July 20: This week in crypto federal policy
DC Decentralized: A weekly newsletter on developments in digital asset and blockchain federal policy
This week decoded
The CLARITY Act’s path to the finish line got more complicated this week, even as negotiators keep pushing to resolve remaining issues. Staff on the Senate Agriculture and Banking Committees continue working to reconcile their separate drafts into a single bill and members grapple with concerns from some law enforcement groups about illicit finance risks tied to crypto developer protections. Perhaps the largest looming question is on ethics limits for federal officials; Sens. Cynthia Lummis and Bernie Moreno took the discussion directly to the White House, underscoring the priority still being placed on closing out the market structure debate. Timing pressures are mounting on two fronts: Senate floor time is already tight heading into the August recess, and the late Sen. Lindsey Graham’s memorial services in Washington and South Carolina later this month will further constrain the calendar.
Compounding the uncertainty, Patrick Witt, the White House’s lead CLARITY Act negotiator, announced his departure just as talks are reaching this decisive stage.
All of this unfolds against a symbolic backdrop: this week marks the one-year anniversary of the GENIUS Act’s enactment, a reminder of how far digital asset policy has come and how much is still unresolved as Congress tries to build on that foundation.
Read more below
Congress
Hearings
Last week
On July 17, the House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee held a field hearing on “Building the Future of Finance: How the CLARITY Act Unlocks Innovation.”
This week
On July 21, the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions holds a hearing on “Oversight of the Financial Crimes Enforcement Network.”
On July 21, the House Agriculture Commodity Markets, Digital Assets, and Rural Development Subcommittee holds a hearing on “Examining Prediction Markets: Customer Protections and Market Integrity in Sports Event Markets.”
Legislation
The Senate unanimously passed resolution from Sen. Ruben Gallego (D-AZ) expressing the sense of the Senate that under no circumstances should Samuel Bankman-Fried receive executive clemency, including a pardon or commutation, and affirming the Senate’s commitment to the rule of law and integrity of the United States financial system. (Text)
Rep. Josh Gottheimer (D-NJ) introduced the Facial Recognition to Protect Children Act to require prediction markets and online sportsbooks to use facial recognition technology to verify a user’s age before they can place a bet or trade. (Press release)
Correspondence
Senate Banking, Housing and Urban Affairs Committee Ranking Member Elizabeth Warren (D-MA) sent a letter to President Donald Trump requesting an updated and comprehensive financial disclosure showing his cryptocurrency earnings. (Letter)
Senate Banking, Housing and Urban Affairs Committee Ranking Member Elizabeth Warren (D-MA) sent a letter to Senate Majority Leader John Thune (R-SD) and Minority Leader Chuck Schumer (D-NY) urging that any crypto legislation heading to the Senate floor prevent the President, Vice President, senior administration officials, members of Congress, and their families from profiting off the crypto industry. (Letter)
Publications and Events
The Congressional Research Service published an updated report on “Central Bank Digital Currencies” (Report)
Trump Administration
White House
President’s Council of Advisors for Digital Assets Executive Director Patrick Witt, will begin a months-long leave of absence later this month to report for training with the Georgia Army National Guard. (Crypto in America)
Federal Deposit Insurance Corporation (FDIC)
The FDIC published a request for comment on Reporting Forms and Instructions Associated With Requirements and Standards for FDIC-Supervised Permitted Payment Stablecoin Issuers. (Notice)
Noteworthy Quotes
ADMINISTRATION
White House
President Trump posted on Truth Social, “In honor of Senator Lindsey Graham, a big supporter, the U.S. Senate should pass the Clarity Act. China, and many other countries, would like to take complete and total control of this major financial ‘happening,’ as well as A.I., where we are now leading, but where they are fighting hard. Don’t let China win on either subject!!!”
President’s Council of Advisors for Digital Assets Executive Director Patrick Witt posted “The world won’t wait on America forever. We can either lead the way on digital assets by passing the Clarity Act, or watch as someone else sets the rules of global finance for us.”
President’s Council of Advisors for Digital Assets Deputy Director Harry Jung posted “Watched my daughter (Clara) sit patiently by the water waiting for that first bite this weekend. That’s exactly how patient the entire crypto industry has been on the Clarity Act Real progress doesn’t happen overnight — but the wait builds stronger foundations.”
