The U.S. crypto landscape has undergone a major regulatory transformation in mid-2025, driven by the Trump administration's push to create a clearer federal framework for digital assets. This coordinated legislative effort, dubbed "Crypto Week" led to the passage of landmark laws and the circulation of new Senate proposals that aim to define how digital assets are regulated nationwide.1, 2 The initiative reflects growing political will to catch up with more developed regimes in the EU and UK, which have already enacted comprehensive crypto legislation focused on market integrity, investor protection, and innovation.
Legislative Progress: The Three Crypto Bills
1. The GENIUS Act: Signed into law by President Trump in July, the GENIUS Act represents the first comprehensive federal law regulating payment stablecoins. It creates a uniform regulatory regime aimed at safeguarding consumers, promoting financial stability, and reducing fragmentation across states. Key provisions include:
- Full reserve backing: Stablecoins must be backed 1:1 by high-quality liquid assets, specifically U.S. dollars or short-term Treasuries.
- Regular disclosures: Issuers are required to publish monthly reserve reports, subject to attestation by an independent auditor.
- Eligible issuers: Only federally insured depository institutions, national trust banks, or state-chartered trust companies meeting specified standards may issue qualifying stablecoins.
- BSA/AML compliance: All issuers must comply with Bank Secrecy Act and anti-money laundering obligations, including KYC and suspicious activity reporting.
- No interest-bearing tokens: Stablecoins may not offer yield or interest to holders, maintaining their status as transactional instruments rather than investment vehicles.
- No guaranteed access to Fed accounts: The Act expressly denies automatic eligibility for a Federal Reserve master account, preserving Fed discretion.
- New federal oversight body: A Stablecoin Certification Review Committee is established to vet issuers, assess risk, and coordinate with other federal and state regulators.
The GENIUS Act also preempts certain state licensing requirements while preserving state-level consumer protection laws. It includes insolvency protections by prioritizing customer claims over other creditors. The House passed the bill with strong bipartisan support in a 308–122 vote. 1
2. The Digital Asset Market Clarity Act (CLARITY Act): Passed by the House with a bipartisan vote of 294–134, the Digital Asset Market Clarity Act (CLARITY Act) is now pending Senate consideration. It establishes a jurisdictional framework allocating regulatory authority between the SEC and CFTC, defines categories of digital assets, and sets forth a registration regime for digital commodity exchanges. The Act imposes new compliance obligations on intermediaries, including digital asset exchanges, brokers, and custodians. These obligations include:
- Registration requirements for both digital commodity brokers and exchanges, modeled in part on existing CFTC frameworks.
- Customer asset protections, including segregation and custody requirements to mitigate commingling and insolvency risks.
- AML and recordkeeping obligations, aligning with Bank Secrecy Act standards and requiring Know-Your-Customer (KYC) programs.
Lawmakers view the CLARITY Act as a direct response to prior market failures, notably the collapse of FTX, and seek to ensure a safer, more transparent market structure moving forward.1, 2
3. The Anti-CBDC Surveillance State Act: The House passed the Anti-CBDC Surveillance State Act 219–210, largely along party lines, and it is now before the Senate. If enacted, this bill would prohibit the Federal Reserve from developing or issuing a central bank digital currency (CBDC) without congressional consent. Supporters emphasize privacy and financial autonomy, while critics warn this restriction could undermine U.S. innovation in global digital currency development.1
Senate Response: New Discussion Draft Emerges
Following House passage of the CLARITY Act, Senate Republicans on the Banking Committee released a discussion draft outlining their approach. Notable elements include:
- Defining "ancillary assets" to distinguish tokens that lack traditional shareholder rights.
- Permitting issuers to self-certify that a digital asset is not a security, with the SEC retaining authority to challenge such designations within 60 days.
- Directing the SEC to modernize rules on custody, clearing, and broker registration for crypto-specific technology.
- Mandating joint SEC-CFTC rulemaking to address regulatory overlap in areas such as derivatives and custody.
- Explicitly protecting self-custody rights and exempting developers from money transmission statutory regimes.
The draft, which builds upon the CLARITY Act, focuses on securities law modernization, while oversight of digital commodity secondary markets remains under consideration by the Senate Agriculture Committee.2
This Senate draft also appears to align with the White House's July 30, 2025, digital asset policy report, which emphasized the need for clear market structure rules, stronger federal coordination, and explicitly reaffirmed the administration's opposition to a retail CBDC. The report supports congressional efforts to modernize financial regulations while preserving privacy, innovation, and consumer choice, broadly consistent with the goals of the GENIUS and CLARITY Acts. 3
Tax Reform Remains a Pressure Point
Despite advances in regulatory structure, U.S. digital asset tax policy is viewed as outdated and burdensome. During a July 16 House hearing, both industry representatives and lawmakers called for:
- De minimis exemptions for low-value transactions.
- Clarified treatment of staking, mining, and token swaps.
- Safe harbors for foreign investors participating in U.S. digital asset markets.
- Updates to tax rules concerning mark-to-market and securities lending.4
Panelists testified that the current ad hoc regime creates compliance challenges, legal uncertainty, and drives innovation offshore. There is bipartisan consensus that updated, crypto-specific tax guidance is essential for consumer protection and U.S. economic competitiveness.4
In parallel, the SEC's July 29, 2025, approval of in‑kind creations and redemptions for crypto asset exchange-traded products (ETPs) significantly enhances liquidity and reduces transaction and tax inefficiencies for authorized participants, custodians, and investors. 5
Looking Ahead
With the GENIUS Act now law and both the Clarity Act and Anti-CBDC bill pending in the Senate, 2025 marks a pivotal year for digital asset regulation. The federal framework for crypto is becoming more defined, though open questions remain around consumer protection, executive branch conflicts of interest (a debate point in both chambers but not explicit in legislative text), and comprehensive tax treatment.1 Stakeholders should expect continued debate and incremental refinement as regulatory clarity continues to take shape.
Footnotes
1. Law360. (2025, July 17). 3 Crypto Bills Pass House, With Stablecoins Headed To Trump. https://www.law360.com/corporate/articles/2366356/3-crypto-bills-pass-house-with-stablecoins-headed-to-trump
2. Law360. (2025, July 22). GOP Senators Float Crypto Market Structure Discussion Draft. https://www.law360.com/corporate/articles/2367655/gop-senators-float-crypto-market-structure-discussion-draft
3. The White House. (2025, July 30). Strengthening American Leadership in Digital Financial Technology. https://www.whitehouse.gov/wp-content/uploads/2025/07/Digital-Assets-Report-EO14178.pdf
4. Law360. (2025, July 16). House Panel Urged To Modernize Tax Rules For Digital Assets. https://www.law360.com/corporate/articles/2365562/house-panel-urged-to-modernize-tax-rules-for-digital-assets
5. SEC. (2025, July 29). SEC Approves In-Kind Creation and Redemption Processes for Crypto ETFs. https://www.sec.gov/newsroom/press-releases/2025-101-sec-permits-kind-creations-redemptions-crypto-etps S. Selecttions v. U.S., Slip. Op. pp. 26–28.
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