House Passes Legislative Proposals as Senate Explores Market Structure Framework

Momentum continues to build for digital asset policy reform in Washington, with both chambers of Congress taking notable steps to advance legislative efforts. On June 23, the House passed several financial services and blockchain-related bills, including measures to promote U.S. leadership in blockchain technology and expand access to capital markets. The following day, the Senate Banking Subcommittee on Digital Assets held a hearing on bipartisan frameworks for digital asset market structure. In advance of the hearing, the Senate Banking Committee released a set of guiding principles for market structure legislation, calling for statutory clarity on the classification of digital assets, streamlined regulatory jurisdiction and a modernized SEC framework to support responsible innovation. Together, these developments reflect increasing alignment in Congress on the need for a clear, tailored and innovation-forward regulatory regime for digital assets.

Congressional Updates

The House and Senate Continue to Advance Stablecoin and Market Structure Legislation

• House. On June 24, Politico reported that House Republican leadership is planning a floor vote on crypto legislation as early as the week of July 7, though timing remains fluid. The President has requested that the House pass the Senate’s version of the GENIUS Act without changes, but House lawmakers, including Financial Services Chair French Hill (R-AR), may seek to reconcile differences with the STABLE Act, the House’s version of the stablecoin legislation. Discussions are ongoing about whether to combine stablecoin legislation with the broader CLARITY Act, which establishes a regulatory framework for digital asset market structure.
• Senate. Senate Banking Committee Chair Tim Scott (R-SC) and Digital Assets Subcommittee Chair Cynthia Lummis (R-WY) have stated their goal is to advance market structure legislation by the end of September. Lummis plans to introduce the market structure bill prior to the August recess. Both senators have urged the House to pass the GENIUS Act as a standalone bill. On June 17, the President posted on social media, urging the House to approve the GENIUS Act without modification. During a recent Senate Banking Committee roundtable, Bo Hines, Executive Director of the White House Council of Advisers for Digital Assets, reiterated that the President supports prompt House passage of the bill. While the House and Senate appear aligned on the broader policy objectives of digital asset legislation, they remain divided on the preferred legislative strategy and sequencing.

Senate Hearing Examines Frameworks for Digital Asset Market Structure

• On June 24, the Senate Banking Subcommittee on Digital Assets convened a hearing entitled “Exploring Bipartisan Legislative Frameworks for Digital Asset Market Structure,” where lawmakers and industry experts emphasized the need for clear, legislative frameworks to support digital asset innovation while maintaining U.S. competitiveness. Witnesses urged Congress to enact statutory definitions distinguishing securities from commodities and to codify the regulatory responsibilities of the SEC and CFTC, warning that current enforcement-driven approaches have driven businesses offshore. They also highlighted tokenization as a transformative yet complementary evolution of existing financial infrastructure, arguing it enhances market efficiency, transparency and liquidity. Concerns about consumer protection were also prominent; several witnesses emphasized that bankruptcy protections, the assurance that customers can recover assets if platforms fail, should be a central component of any digital asset legislation. Lawmakers, including Sen. Cynthia Lummis (R WY), stressed the need for bipartisan cooperation.

Senate Banking Committee Releases Principles for Market Structure Legislation

• Ahead of the June 24 hearing, Senate Banking Chairman Tim Scott (R-SC), Subcommittee on Digital Assets Chair Cynthia Lummis (R-WY), Sen. Thom Tillis (R-NC) and Sen. Bill Hagerty (R-TN) released a set of principles for the development of comprehensive market structure legislation, including:
• • Legislation should clearly define the legal status of digital assets. A clear, economically rational line distinguishing digital asset securities from digital asset commodities should be fixed in statute, contemplating existing law and providing predictability, enhanced legal precision and much-needed regulatory certainty.
  • Jurisdiction should be clearly allocated among regulators. Regulatory authority should be clearly allocated in statute. Legislation should acknowledge that not all distributed ledger technology should be regulated equally. Self-custody of digital assets should be explicitly preserved.
  • Regulation should be modernized to foster innovation. Legislation should include a new SEC exemption for certain digital asset fundraising. The SEC should revisit its registration requirements for digital asset issuers and instead provide a clear, appropriately tailored pathway to compliance for good-faith, innovative actors. Tokenization should be recognized as an evolution of financial infrastructure that enhances efficiency, transparency and liquidity rather than a fundamental change to the nature of the underlying asset.
  • Regulation should protect those who purchase or trade digital assets. Centralized digital asset intermediaries should have illicit finance compliance, clear and right-sized capital, custody and segregation requirements, and appropriate enforcement authority.
  • Illicit finance measures should be targeted and pro-innovation. A small, common-sense package of measures preventing money laundering and sanctions evasion with digital assets should be included. This could include requiring the adoption of examination standards and clarifying that the Bank Secrecy Act and International Emergency Economic Powers Act (IEEPA) extend to entities abroad with U.S. touchpoints.
  • Federal financial regulators should welcome responsible innovation. The financial services regulatory agencies should consider increasing the use of no-action guidance, sandboxes, safe harbors, coordination and appropriate application requirements. Federal financial regulators should provide clear guidance affirming that many crypto-related activities are permissible for banks and other financial institutions, provided they do not threaten the safety and soundness of the institution.