Commodity Futures Trading Commission (CFTC)
Chair Mike Selig posted “One year after the GENIUS Act became law, America is the crypto capital of the world. Thank you, POTUS and SenatorHagerty for the leadership that made it possible. The CFTC will build on that leadership by helping to deliver CLARITY for the American people.”
Selig also posted “POTUS is exactly right: America MUST lead in the race for AI, crypto, and financial innovation. We CANNOT let outdated laws allow us to fall behind China and other countries. It’s time for CLARITY.”
Securities and Exchange Commission (SEC)
Chair Paul Atkins posted “Our proposal to permit e-delivery is another step toward building a regulatory framework suitable for the modern era, a key pillar of my agenda. In an age of artificial intelligence and blockchain technology, a default to paper delivery should be a relic, not a standard.”
Treasury Department
Treasury Secretary Scott Bessent posted “USTreasury is committed to disrupting and degrading Iran’s illicit financial activities, including its abuse of digital assets. Today, Treasury’s Office of Foreign Assets Control sanctioned multiple wallets tied to the Central Bank of Iran, resulting in the freeze of over $130 million. We will continue to aggressively follow the money and deny the Iranian regime access to the proceeds of its illicit revenue schemes.”
CONGRESS
CLARITY Act
On the Senate Republican meeting with President Trump on the CLARITY Act, Sen. Ruben Gallego (R-AZ) said, “They’re taking a version of the text to the president with their ethics provisions, not with anything that we agree to as Democrats. At the end of the day, we don’t have strong ethics. I don’t care what the president says. You’re not going to have the Democratic votes.” (Politico)
Gallego added the ethics language he saw includes “a lot of latitude to the president to continue doing his grift, and also it’s not very consumer protection friendly.” (Politico)
Gallego also said, “You’re arguing with an administration that likes to skirt the law. We are trying to get outside entities to be able to also be enforcing the law that aren’t just going to be dependent on a very corrupt DOJ.” (Punchbowl)
In contradiction, Sen. Bernie Moreno (R-OH)) said the current draft “has the strongest ethics provision of any piece of legislation ever passed by any Congress.” (Politico)
Moreno also said, “It’s time for a vote now, but the president asked for a briefing.” (Politico)
On returning to a previous proposal to allow state attorneys general to enforce ethics provisions, Moreno said, “That’s just ridiculously stupid.” (Punchbowl)
Sen. Cory Booker (D-NJ) indicated the bill is still under negotiation, saying, “I hope they’re not going to drop something before we finish our negotiation. The only way to get this done is a bipartisan pathway.” (Politico)
On the White House providing feedback on ethics language, Sen. Thom Tillis (R-NC) said, “We’re asking for baseline language. What do we need so that we can figure out if we’ve got something we can pack?” (Punchbowl)
On his idea for a circuit breaker language to allow bank regulator to stop systemwide deposit flight from traditional banks to crypto exchanges, Sen. Thom Tillis (R-NC) said, “If you’re against it on yield, because you think it’s going to cause deposit migration, what if we come up with language that the FDIC, the OCC can have, as circuit-breaker language?” He added, “When you start talking about circuit-breaker language that could eliminate the one thing that the banks have said is their concern, and they still don’t support it, then it suggests to me that that was a red herring.” (Punchbowl)
Sen. Cynthia Lummis (R-WY) posted “More than 4 million people lost access to their money in 2022, and thousands are still sorting through bankruptcy claims today. Congress spent years arguing about crypto’s future while consumers waited in bankruptcy court for their own money. The Clarity Act ends the wait and ends the fight.”
On timing, Sen. Catherine Cortez Masto (D-NV) said, “At this juncture, I’m not dictated by floor time or deadlines.” (Punchbowl)
Sen. Mark Warner (D-VA) said, “I’m a supporter of having a Clarity bill to have guardrails for digital assets. They’re here to stay. But in creating that, we can’t create such loopholes around, for example, particularly funding terrorism or other illicit finance. If the goal is that no one in industry is gonna be upset at all, or 100% satisfied, there’s not gonna be a bill.” (Punchbowl)
GENIUS Act One-Year Anniversary
Sen. Cynthia Lummis (R-WY) posted “One year ago, the GENIUS Act became law. The GENIUS Act was an important first step in securing the dollar’s dominance, but we must capitalize on that momentum if we are going to cement America’s legacy as the crypto capital of the world. Let’s get the Clarity Act done!”
