June 15: This week in crypto federal policy
DC Decentralized: A weekly newsletter on developments in digital asset and blockchain federal policy
This week decoded
On the Hill, digital asset tax policy took center stage. The House Ways and Means Committee held a legislative hearing on digital asset taxation that showcased both bipartisan appetite to do something and partisan divisions over how far to go, with Chair Jason Smith (R-MO) arguing the status quo is untenable for a $2+ trillion market while Ranking Member Richie Neal (D-MA) warned against giving crypto a distinct advantage over other assets. Rep. Steven Horsford (D-NV) and fellow Democrats pressed for tighter limits on validation reward tax deferral and charitable valuation before they engage further.
In the executive branch, the CFTC issued a proposed rule on event contract derivatives that would more clearly define when prediction market contracts are contrary to the public interest, introducing formal concepts like “gaming” and specifying how the Commission will evaluate contracts tied to sensitive underlying activities. The OCC, building on its GENIUS Act rulemaking, proposed new weekly and quarterly reporting requirements for permitted payment stablecoin issuers and foreign issuers under its jurisdiction.
Read more below
Congress
Hearings
Last week
On June 9, the House Ways and Means Committee held a hearing on “Digital Asset Taxation.”
On June 9, the House Financial Services Oversight and Investigations Subcommittee held a hearing on “Converging Criminal Enterprises: Chinese Money Laundering Networks and Cartel Financing in the U.S. Financial System.”
Upcoming
On June 25, the House Financial Services Subcommittee on Capital Markets holds a hearing on “From Wall Street to Main Street: The Future of How America Invests.”
On June 25, the House Small Business Committee holds a hearing on “From Startup to Scale: The Role of the SBA Office of Investment and Innovation in Powering America’s Small Businesses.”
Legislation
Reps. Sean Casten (D-IL) and María Elvira Salazar (R-FL) introduced the Stop Crypto ATM Scams Act to provide protections for potential fraud victims and require that crypto ATM companies comply with robust anti-money laundering and anti-fraud measures. (Press release)
Reps. Lance Gooden (R-TX) and Josh Gottheimer (D-NJ) introduced the Federal Cryptocurrency Theft Enforcement and Coordination Act to establish a Federal Cryptocurrency Theft Task Force within the Department of Justice to serve as the primary federal coordinating body for combating crypto theft and supporting victims. (Press release)
Rep. Mike Kelly (R-PA) introduced the Charitable Deductions for Digital Asset Donations Act (Text)
Rep. David Kustoff (R-TN) introduced the Providing Analogous Rules for Digital Assets Act (PAR Act) to modernize the Internal Revenue Code and ensure digital assets are treated consistently with comparable traditional financial instruments. (Text)
Rep. Jodey Arrington (R-TX) introduced the Applying Existing Tax Anti-Abuse Rules to Digital Assets Act to apply the wash sale rules and constructive sale rules to digital assets (Text)
Rep. Rudy Yakym (R-IN) introduced the Less Tax Paperwork for Digital Asset Owners Act to reduce certain tax compliance burdens with respect to digital asset ownership (Text)
Rep. Mike Carey (R-OH) introduced the Tax Clarity for Mining and Staking Act (Text)
Rep. Aaron Bean (R-FL) introduced the Digital Assets Voluntary Disclosure Program Act to allow eligible taxpayers to remedy digital assets violations by fulfilling the remedial requirements (Text)
Rep. Steven Horsford (D-NV) offered an amendment to the Ways and Means digital asset tax bills to modify validation reward deferral and charitable contribution valuation. (Text)
Correspondence
On the legislative drafts of digital asset tax bills released by Ways and Means Chair Jason Smith (R-MO), Rep. Steven Horsford (D-NV) sent a one-pager to his Democratic committee colleagues laying out “two minimum conditions that must be met before Democrats can engage on additional technical issues,” limiting deferral of validation rewards and valuation of charitable donations. (One-pager)
Trump Administration
Commodity Futures Trading Commission (CFTC)
The CFTC published a proposed rule regarding amendments to its rules concerning event contract derivatives, or prediction markets, to further specify the types of event contracts that may be subject to a determination that they are contrary to the public interest, such that they may not be listed for trading or accepted for clearing on or through a CFTC-registered entity, as provided in the Commodity Exchange Act (CEA). The CFTC also is proposing amendments to the procedure for the Commission’s determination to enhance clarity and organization, as well as a definition of the term “gaming” and a rule regarding when event contracts “involve” an underlying activity. The comment period closes July 27. (Proposed Rule)
Office of the Comptroller of the Currency (OCC)
The OCC published a proposed new information collection that would include weekly and quarterly reporting forms that must be completed by permitted payment stablecoin issuers and foreign payment stablecoin issuers. The OCC issued a proposed rule on March 2 that would implement requirements of the GENIUS Act with respect to the issuance of payment stablecoins and certain related activities by entities. The new OCC notice proposes reporting forms that permitted payment stablecoin issuers and foreign payment stablecoin issuers subject to the OCC’s jurisdiction would be required to complete. The comment period ends August 11. (Federal Register)
Internal Revenue Service (IRS)
The IRS will hold a public hearing on July 8 on the notice of proposed rules for electronic furnishing of payee statements by brokers with respect to digital asset sales. (Notice)
Noteworthy Quotes
ADMINISTRATION
Commodity Futures Trading Commission (CFTC)
CFTC Chair Mike Selig posted “Incumbents are always going to fear the future. The CFTC stands ready to address changing landscapes and ensure America remains the crypto capital of the world. We will continue to work diligently to onshore innovation and bring novel derivatives under the CFTC’s gold standard regulatory framework so that these markets can thrive here at home.”
