Senate Negotiates Clarity Act, GENIUS Act Implementation Continues, 9th Circuit Affirms Block on FinCEN Border Reporting and DTCC Moves Forward on Tokenization

Market structure legislation remained the focus in Washington last week. The President met with Republican senators at the White House on July 16 to discuss proposals addressing remaining issues on the Digital Asset Market Clarity Act. The merged Senate text lawmakers had signaled was forthcoming was not released and is now expected during the week of July 20. Senate Majority Leader John Thune (R-SD) has committed to a floor vote before the August recess. The House Financial Services Committee marked the one-year anniversary of House passage with a field hearing at Federal Hall in New York.

July 18 marked one year since enactment of the GENIUS Act, the timeframe Section 13 of the Act sets for regulators to promulgate implementing regulations. The Act’s effective date framework continues to point to Jan. 18, 2027. Treasury also joined HM Treasury of the U.K. in releasing recommendations from the Transatlantic Taskforce for Markets of the Future, addressing tokenized securities, stablecoins and cross-border capital raising. The Depository Trust & Clearing Corporation (DTCC) announced on July 15 that it successfully converted assets held at The Depository Trust Company (DTC) into tokens that were then used in real production trades, ahead of the DTCC Tokenization Service launch planned for October 2026.

In the courts, the 9th Circuit affirmed a preliminary injunction blocking FinCEN’s southwest border geographic targeting order on Administrative Procedure Act grounds. A crypto-focused bank petitioned the Supreme Court to review the 10th Circuit’s decision upholding Federal Reserve bank discretion over master account access, and defense counsel previewed challenges to the first prediction market insider trading prosecution based on corporate information.

Congressional Updates

Where Market Structure Legislation Stands

• On July 13, the President urged the Senate in a Truth Social post to pass H.R. 3633, the Digital Asset Market Clarity Act, in honor of the late Sen. Lindsey Graham (R-SC). The bill remains on the Senate Legislative Calendar as Calendar No. 423.
• On July 14, Senate Majority Leader John Thune (R-SD) told Bloomberg Government that a floor vote on the bill will happen this work period, before the chamber recesses in August, though leadership had not set exact timing.
• Also on July 14, Sens. Chris Murphy (D-CT), Chris Van Hollen (D-MD) and Jeff Merkley (D-OR) held a press conference opposing the bill absent a provision restricting certain officials from holding personal business interests in the digital asset sector.
• On July 15, Sen. Cynthia Lummis (R-WY) stated on Fox Business that a revised draft merging the Senate Banking and Agriculture Committee texts would be introduced within days, with a floor vote expected the week of July 20. CoinDesk reported the same day that circulation of the near-final text had slipped while negotiations continued.
• On July 16, the President met at the White House with Republican senators to discuss proposals addressing the bill’s remaining issues. Democratic negotiators did not participate in the meeting. No revised text was released following the meeting, and none had been made public as of July 19; release is now expected during the week of July 20.
• On July 17, the House Financial Services Subcommittee on Digital Assets, Financial Technology and Artificial Intelligence held a field hearing at Federal Hall National Memorial in New York titled “Building the Future of Finance: How the CLARITY Act Unlocks Innovation.” Per the committee memorandum, the hearing examined how the bill’s regulatory framework would encourage developers and financial institutions to build and invest in the United States.

White House Digital Assets Adviser to Depart

• The Executive Director of the President’s Council of Advisers on Digital Assets, Patrick Witt, is expected to leave his position this month, according to reports. Witt has served as the White House’s lead negotiator on market structure legislation since early 2025.

Regulatory Updates

GENIUS Act Marks One Year Since Enactment as Implementing Rules Remain in Progress

• July 18 marked one year since enactment of the GENIUS Act. Section 13 of the Act directs the primary federal payment stablecoin regulators, the Treasury Secretary and state payment stablecoin regulators to promulgate implementing regulations through notice and comment rulemaking not later than one year after enactment. As of July 18, the rules from the OCC, FDIC, NCUA and Treasury remain at the proposal stage, according to reports.
• The Act’s effective date is the earlier of 120 days after the primary federal regulators issue final rules or Jan. 18, 2027; because final rules have not issued, the operative effective date remains Jan. 18, 2027, and the window between final rules and effectiveness continues to compress.