Rep. Bryan Steil (R-WI) posted “One year ago today, GENIUS became law. Next up: CLARITY to help protect consumers and ensure U.S. wins the Web3 race.”
Rep. Young Kim (R-CA) posted “One year ago today, The GENIUS Act was signed into law, creating clear rules for stablecoins, protecting consumers, & securing America’s place as the undisputed leader in digital finance. Crypto innovation belongs in America.”
Sen. Bill Hagerty (R-TN) posted “It’s been one year since POTUS signed my GENIUS Act into law! We are making America the crypto capital of the world.”
Financial Services GOP posted “One year ago today, the GENIUS Act was signed into law, delivering the first comprehensive federal framework for payment stablecoins and marking a historic step toward securing America’s leadership in digital assets. The law promotes responsible innovation, reinforces consumer protections, and strengthens the U.S. dollar’s position as the world’s reserve currency.”
Miscellaneous
Rep. Steven Horsford (D-NV) posted “This week, I joined congressional colleagues at the Injective Summit to discuss America’s financial edge and the future of digital assets. I shared why Congress must get the rules right, not just get them done. This means protecting consumers, providing fair tax treatment through my bipartisan Digital Asset PARITY Act, and giving responsible innovators the certainty they need to grow here at home. Nevada understands reinvention, and I will keep working to ensure this technology creates jobs, expands opportunity, and works for working families and small businesses. NV04”
Rep. Nancy Mace (R-SC) posted “Owning crypto should not disqualify you from owning a home. The American Dream is homeownership. Washington keeps making it harder to get there. Hardworking Americans who have built real wealth through cryptocurrency cannot use those assets to qualify for a mortgage. The system is stuck in the past, and our American Homeowner Crypto Modernization Act brings it into the 21st century. The bill requires HUD, USDA, the VA, and the Federal Housing Finance Agency to update their mortgage underwriting guidelines so verified crypto holdings count when evaluating a borrower’s creditworthiness, not just traditional bank assets. If you worked hard, built wealth, and want to buy a home, the federal government should not stand in the way because the system refuses to recognize your assets. More Americans deserve a real shot at owning a home.”
Senate Judiciary Committee Confirmation Hearing for Acting Attorney General Todd Blanche
Katie Britt (R-AL)
Katie Britt (R-AL): “As our society ages … it will continue to be a problem that we must take robust action to address, particularly given technological advances and other ways that this fraud is occurring. I introduced the GUARD Act with Senator Gillibrand, and it would allow state and local law enforcement agencies … to use certain federal grant funding 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. I’m thrilled it was reported out of this committee by voice vote earlier this year. I know that DOJ has programs in place like [the] Elder Justice Initiative, but can you speak specifically to DOJ’s efforts with respect to elder financial fraud and the extent to which we will work to continue to make this a priority under your leadership and the importance of collaboration with state and local law enforcement officers as we work to bring justice to these people who have been abused?”
Todd Blanche: “Yes, Senator, we are very focused not only at main Justice, but at every U.S. Attorney’s office on protecting our elderly, who are absolutely victims of scams of any sort. And many of the scams are coming from overseas … and so we are we’ve, we’ve charged, I think, over 300 this year alone. We’ll keep on doing that, and it has been a priority, as it should be, and it will remain a priority of the Department to, to target these, these criminals again, many of whom are not even in this country, going after our senior citizens.”
Senate Finance Confirmation Hearing for Francis Brooke as Nominee for Deputy Secretary of the Treasury and Sriprakash Kothari as Nominee for Assistant Secretary of the Treasury
Sen. Steve Daines (R-MT)
Sen. Steve Daines (R-MT): Congratulations to each of the nominees here today, and thank you for the willingness to jump back in the arena and serve. In partnership with the administration, this Congress has taken historic steps to advance American leadership in digital assets. In fact, we’ve established the first federal regulatory framework for payment stablecoins through the Genius Act, and I remain hopeful that Congress will finish the work we started on digital asset market structure legislation. There’s a very important piece of the framework that is unfinished, and that’s the tax code. The current tax code forces taxpayers to apply rules written decades before blockchain technology even existed. Taxpayers deserve rules they can understand. The IRS deserves rules they can administer. And the American entrepreneurs deserve certainty that allows them to build their businesses here rather than overseas. My comprehensive digital asset tax framework that I’ve been developing over the past year would accomplish those goals. It is built around some commonsense principles. Reduce unnecessary complexity, increase compliance, protect the tax base, and keep digital asset jobs and the innovation here in the United States. This is not about giving digital assets special treatment. Where digital assets function like securities or commodities, my proposal applies familiar tax principles, including wash sale rules, constructive sale rules, and elective mark-to-market regime. Where blockchain technology creates genuinely different transactions, the proposal provides tailored rules for stablecoin payments, network fees, staking, lending, investment trusts, passive validation activity, and charitable contributions. Importantly, it pairs this commonsense relief with strong guardrails to prevent abuse. The administration has made clear that America should lead the digital asset economy. We need now, here in Congress, to finish the tax side of that ledger, of course, the jurisdiction here in the Finance Committee. Mr. Brooke, could you explain how a comprehensive framework that would reduce needless complexity apply traditional tax safeguards where appropriate and include strong anti-abuse rules could improve compliance while at the same time protecting the tax base?”
