia Lummis (R-WY) posted “The last administration drove away the digital asset industry. It’s time to welcome them home with clear rules of the road. Pass the Clarity Act.”

Miscellaneous

• Sen. Jeff Merkley (D-OR) posted “Trump’s crypto corruption is spreading to his ‘Board of Peace,’ which is reportedly considering a shady stablecoin scheme to rebuild Gaza. SenWarren, SenVanHollen, SenSanders, and I are demanding answers.”

• Rep. Don Davis (D-NC) posted “The CFTC is understaffed and facing increasing demands to oversee digital assets, prediction markets, and more amid leadership uncertainty. Chairman Selig addressed the House Agriculture Committee as we work to strengthen agency coordination, clarify rules, and enhance consumer protections.”

• Rep. Valerie Foushee (D-NC) posted “This is great news. I’m glad that local leaders and Apex residents worked together to enact restrictions that the community sees fit. As we continue to study the negative effects of data centers and crypto mining operations, I strongly support local communities’ efforts to halt the construction of these facilities and prioritize concerns about water and energy use.”

House Financial Services Capital Markets Subcommittee hearing on Safeguarding Main Street: Combatting Fraud and Exploitation in Our Capital Markets Q&A

Rep. Brad Sherman (D-CA)

• Rep. Brad Sherman (D-CA): “When an investor wants to send, an older male investor, wants to send a million dollars to a beautiful young woman he’s met only online, we have to say she doesn’t love you and she’s not a she. We need to stop the idea of tokenized securities because that kills the consolidated audit trail… Well, the whole purpose of tokenization is to eliminate the Know Your Customer rule. If you take the crypto out of crypto, take the hidden out of crypto, it’s not crypto anymore. You’re saying that if we have tokenization, we need to somehow have a Know Your Customer for every account?”

  • Andrew Verstein, Co-Director of the Lowell Milken Institute for Business Law and Policy, UCLA School of Law: “I think we don’t want to have a sleight of hand where we lose visibility just because we change technologies. It seems like that could happen with a lot of the changes that are happening.”

Rep. Bryan Steil (R-WI)

• Rep. Bryan Steil (R-WI): “…I just want to return to a previous colleague’s assertion about tokenized securities. In particular, there’s an assertion made that would make it easier for insider traders to trade on non-public information if the security was tokenized. That’s not true. And, so to be clear, placing a security on a blockchain does not confer any special treatment. It does not alter its regulatory status. It remains a security and must comply with all applicable laws and regulations. I think that’s really important to put that back in the record based on the previous assertion that was made.”

Rep. Sean Casten (D-IL)

• Rep. Sean Casten (D-IL): “Just briefly, I want to correct something Mr. Steil said. It is true that a tokenized security is a security. The SEC has been very clear for that. It is also true that Section 202 and Section 203 of the Clarity Act says that if you raise a security less than $200 million, you were exempted from those provisions. So this Congress, this committee, has opened a back door if that Clarity Act becomes law. And I think it’s important for us to understand that if we care about fraud, let’s not pretend that laws we passed, just because I haven’t passed the Senate yet, does not represent the intentions of this committee. Not yours truly, but this committee.”

Senate Finance Hearing on IRS Oversight Q&A

Sen. Bill Cassidy (R-LA)

• Sen. Bill Cassidy (R-LA): “…Let me also ask about some crypto tax reform. Let me make sure I’ve got my lead into this. I’m told in the 2026 crypto tax readiness report, which survey 3000 US crypto users, they found that most intend to comply with their tax obligations, but only 49% correctly identify that a taxable event occurs every time crypto is sold. Approximately 61% of the crypto users are unaware of the specific reporting rules that took effect in 2025; these rules require brokers to issue Form 1099-DA digital asset proceeds from broker transactions. And vice president of tax at Coinbase said that users are, quote, struggling to navigate the complexities of crypto taxation. So can I ask what the IRS is now seeing regarding crypto tax reporting compliance this filing season?”

  • Frank Bisignano, IRS CEO: “Well, you know, on the 1099-DA, it’s now, you know, out, and there’s a bunch of work to still do. So, I’d like to have our team get with your staff working on it and make sure the things we’re working on equals what you what they’re saying. But it’s high on the list because of its newness, of things that still need work.”

What I’m Reading This Week

• Bitcoin Taxes Make No Sense, Nicholas Anthony, Cato Institute.

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

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

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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

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