Since President Trump’s second inauguration, few issues in the financial services space have received as much attention in Washington as digital asset regulation. Our first blog post of this series surveyed initial actions and developments within the executive branch and their potential implications for the future of digital asset and cryptocurrency regulation. As the Securities and Exchange Commission (“SEC”) and Commodity Futures Trading Commission (“CFTC”) consider next steps—to be guided by the recently-convened Crypto Task Force led by SEC Commissioner Hester Peirce—we turn our attention to the other end of Pennsylvania Avenue. Recent developments indicate that, as within the Trump administration, momentum is growing in Congress to take action on digital asset regulation, including as relates to stablecoins, and also to address Biden-era regulatory trends that many believe were unhelpful to the cryptocurrency industry.
In this post, we summarize key pending and potential legislation, highlight takeaways from recent congressional hearings, and discuss crypto-focused congressional subcommittees, including the new Senate Subcommittee on Digital Assets and Bicameral Working Group on Digital Assets.
Pending and Potential Legislation
The GENIUS Act
On February 4, Sens. Bill Hagerty (R-TN), Cynthia Lummis (R-WY), Tim Scott (R-SC) and Kirsten Gillibrand (D-NY) introduced the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. If enacted, the bill would create a federal regulatory framework for dollar-denominated “payment stablecoins” and the issuers of such instruments.
A “payment stablecoin” is defined in the bill as a digital asset pegged to the U.S. dollar that is designed to maintain a steady value and can be freely redeemed for U.S. dollars at a fixed exchange rate. Under this framework, a digital asset that constitutes a “payment stablecoin” may not be a security issued by an investment company registered under the Investment Company Act of 1940, nor a national currency itself. In a statement accompanying the bill’s release, Sen. Gillibrand sought to allay concerns about fraud, money laundering, and consumer protection, highlighting the bill’s requirements that issuers “maintain one-to-one reserves,” prohibit issuances of “algorithmic stablecoins,” and “comply with U.S. anti-money laundering and sanctions rules.”
If enacted, the GENIUS Act would limit the issuance of payment stablecoins in the United States to “permitted payment stablecoin issuers,” and would establish a two-track regulatory approach for such issuers, depending on their size.
Permitted payment stablecoin issuers with greater than $10 billion in market capitalization would be overseen by one of the federal banking agencies. Specifically, issuers above the $10 billion threshold that are insured depository institutions (other than insured credit unions) would be regulated by the “appropriate federal banking agency” for the institution, as defined in the Federal Deposit Insurance Act (12 U.S.C. § 1813), while those that are nonbanks would be regulated by the Office of the Comptroller of the Currency (“OCC”), which also would regulate any other issuer that is an OCC-chartered entity with more than $10 billion in market capitalization. Issuers above the threshold that are insured credit unions would be regulated by the National Credit Union Administration.
A separate framework would exist for permitted payment stablecoin issuers with less than $10 billion in market capitalization. These entities would have the option to be supervised under a state-level regulatory regime, provided the state regime is substantially similar to the analogous federal regulatory framework. In cases where a state-regulated stablecoin issuer grows beyond the $10 billion threshold, the entity would be expected either to cease issuing stablecoins until its market capitalization falls below $10 billion or transition to a federal framework—to the Federal Reserve Board’s (“FRB”) regime for issuers that are depository institutions or to the OCC’s regime for nonbank issuers—unless the applicable agency grants a waiver allowing the issuer to remain subject to the state-level regime notwithstanding its market capitalization.
Similar stablecoin bills have been introduced in the past. Last year, Sens. Gillibrand and Lummis proposed an earlier version of the GENIUS Act that received bipartisan support, the Lummis-Gillibrand Payment Stablecoin Act. The Act was introduced with the purpose of establishing a federal regulatory framework for payment stablecoins. In April 2022, then-Sen. Patrick Toomey (R-PA) introduced another bill, the Stablecoin TRUST Act, that also failed to progress.
The STABLE Act
Meanwhile, on February 6, House Committee on Financial Services Committee (“HFSC”) Chairman French Hill (R-AK) and Rep. Bryan Steil (R-WI) released a discussion draft of the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act of 2025. The draft STABLE Act, discussed during the February 11 hearing on digital assets, serves essentially as companion legislation to the Senate’s GENIUS Act. The draft STABLE Act bill has various similarities with the GENIUS Act, including most notably the two-track framework for regulating payment stablecoin issuers.
The STABLE Act also builds on a previously proposed 2023 House bill, the Clarity for Payment Stablecoins Act of 2023. However, the new draft diverges from the 2023 bill in an important way: under the draft STABLE Act, the OCC would be granted authority to approve and supervise federal nonbank payment stablecoin issuers, whereas the 2023 bill provided no such role for the OCC.
Additional Legislation in the Congressional Pipeline
In addition to the draft STABLE Act, other bills discussed during the February 11 HFSC hearing included a draft bill that would establish an office to assess technological advancements at the SEC and codify an existing similar office at the CFTC, a draft bill to establish a joint advisory committee at the SEC and CFTC, and a draft bill that would clarify the definition of a non-fungible token (“NFT”).
