Key Takeaways:
- Congress handed the GENIUS Act in July, the primary complete U.S. federal legislation regulating stablecoins. Most notably, the GENIUS Act eliminates ambiguity by defining stablecoins as not a safety or commodity.
- Federal companies beneath the Trump Administration, significantly the SEC and CFTC, have shifted towards a extra predictable, business-friendly method to crypto regulation and have proven elevated disinterest in pursuing regulatory enforcement by litigation.
- Firms concerned with stablecoins or different digital property ought to evaluate their compliance packages, monitor upcoming rules and company steering, and put together for evolving necessities—particularly relating to reserve administration, reporting and potential adjustments in oversight as new legal guidelines and guidelines are finalized. Specifically, corporations within the crypto asset house ought to keep watch over the Anti-CBDC Surveillance State Act and the CLARITY Act which seem poised to turn out to be new legislation within the coming months.
Crypto regulators have been busy this summer time—Congress handed the primary main U.S. federal statute offering a complete regulatory framework for stablecoins, whereas numerous companies issued a slew of regulatory statements that underscore the Trump Administration’s need to pare again SEC enforcement of crypto property to make the U.S. a extra predictable and hospitable marketplace for corporations contemplating collaborating within the digital asset market. Further Congressional acts seem poised to go quickly and the SEC has continued to unilaterally stop prosecution of high-profile enforcement actions in opposition to crypto market members.
Federal Legislative Replace
For over a decade, U.S. regulators have struggled to suit digital property into present monetary regulatory frameworks. Because of this, regulators have addressed the difficulty from completely different angles, resulting in a fragmented and inconsistent method. Seeking to treatment this, Congress handed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (“GENIUS Act”), which President Trump signed into legislation in July 2025. The GENIUS Act is the primary main U.S. federal statute that gives a complete regulatory framework for stablecoins.
The GENIUS Act defines a stablecoin as a digital asset used as a way of fee; as such, the stablecoin issuer is “obligated to transform, redeem, or repurchase for a set quantity of financial worth” and the “issuer will keep . . . a steady worth relative to the worth of a set quantity of financial worth.” The Act requires that each one stablecoins be backed on at the very least a one-to-one foundation by sure high-quality liquid property, together with U.S. {dollars}, financial institution deposits and short-term, low-risk securities (e.g., U.S. Treasuries).
Stablecoins are explicitly excluded from the definition of a “safety” and fall outdoors SEC oversight. As a substitute, regulatory accountability will depend on the kind of permitted fee stablecoin issuer (“PPSI”). PPSIs should file month-to-month studies detailing their reserves, together with the whole variety of excellent stablecoins and the quantity and composition of the reserves.
The GENIUS Act acknowledges three classes of PPSIs:
- Subsidiary of an insured depository establishment (IDI). Requires approval from the IDI’s main federal regulator. Stablecoins issued by IDIs are overseen by their main banking regulator.
- Federal certified issuer. Consists of non-bank entities, uninsured nationwide banks and federal branches of overseas banks. Stablecoins issued by federal certified issuers are regulated by the Workplace of the Comptroller of the Foreign money (“OCC”).
- State certified issuer. Consists of non-bank entities and state-chartered depository establishments with lower than $10 billion in excellent stablecoins. These issuers have to be included in a U.S. state with a regulatory regime licensed as considerably much like the federal framework beneath the GENIUS Act. Stablecoins issued by state-qualified issuers are supervised by their state banking regulators.
PPSIs might solely interact in sure actions, together with: (1) issuing and redeeming stablecoins and managing associated reserves; (2) offering custodial or safekeeping companies for stablecoins, non-public keys and reserve property; and (3) performing different features straight supporting these actions. Nevertheless, with extra regulatory approval, a PPSI can also: (1) trade digital property for cash or different digital property; (2) switch digital property to 3rd events; (3) act as a digital asset custodian; (4) take part in monetary companies regarding digital asset issuance; and (5) interact in approved incidental actions.
Whereas no rules have but been proposed beneath the GENIUS Act, the FDIC started getting ready for the legislative change by rescinding a rule that required notification for all types of crypto-related activities. This FDIC assertion incorporates a number of interpretive letters from the OCC. Moreover, in July, each the FDIC and OCC, in addition to the Federal Reserve, issued a joint statement discussing risk-management ideas in regard to crypto property being held by banks, which was the primary publication after two joint statements were revoked in April. These earlier joint statements advised crypto actions needs to be seen with greater scrutiny, whereas the brand new steering makes use of customary ideas. This new method is sensible given the opportunity of a serious shift in financial institution deposits into corporate stablecoins, which the GENIUS Act permits.