Financial Services and Blockchain-Related Bills Advance in the House

• On June 23, the House of Representatives passed several pieces of legislation focused on capital formation and blockchain technology. The bills included measures aimed at expanding accredited investor eligibility, promoting U.S. leadership in blockchain technology and easing regulatory burdens for public offerings and emerging growth companies.
• • Deploying American Blockchains Act of 2025 (H.R. 1664). Introduced by Reps. Kat Cammack (R-FL) and Darren Soto (D-FL), this bill would direct the Secretary of Commerce (currently Howard Lutnick) to lead federal policy initiatives guiding blockchain integration across industries to promote the United States' leadership. The bill now heads to the Senate, where companion legislation was considered earlier this year. Additional information on the bill can be found here.
  • Fair Investment Opportunities for Professional Experts Act (H.R. 3394). Sponsored by Chairman French Hill (R-AR), this bill passed the House by a bipartisan vote of 397-12. The bill expands the definition of “accredited investor” under the Securities Act of 1933 to include individuals with certain licenses, education or job experience, beyond just those meeting wealth and income thresholds.
  • ELEVATE Act of 2025 (H.R. 3301). Sponsored by Rep. Zach Nunn (R-IA), the bill was unanimously passed by the House by voice vote. This bill clarifies that an emerging growth company (EGC) may present two years, rather than three years, of audited financial statements in both initial public offerings (IPOs) and spin-off transactions. This expands the JOBS Act accommodation currently limited to IPOs.
  • Encouraging Public Offerings Act of 2025 (H.R. 3381). Sponsored by Capital Markets Subcommittee Chairman Ann Wagner (R-MO), the bill was unanimously passed by the House by voice vote. This bill codifies SEC Rule 163B, allowing all issuers, not just EGCs, to “test the waters” with potential investors and to submit confidential draft registration statements to the SEC prior to public filing. It also shortens the public filing window before effectiveness to 10 days.

House Financial Services Chair Hill Outlines Crypto Legislative Strategy

• On June 23, the House Financial Services Committee Chair French Hill (R-AR) spoke at the Brookings Institution about the Committee’s ongoing efforts related to crypto legislation, including a fireside chat with Nellie Liang, former Treasury Under Secretary for Domestic Finance. Hill acknowledged the President’s call for a swift passage of the Senate’s GENIUS Act but emphasized that the House may reconcile key differences with its own STABLE Act. Hill confirmed the Committee is working toward the President’s August timeline.

Agency Updates

Federal Reserve Board Removes Reputational Risk as a Component of Examination

• On June 23, the Federal Reserve Board announced that reputational risk will no longer be a component of examination programs in its supervision of banks. See also SR 95-51 (SUP). The Board stated that it has started the process of reviewing and removing references to reputation and reputational risk from its supervisory materials, including examination manuals, and, where appropriate, replacing those references with more specific discussions of financial risk. The Board indicated that it would train examiners to help ensure this change is implemented consistently across Board-supervised banks and will work with the other federal bank regulatory agencies to promote consistent practices, as necessary.
• The announcement follows similar guidance from the OCC and FDIC regarding reputational risk in March 2025.

State Updates

Illinois Digital Asset Bill

• The Illinois legislature recently passed the Digital Assets and Consumer Protection Act (SB1797), a wide-ranging bill that would empower the Illinois Department of Financial and Professional Regulation (IDFPR) to regulate any company engaged in “digital asset business activity” with an Illinois resident. The bill grants the IDFPR wide-ranging authority to promulgate rules, initiate investigations and examine registered businesses. As initially introduced, SB1797 was extraordinarily broad, seemingly applying to anyone involved in the crypto industry or engaged in crypto trading.
• Based on feedback from the industry, late-stage revisions to the bill significantly narrowed the definitions of “digital asset” and “digital asset business activity.” As a result, far fewer entities would be subject to SB1797’s regulatory regime under the version of the bill that passed. Nevertheless, the IDFPR retains expansive authority to regulate anyone who falls within the bill’s ambit. Therefore, market participants that are still subject to SB1797 should remain concerned about its broad scope.
• The Illinois Constitution requires the legislature to present the bill within 30 days after passage, and the Governor has 60 days after that to sign or veto/return it; otherwise, it becomes law.

CSBS Guidance on Tangible Net Worth and Virtual Currency Under the Money Transmission Modernization Act

• The Conference of State Bank Supervisors (CSBS) recently promulgated guidance applying the tangible net worth requirements under the Money Transmission Modernization Act to entities holding virtual currency, whether as corporate assets or for customers.
• The Money Transmission Modernization Act (MTMA) requires licensees to maintain tangible net worth of the greater of $100,000 or (i) 3% of total assets for the first $100 million; (ii) 2% of additional assets for $100 million to $1 billion; and (iii) 0.5% of additional assets for over $1 billion. Tangible net worth is defined as “the aggregate assets of a licensee excluding all intangible assets, less liabilities, as determined in accordance with United States generally accepted accounting principles.” To date, 31 states have enacted the MTMA in full or in part.
• Pursuant to the guidance, when calculating the amount of tangible net worth required under the MTMA, money transmitter licensees with virtual currency assets on their balance sheet must include all such virtual currency assets in their calculation of total assets, including virtual currency assets held on behalf of customers. Because the Financial Accounting Standards Board has confirmed that virtual currencies are intangible assets, any virtual currency owned by the licensee must be subtracted from the licensee’s total assets to calculate tangible net worth. However, virtual currency for which the licensee has a corresponding customer liability denominated in the same virtual currency need not be subtracted from the licensee’s total assets.
• In the guidance, the CSBS writes that “in general, virtual currency is not a sufficient source of capital” to support its decision that virtual currency assets held as capital and not denominated in the virtual currency for which a customer obligation is owed should be subtracted from total assets in determining a licensee’s tangible net worth requirement.
• Money transmitter licensees who hold virtual currency, whether on behalf of customers or on their own behalf, should ensure that they are compliant with the tangible net worth requirements of any state where they are licensed, including those states that have adopted the MTMA.