HFSC Chairman Hill has also said that he anticipates proposing a market structure package similar to 2024’s Financial Innovation and Technology for the 21st Century Act (“FIT21”). Passed by the House of Representatives on May 22, 2024, FIT21 would have established a comprehensive framework for digital asset markets, including a demarcation of which federal agencies have jurisdiction over what particular types of digital assets.[1]
Congressional Hearings on Debanking and Digital Assets
Last week, House and Senate committees held hearings on what has become a hot political topic: the so-called “debanking” of cryptocurrency companies. “Debanking” or “de-risking” is the process through which financial institutions deny services or terminate customer accounts, often due to financial, legal, regulatory or reputational risk concerns. Debanking has long been a bipartisan concern, with Democrats and consumer watchdog groups generally focusing on alleged debanking of low-income and minority customers, and Republicans generally focusing on alleged debanking of individuals and companies that participate in “disfavored” industries—e.g., oil and gas, mining, firearms, tobacco—or that hold conservative political views.
Concerns about the debanking of crypto companies has become a flashpoint for this larger debate, with many congressional Republicans claiming that federal regulators have recently conducted a coordinated effort to cut participants in the digital asset industry off from access to banking services in the United States, referred to colloquially as “Operation Choke Point 2.0.” This nickname derives from the name of an initiative by Obama-era Justice Department to investigate U.S. banks that served customers in industries believed to pose a high risk of money laundering and fraud, most notably payday lenders, but also firearms dealers.
On February 5, the Senate Committee on Banking, Housing, and Urban Affairs (“Senate Banking Committee”) held a hearing entitled “Investigating the Real Impacts of Debanking in America.” This hearing focused on the debanking of cryptocurrency companies and other participants in the digital asset industry (as well as the alleged debanking of “political figures and conservative-aligned businesses and individuals”). Committee members and witnesses discussed the following priorities and topics at length:
- Passage of the Fair Access Act. Sens. John Kennedy (R-LA) and Kevin Cramer (R-ND) reintroduced the Fair Access to Banking Act, based on the OCC’s finalized-but-never-enacted Fair Access Rule. The rule would have codified OCC guidance regarding the requirement that banks conduct risk assessments of individual customers rather than based on whole categories or classes of customers. The Fair Access to Banking Act would, if implemented, penalize financial institutions with more than $10 billion in assets for refusing services to “law-abiding companies or people” and would require banks to explain any denials of service in writing to potential customers.
- Amendment or Repeal of Agency Cryptocurrency Letters. During the Biden administration the federal banking agencies promulgated guidance documents─OCC Interpretive Letter 1179, Federal Deposit Insurance Corporation FIL-16-2022, and FRB SR 22-6─that require financial institutions to notify their regulator before engaging in cryptocurrency-related activities so that the agency could evaluate and provide feedback regarding potential risks to the bank’s safety and soundness. That process has been widely criticized as having a chilling effect on banks’ willingness to provide services to companies and individuals with exposure to the digital asset industry. Indeed, witnesses during the hearing testified that federal regulators applied various forms of pressure to discourage banks from engaging with crypto companies or crypto-affiliated customers and called for these letters to be withdrawn.
- Reforming Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) Compliance Requirements. Committee members and witnesses discussed concerns that the BSA/AML framework is ill-suited to the digital asset industry, and highlighted various ways it could be reformed. Proposals included raising the currency transaction report (“CTR”) threshold and reforming suspicious activity report (“SAR”) triggers.
On February 6, the HFSC, Oversight and Investigations Subcommittee held a hearing entitled “Operation Choke Point 2.0: The Biden Administration’s Efforts to Put Crypto in the Crosshairs.” The hearing was primarily a retrospective on allegations that federal regulators during the Biden administration targeted the U.S. digital asset industry. However, witnesses also discussed various ways in which concerns about debanking could be addressed, including many of the proposals described above.
New Senate Subcommittee and Bicameral Working Group
On January 23, 2025, the Senate Banking Committee established a new Subcommittee on Digital Assets (the “Senate Subcommittee”). The Subcommittee, which will be chaired by Sen. Lummis (R-WY), has announced that its two top priorities are “passing bipartisan digital asset legislation that promotes responsible innovation and protects consumers, including market structure, stablecoins and a strategic bitcoin reserve” and “[c]onducting robust oversight over Federal financial regulators to ensure those agencies are following the law, including by ensuring Operation Chokepoint 2.0 never happens again.” This Senate Subcommittee mirrors one created in the HFSC in 2019, the Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee.
Further, in a sign of expected House and Senate cooperation on issues relating to digital assets, on February 4 HFSC Chairman Hill announced the creation of a Bicameral Working Group on Digital Assets. This working group includes members of the House Financial Services Committee, House Agriculture Committee, Senate Banking Committee, and Senate Agriculture.
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We will continue monitoring events in this space and expect to publish additional posts in this series in the weeks ahead.
[1] For example, the legislation would grant the CFTC jurisdiction over digital commodities and would clarify that the SEC has jurisdiction over digital assets that are part of investment contracts.
