February 23: This week in digital asset federal policy
DC Decentralized: A weekly newsletter on developments in digital asset and blockchain federal policy
This week decoded
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