Francis Brooke: “We need to make sure that the United States is the leader, that we’re the ones setting the standards.”
Daines: “Dr. Kothari, you’ve spent your career studying how government rules affect markets, affect capital formation, affect economic behavior. Could you tell us what the consequences might be for American competitiveness if Congress continues to leave digital asset taxpayers in businesses without clear and administrable tax rules?”
Sriprakash Kothari: “If the U.S. has to have maintained a leadership position in digital assets, digital currency, then we need a regime that is clear in terms of rules of engagement and also we have to enforce those laws.”
Senate Select Committee on Intelligence Confirmation Hearing for Jay Clayton as Nominee for Director of National Intelligence
Sen. James Lankford (R-OK)
Sen. James Lankford (R-OK): “You have handled terrorism cases coming straight out of Iran and threats that have come to us. For 47 years, the United States and American citizens all around the world have faced terrorism threats from Iran and the growth of the proxy terror organizations. What can you tell us at this point, based on your experience in the Southern District of New York and your prosecution side of things, and then also some of the work that you had done in the past just dealing with money laundering and the movement of money, the most effective way to be able to deal with the threats that we’re facing right now from Iran?”
Jay Clayton: “The threat’s real. It’s not hypothetical. Look, all you need to do is look at the people who we have arrested in the last year and what they have done. They intend to do our citizens harm. They are well funded, and they are well funded through channels that we need to do a better job of monitoring. Our traditional banking channels I think are fairly well monitored. There are new channels, I would say digital asset platforms, other channels where funding takes place that we need to do a better job on.”
Confirmation Hearing for Department of Labor Secretary Nominee Keith Sonderling
Tommy Tuberville (R-AL)
Tommy Tuberville (R-AL): “Couple of other things. I just wanna say, you know, we have this 401[k] plan that we’re trying to get through for retirement funds, through private equity, cryptocurrency, one of my bills called the Financial [Freedom] Act, and we’re trying to get it through committee. And what does all this mean for the average American and the retirement accounts if we can pass a bill like this where they can actually get something out of the retirement?”
Keith Sonderling: “We’re very working very hard at the Department of Labor to make sure that 401(k) plans have access to alternative investments just like union pensions do, just like state pensions do. Right now, the 401(k) market is largely in index funds, and those workers deserve private assets. They deserve diversification just like somebody with a pension plan. So, this is one of my top initiatives to make sure that there’s parity now between the pension system and the 401(k) system to be able to diversify for individuals, you know, who just have a 401(k), to get into those private markets that were previously only for accredited investors. This is how President Trump is gonna make America wealthy again by allowing everyone to democratize that access, allow everyone these opportunities outside of just very conservative index funds. And at the department, we don’t push one fund over the other. We lay the mutual framework and let the employers decide under their fiduciary obligations, which is the best for their employees.”
Industry Spotlight
On July 20, Pubkey will host a DIGITAL ASSETS & AI town hall exploring the future of American innovation through the lens of artificial intelligence, digital assets, entrepreneurship, and public policy. As the United States navigates a new era of emerging technologies, the decisions made today will shape how businesses build, invest, hire, and compete for years to come. The discussion will examine innovation, the impact on digital assets, the state of AI, government involvement, and the policy frameworks needed to encourage responsible developments while maintaining America’s global leadership. Register at: https://luma.com/ujh4zz9w
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
Check out our other newsletter, DC/ai Decoded: A weekly newsletter on developments in artificial intelligence and quantum federal policy.