US-UK Transatlantic Taskforce Release Recommendations on Digital Assets and Capital Markets

• On July 14, the U.S. Department of the Treasury and HM Treasury jointly published recommendations of the Transatlantic Taskforce for Markets of the Future, identifying opportunities to enhance cross-border capital raising, update supervisory cooperation and provide clarity for tokenized financial activity.
• The recommendations call for a private sector-led group to test cross-border use cases for tokenized assets, common regulatory approaches to tokenized securities among the SEC, CFTC, FCA and Bank of England, and coordinated policy frameworks under which stablecoins, tokenized deposits and other forms of digital money can coexist.
• The recommendations do not impose new regulatory requirements. The taskforce was established in September 2025 by Treasury Secretary Scott Bessent and Chancellor of the Exchequer Rachel Reeves.

9th Circuit Affirms Injunction Blocking FinCEN Border Reporting Order

• On July 13, a divided 9th Circuit panel affirmed a preliminary injunction barring FinCEN from enforcing its geographic targeting order, which required money services businesses in an area along the southwest border (including certain areas in Texas and California) to file currency transaction reports for cash transactions between $200 and $10,000, lowering the traditional reporting threshold of $10,000.
• After the order took effect, the plaintiffs experienced a significant loss of customers and filed suit in the United States District Court for the Southern District of California, seeking to enjoin enforcement of the order. The District Court granted a temporary restraining order, then a preliminary injunction, finding that the plaintiffs were likely to succeed on their claims that the agency had exceeded its statutory authority, failed to conduct notice and comment rulemaking, and acted arbitrarily and capriciously by not considering compliance costs. The scope of the injunction was limited to the Southern District of California.
• The United States Court of Appeals for the 9th Circuit reviewed the case and affirmed the District Court’s preliminary injunction.

SEC Advances Crypto Mining Enforcement Cases

• On July 20, the SEC announced that it had partially settled charges against defendants alleging that they misappropriated and misused investor funds after raising approximately $22 million from more than 380 investors in connection with a fraudulent scheme involving purported crypto asset mining. According to the SEC’s complaint, defendants promised investors guaranteed monthly returns from investing in a purported crypto asset mining operation that was insufficient to generate the promised returns.
• On July 10, the SEC asked a Texas federal judge to find as a matter of law that client service agreements sold by a crypto mining company and its CEO are investment contracts, and thus securities. The SEC filed the complaint on April 24, 2024, alleged that the defendants told investors they would purchase, maintain and operate crypto asset mining machines and then distribute mined crypto assets, such as bitcoin, to the investors for a fee.

Additional Updates

US Trades Successfully Processed Using DTC-Tokenized Assets

• On July 15, the Depository Trust & Clearing Corporation (DTCC) announced that it successfully converted assets held at The Depository Trust Company (DTC) into tokens that were then used in real production trades. The tokenized trades were processed on July 15 and set the stage for the DTCC Tokenization Service to launch in October 2026. More than 30 firms representing a cross-section of traditional financial institutions and digital market participants took part in the initiative.
• The DTCC Tokenization Service enables the issuance of tokenized representations (also referred to as digital twins) of real-world assets that can be delivered to DTC Participant wallets of choice. The DTC-held securities can be converted between traditional and tokenized forms, allowing DTC Participants to access new liquidity pools and execute digital asset strategies with greater flexibility.
• The service operates under a no-action letter issued by the SEC staff on Dec. 11, 2025, which authorizes DTC to offer the tokenization service to DTC participants and their clients for three years.

Defense Previews Challenges in Prediction Market Insider Trading Prosecution

• On July 13, in U.S. v. Spagnuolo, counsel for a software engineer accused of using his employer’s nonpublic information to trade event contracts on a prediction markets platform told a Manhattan federal judge at the defendant’s first appearance that the defense will argue the contracts are not swaps regulated under the Commodity Exchange Act.

Crypto-Focused Bank Petitions Supreme Court in Federal Reserve Master Account Dispute

• On July 10, a Wyoming-chartered crypto-focused bank petitioned the U.S. Supreme Court to review an adverse 10th Circuit ruling that upheld the discretion of Federal Reserve banks to deny master accounts.
• The petition argues that the Monetary Control Act’s directive that Federal Reserve services “shall be available to nonmember depository institutions” leaves no room for regional Reserve banks to deny access to eligible institutions, and that the 10th Circuit’s reading of the Monetary Control Act provides the Federal Reserve with an effective veto over bank chartering decisions by the various states. The 10th Circuit had previously held that the Monetary Control Act directs the Federal Reserve to make services available to nonmember depository institutions as a class, rather than mandating access to every eligible institution.

Trading Platform Opposes Wisconsin Bid to Enjoin Sports Event Contracts

On July 10, a trading platform filed a brief asking a Wisconsin federal judge to deny the state’s motion for a preliminary injunction against sports-related event contracts offered on the platform in the state’s public nuisance suit against three platforms offering the contracts.