Congress stayed busy, as there were multiple committee markups in the House which had varying degrees of controversy, and stablecoin legislation got one step closer to being a reality, with a procedural move in the Senate which lines the legislation up for likely passage through the Senate early this week. In other news, crypto M&A and funding stays hot, and Coinbase released their State of Crypto Report along with a full day presentation of industry updates.
Here’s everything that happened last week in Web3 legal:
House Financial Services and Agriculture Committees Markup CLARITY Act
The House Financial Services and Agriculture committees held separate hearings to mark up the CLARITY Act with the Financial Services committee focused on the SEC related-elements, while the Agriculture committee worked through the CFTC-related provisions. The biggest change was probably the protection for crypto developers, wallet makers, and infrastructure providers (previously a separate bill dubbed the Blockchain Regulatory Certainty Act introduced by Representatives Emmer and Torres). The bill passed through the Agriculture committee on an overwhelming 47-6 vote. The vote in the Financial Services committee was a closer 32-19.
Tl;dr– The Agriculture committee’s overwhelmingly bipartisan vote came right around the start of the Financial Services committee markup, and this fact was harped on regularly by bill proponents as a reflection of bipartisan bill support. The Financial Services markup was a less smooth process, going well into the night with roughly 40 amendments offered largely by opponents to the bill with no expectation of their text being added. The current bill gives the CFTC spot market authority over most digital assets, but there is seemingly a push by opponents to give the SEC more power in this area so expect to see more of this as the bill advances to the House floor.
GENIUS Act Vote in Senate
In the Senate, there was a 68-30 vote to invoke cloture on the GENIUS Act, setting the stablecoin bill up for final passage this week. President Trump has put out a statement saying he would sign the bill into law in its current form if it hits his desk. The bill still needs to pass the Senate (with just a simple majority), and then the House, and then the Senate again if the House makes any changes, before it can reach the President’s desk. The current House legislation on stablecoin differs from the GENIUS Act in various ways, including issuers are regulated at the state and federal levels and how foreign issuers are regulated.
Tl;dr– This was apparently a move by Senate Majority Leader Thune to end the effort to pass the bill via “regular order” which opens floor proceedings for submission and debate on various amendment proposals. So the bill is now moving forward with just the changes negotiated with Democrats which lead to 16 Democrats supporting the GENIUS Act in a procedural vote on the Senate floor last month. The list of Senators who voted in favor of cloture is worth monitoring, with Senate Minority Leader Schumer voting against. This stablecoin bill cloture vote came the same week as Treasury Secretary Bessent testified to the Senate Appropriations committee that the Treasury Department is estimating the U.S. Dollar denominated stablecoin market to grow to $2 trillion by the end of 2028.
OTHER STORIES
SEC DeFi Pannel: Having watched a few of these panels, I think this one is worth going back and watching if you missed it. Great conversation from an extremely knowledgeable group of panelists. The intro from Chair Atkins was great, as were the additions from Michael Mosier on privacy and data communications systems. Also learned about l2beat which is an amazing resource I am shocked I didn’t know about.
Coinbase State of Crypto Report: The Coinbase yearly State of Crypto research is out. Biggest findings are in the cover photo, including that 60% of Fortune 500 executives surveyed said their companies are currently working on blockchain initiatives. They also did a livestream with various big names in crypto/policy going through the results if you are more of a visual learner.
Plasma Raises Half Billion: Plasma, a Bitcoin-rooted, EVM-compatible stablecoin chain, raised a half billion dollars in its Sonar ICO. It filled its $250 million pre-deposit limit in under a minute, and when the cap was raised to a half billion it filled that in seconds too with a gas war to get in on it.
Stripe Continues Crypto Expansion: After previously acquiring Bridge for $1.1 billion, Stripe now has acquired Privy which is the payment processor for Hyperliquid, Farcaster, OpenSea, and Blackbird. If Stripe wants to go full crypto integrations, they need to revise their terms to not prohibit crypto mining equipment sales or digital wallets.
Bullish IPO: Another crypto company is looking to go public, this time exchange Bullish. I personally have never heard of this exchange, but more crypto companies on the stock market is a good thing as far as I’m concerned. Good to see companies IPO as it frees up early investors for deploying capital elsewhere.
CFTC Chair Nomination Hearing: Brian Quintenz had his confirmation hearing last week. It’s widely expected he will be confirmed, but the fact that he will likely be the sole CFTC Commissioner if he is confirmed is an interesting wrinkle.
Crypto Tax Updates: Big ups to Jason Schwartz for putting out his summary of the yet-to-be-released proposed crypto tax changes. Seems mostly positive, with wash trading rules being the negative change which is inevitable.
Rage Bait: I hate to give this attention, but I have been successfully baited into including this Better Markets (aka, Bitter Muppets) submission to the SEC where they, many of which were at the SEC under Gensler, complain about regulating without formal a comment and rulemaking process. It’s offensive coming from the regulation by enforcement brigade, but not as offensive as having the underline in their roman numeral headings continue in the tab space. Gross.
Privacy Advocacy Chaser: Gotta follow up the rage bait post with a great piece of privacy advocacy work by Coin Center/the DeFi Education Fund in the Dutch Tornado Cash case, and a half million donation by the Ethereum Foundation to Roman Storm’s defense in the U.S. Tornado Cash case. “Privacy is normal, and writing code is not a crime.”
SEC Staff Updates: Jamie Selway was appointed to be the new Director of the Division of Trading and Markets and Brian T. Daly will take over as Director of the Division of Investment Management. Both have a background in digital assets in their previous roles, so seemingly a part of Chair Atkins’ stated goal of encouraging technological innovation at the agency. In other news, the DeFi and crypto custody rule proposals are also now dead. Huzzah!
SOL Spot ETF Filings: All the major players filed their S-1 prospectuses with the SEC to try to be in the first batch of SOL ETFs which everybody expects to happen. The big issue remains staking, which these vehicles need to be able to do to be competitive with spot buying on the open market.
CONCLUSION
If you have any questions or would like me to write about anything else, let me know on Twitter (X?) or Warpcast. As always, I am an attorney, I am not your attorney. For legal advice, you should always consult (and pay for) an attorney.
Outro/Disclaimer: Since late 2022, I’ve prepared weekly updates for attorneys at my firm to stay abreast of the latest Web3 legal developments. The biggest stories are included in Bi-Weekly posts on the firm’s BitBlog, where we provide tl;dr overviews and insights into the biggest stories from the past two weeks. I post the weekly updates on my personal blog every Tuesday, where I also provide links to more obscure legal developments and otherwise discuss industry trends and stories. Please note, the views and opinions I express, both on BitBlog and my personal blog, are solely my own. They do not reflect the official stance or endorsement of my firm.
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