Selig also posted “America is the global leader in financial markets because we embrace innovation and enforce robust regulatory requirements that provide confidence to market participants. Under POTUS’ leadership, we will continue to provide pathways for crypto, prediction markets, and other innovations to be offered within the US while protecting investors with world class regulation.”
Selig also posted “The name CLARITY says it all. For too long, crypto markets have operated under uncertainty and opaque rules. As CFTC Chairman, I am committed to bringing clarity where it is needed most and building a future-proof regulatory framework that can stand the test of time.”
Selig also posted “Under my leadership, the CFTC is onshoring crypto perpetual contracts under gold standard regulations. The Biden administration drove perps offshore to jurisdictions that had ZERO investor protections, leading to disasters like the FTX implosion. Instead, we believe that popular financial instruments like perps should be available to Americans under American laws and regulations.”
Selig also posted “SenTedCruz and I agree: America must lead in financial innovation. It’s not a question of WHETHER innovations like AI, crypto, or prediction markets transform financial markets, but a question of WHERE these innovations will take root. I’m committed to ensuring that these innovations are available on American soil and subject to American laws and regulations.”
Selig also posted “I’m pleased to announce that today, the CFTC is officially seeking public comment on a structured framework for evaluating the types of events that may underpin contracts traded on prediction markets. This proposal would give the CFTC durable, transparent rules of the road to identify the contracts Congress directed it to scrutinize while letting legitimate markets move forward pursuant to the public interest.”
Selig also posted “It is no coincidence that major media outlets, exchanges, and financial institutions are increasingly turning to prediction markets. When people have real skin in the game, the data follows, and that is the wisdom of the crowds at work.”
Selig also posted “The future of crypto should be built in America. I’m grateful for RepBryanSteil’s leadership in helping to deliver CLARITY to the American people and cement the US as the crypto capital of the world.
Selig also posted “As a former attorney who spent years defending crypto clients against government overreach, I can say this: innovators should not need a defense attorney. Under my leadership at the CFTC, the days of arbitrary enforcement and regulatory uncertainty are over. We are building clear rules that allow innovators to thrive and markets to grow.”
CONGRESS
CLARITY Act Ethics Language
On the White House operating in good faith in ethics language negotiations, Sen. Ruben Gallego (D-AZ) said, “I mean, they’re operating. I can’t tell if they’re operating in good faith or bad faith.” (Punchbowl)
On state enforcement, Sen. Bernie Moreno (R-OH) said, “I’m pointing out to these guys, like the shoe will be on the other foot someday. Think about that scenario when there’s a Democrat president or Democrat majority. You don’t think they’d go after Adam Schiff every day of the week?” (Punchbowl)
Senate Banking Chair Tim Scott (R-SC) Interview with Fox Business
On setting clear rules of the road for digital assets, Scott said, “Digital assets are part of the future of finance, so every single industry will want to be a part of that, including banks. What we’re talking about today is how do we set the rules of the road so that we protect our consumers?” (Press release)
On protecting consumers and lowering transaction costs, Scott said, “Job one is making sure that consumers are protected. Job two is making it less expensive to do business in America and easier to do it 24/7. Blockchain and digital assets allow us to get there faster.” (Press release)
On ensuring America leads in digital assets, Scott said, “We can either lead in America or watch the dust from a distance. We’re not going to do that. We’re going to lead in America. Why? Because we’re Americans.” (Press release)
On keeping financial innovation in the United States, Scott said, “We have to make sure that we have an environment that is conducive for the brightest minds, the greatest thinkers, and entrepreneurs to descend upon America to make sure that we are the economic and financial capital of the world for another generation.” (Press release)
On stablecoins and dollar dominance, Scott said, “What we’ve already seen with stablecoins is that our dollar dominance is actually increasing… Stablecoins require dollars or U.S. Treasuries to back every single penny. That’s really good news for America’s dollar remaining the reserve currency of the world.”(Press release)
On how digital assets help working families, Scott said, “For single mothers like the one that raised me and people working paycheck to paycheck, democratization through digital assets will bring down the cost of transactions and speed up the time of delivery.” (Press release)
