January 12: This week in digital asset federal policy
DC Decentralized: A weekly newsletter on developments in blockchain federal policy
This week decoded
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
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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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