April 20: This week in crypto federal policy
DC Decentralized: A weekly newsletter on developments in digital asset and blockchain federal policy
This week decoded
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.
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