On previewing today’s AI hearing, Scott said, “We know artificial intelligence is coming. The number one objective we have is to protect our consumers and make sure they don’t bear the burden of higher costs in electricity or water usage.” (Press release)
On AI-related protections for American workers, Scott said, “We need to make sure that we protect the American worker and make sure they don’t feel replaceable. Good, hard workers plus artificial intelligence should make us more productive. That means incomes will rise and we will have a better future.”(Press release)
On the Banking Committee’s work on AI, Scott said, “Today is the first of many hearings that we will have in the Banking Committee so that we can understand this… We’re going to make sure that we understand the implications of this technology, go into it with our eyes wide open, and create a regulatory environment that is helpful for American companies, American workers, and the future of the country.” (Press release)
On ensuring American leadership in AI, Scott said, “The one thing we all agree upon, left and right, is that China will not lead in AI. The stack will be built by American companies, American products, and America’s vision for the future of the world, not China’s.” (Press release)
Digital Asset Tax
On the legislative drafts released by Ways and Means Chair Jason Smith (R-MO), Rep. Steven Horsford (D-NV) wrote to his Democratic committee colleagues, “At this time, I cannot support the legislation in its current form, but I remain committed to working with Chairman Smith, Congressman Miller, and my colleagues on both sides of the aisle.”
Horsford also said, “I told them what my concerns are. I provided language, and I’m open to continuing to talk, but without those concerns being addressed, I can’t support what the majority has put forward.” (Punchbowl)
Horsford posted “Crypto should not be a political talking point. It should be governed by clear rules that protect consumers, prevent abuse, and make sure innovation works for everyone. In Nevada, we have seen what happens when emerging industries move faster than the rules meant to govern them. It creates uncertainty for consumers, small businesses, investors, and communities that deserve transparency and accountability. That is why I introduced the PARITY Act: to create a fair, durable tax framework for digital assets, close loopholes exploited by sophisticated traders, reduce unnecessary burdens on ordinary consumers, and keep innovation and jobs here in the United States. The future of digital assets should be built on trust, fairness, and opportunity, not confusion or political games. #NV04”
Horsford also posted “The future of digital assets cannot be built on outdated rules. As more Americans engage with crypto and blockchain technology, Congress has a responsibility to provide clarity, protect consumers, and make sure innovation reaches communities that have too often been left out of the financial system. That is what the PARITY Act is about: creating a fair framework for digital assets that supports responsible growth, strengthens trust, and opens more pathways to build wealth. Nevada deserves a seat at the table in the future of our economy. #NV04”
Horsford also posted “Digital assets are not a future issue. They are already here, and Congress has a responsibility to get this right. I have been clear: we need modern rules that provide certainty, protect consumers, prevent abuse, and make sure innovation creates opportunity for everyone, not just those already at the top. That is why I introduced the PARITY Act. This bill modernizes outdated digital asset tax rules and helps create a fairer system that supports responsible innovation while closing the wealth gap. Nevadans deserve a digital economy with clear rules, strong protections, and real pathways to build wealth. #NV04”
On the potential for bipartisan support of digital asset tax legislation, Smith said, “You had several members who want something done. We are going to do it as long as both parties continue to work together.” (Punchbowl)
In remarks during the Ways and Means hearing about Smith’s drafts, Ranking Member Richie Neal (D-MA) said there were “quite sensible, providing clear rules of the road for taxpayers looking to apply law.” (Punchbowl)
Rep. John Larson (D-CT) said, “I think this is a promising industry, but there’s far more questions than there seem to be answers.” (Punchbowl)
Rep. Tom Suozzi (D-NY) said, “We have to do something, but I hope we can find a bipartisan way forward,” said. “But it’s very complicated. I don’t think most people understand how complicated it really is.” (Punchbowl)
Rep. Greg Murphy (R-NC) said crypto seems like “make-believe money” and “We do need to get a hold on this because it’s becoming such a big part of people’s investment portfolio. It’s just, we need to make sure we do it right and we don’t overburden people.” (Punchbowl)
In his opening statement, Chair Jason Smith (R-MO) said, “The digital asset status quo is untenable. America needs clear tax rules of the road to remain the crypto capital of the world. Recent data indicate that a quarter of Americans, or over 67 million people, own cryptocurrency. That’s a dramatic increase from only 3 percent at the start of this decade. Nearly a quarter of cryptocurrency holders earn less than $75,000, and the average crypto holder is nearly as likely to work in construction, manufacturing, or food service as tech or finance. Crypto owners live in every community – urban, rural, and everywhere in between. Today, cryptocurrency has a market capitalization of over $2 trillion. That’s a massive industry by any measure, and nearly all other industries of a similar size enjoy clear tax policies. The days of debating whether digital assets are a passing fad are gone. Continuing their current growth, digital assets will only become further integrated into the economy. Americans need simplicity and clarity to own, trade, and use digital assets with confidence. Digital asset businesses, many of which are homegrown American innovations, need consistent rules tailored to digital assets.” (Press release)
In his opening statement, Ranking Member Richie Neal (D-MA) said, “We’re here to address the taxation of digital assets, which has taken quite a bit of the Committee’s time this year. One might even say, in light of the struggles of working families, too much of the Committee’s time. With families struggling to make ends meet, the price of gas, groceries, energy, housing and health care soaring, our time and efforts should be poured in to solving these problems. Notwithstanding that observation, I am glad to see that the Majority, in holding this legislative hearing, is wading into a novel topic with a degree of caution. If there is one thing I can say that is bipartisan for sure, is the need for more education on the topic of digital assets—on both sides of the aisle… it appears there are some provisions that deviate substantially from general tax principles, providing a distinct advantage to digital assets above and beyond other investments. We should be very careful about putting a thumb on the scale here—as we all know, it’s much easier to put something into the tax code than it is to take it out.” (Press release)
Miscellaneous
Rep. Jason Crow, (D-CO) said, “As a member of Congress, you should not be able to use prediction markets, and you should not be trading stocks.” Crow connected prediction markets with his partnership with Reps. Alexandria Ocasio-Cortez (D-NY) and Mike Levin (D-CA) to establish the End Corruption Caucus, saying, “I’m reading the letter to call for the ban on the use of prediction markets, which is pretty gross, by the way. The things that people are betting on, military operations, the loss of lives… Public service, you should not be getting something out of this, right? Like, my net worth has decreased since I’ve been in Congress, not increased.” (Punchbowl)
Sen. Cynthia Lummis (R-WY) posted “The rules for digital assets exist. We just have to make them law. That is what the Clarity Act does.”
Lummis also posted “A Strategic Bitcoin Reserve is the most asymmetric bet the U.S. Treasury could make. The downside is manageable. The upside is generational.”
Senate Banking Chair Tim Scott (R-SC) posted “Innovation shouldn’t be held back by uncertainty. The Clarity Act establishes clear guardrails and transparency, helping create new opportunities to achieve the American Dream. Clarity for digital assets and your future.”
Rep. Sean Casten (D-IL) posted “Illinoisans have lost devastating sums of money to crypto-enabled fraud. Just last year, the FBI reported $333 million in losses due to crypto scams.That’s why I’ve introduced the bipartisan Stop Crypto ATM Scams Act to strengthen consumer protections, increase transparency, and help prevent fraudsters from exploiting vulnerable Americans.”
Rep. María Elvira Salazar (R-FL) posted “En el sur de la Florida he visto de cerca el daño que estas estafas le hacen a nuestros adultos mayores y a sus familias.Por eso me uní a RepCasten para presentar la Ley Stop Crypto ATM Scams, una iniciativa bipartidista para combatir el fraude, reforzar las protecciones para los consumidores y evitar que más personas pierdan los ahorros de toda una vida a manos de delincuentes.Nuestros mayores trabajaron duro durante décadas para construir su retiro. Tenemos la responsabilidad de protegerlo.”
Salazar also posted “In South Florida, I’ve seen firsthand the devastating impact financial scams can have on seniors and their families. Today, I joined RepCasten to introduce the Stop Crypto ATM Scams Act to crack down on fraud, strengthen safeguards, and help stop scammers from targeting seniors through crypto ATM scams. They earned their retirement. We have a responsibility to protect it.”
Scott also posted “Digital assets are part of the future of finance. We can either lead the next era of innovation or be left watching it happen elsewhere. America doesn’t follow - we lead.”
What I’m Reading This Week
Tax Treatment of Newly Regulated Crypto Perpetuals, Lee A. Sheppard, 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
Check out our other newsletter, DC/ai Decoded: A weekly newsletter on developments in artificial intelligence and quantum federal policy.