SEC and CFTC Regulatory Replace
Whereas Congress centered on clarifying the regulation of stablecoins particularly, the SEC and CFTC have labored to harmonize and modernize rules for different crypto property. On July 31, 2025, SEC Chairman Paul Atkins delivered a speech by which he introduced “Undertaking Crypto,” a brand new initiative based mostly off of the President’s Working Group’s Digital Asset Report. At some point later, the CFTC announced “Crypto Sprint,” an initiative additionally based mostly off the President’s Working Group’s Digital Asset Report. Each bulletins referenced the CFTC and SEC working collectively to create consistency.
In saying “Undertaking Crypto,” Chairman Atkins laid out a number of objectives, together with: (1) bringing crypto property again to the US; (2) modernizing custody necessities to supply choices for customers; (3) facilitating “super-apps” that permit for buying and selling of safety and non-security choices; (4) enabling on-chain software program techniques; and (5) creating an “innovation exemption” that will allow new applied sciences to bypass rules that don’t match the know-how.
Atkins’ speech illustrates a serious change within the SEC’s view of crypto property, as he said that “most crypto property should not securities”—a stark departure from the SEC’s place within the earlier administration and opposite to many latest court docket selections. Chairman Atkins additionally famous that new crypto-specific exemptions to securities legal guidelines are within the works for crypto property which are deemed securities. When discussing the will for “super-apps,” Chairman Atkins famous that this is able to permit non-SEC registered exchanges and CFTC regulated platforms to supply crypto merchandise. The announcement adopted up on a previous SEC announcement that confirmed a softening in the direction of crypto property by permitting in-kind redemptions for crypto ETPs.
Only some days after these preliminary bulletins, the CFTC announced the long run launch of spot crypto asset contract buying and selling on CFTC-registered designated contract markets (“DCMs”). Quickly after, the SEC’s Division of Corporate Finance announced that “Liquid Staking”—a typical observe for cryptocurrency holders that allows liquidity and development—is outdoors the authority of the SEC. This accords with a previous statement that “Protocol Staking” falls outdoors the “efforts of others” prong of the Howey take a look at. Although, as Commissioner Crenshaw pointed out, these conclusions depend on “plentiful assumptions” which may not create as a lot consolation for these engaged in staking.
Final month, the SEC and CFTC issued a joint statement, which clarified that exchanges regulated by both fee might provide sure spot commodity merchandise. This was adopted by a joint statement on September 5, 2025, by which they reaffirmed the necessity to coordinate actions to “guarantee regulation doesn’t stand in the best way of progress.”
The latter assertion additionally introduced a SEC-CFTC roundtable on regulatory harmonization to be held on September 29, 2025. The roundtable will focus on enlargement of buying and selling hours, occasion contracts, perpetual contracts, shared portfolio margining and “innovation exemptions” for decentralized finance. Along with the joint roundtable, the SEC announced a series of public engagement roundtables that started in August and run till December 5 of this 12 months.
The SEC’s Regulatory Flexibility Agenda for Spring 2025 was additionally lately revealed, which clarified that rules, protected harbors and exemptions for crypto property, broader market construction adjustments to account for crypto property, and updates to switch agent rules to accommodate crypto property are all on the proposed rule stage. Nevertheless, such guidelines may also require up to date FINRA steering, which has been within the works for the reason that SEC-FINRA joint assertion on crypto property was withdrawn back in May.
Given the benefit at which cross-border transactions can happen with crypto property, it isn’t shocking that the US is also considering harmonizing regulations across international boundaries (and particularly with the U.Okay.). That is in-line with the proposal for a cross-border sandbox from Commissioner Pierce, who heads the SEC’s Crypto Taskforce. Nevertheless, regardless of the announcement of the U.Okay.-U.S. Tech Propensity Deal on September 18, nothing strong on this entrance has but been introduced.
A Look Towards Future Potential Laws
The CLARITY Act
Along with regulating stablecoins by the GENIUS Act, Congress is contemplating laws to control the broader digital asset market. On July 17, 2025, the Home handed the Digital Asset Market Clarity Act (“CLARITY Act”), which awaits Senate consideration. Taken collectively, the CLARITY Act and GENIUS Act represent Congress’s compressive framework for digital asset categorization, issuance and oversight.
The CLARITY Act divides digital property into three distinct classes: permitted fee stablecoins, digital commodities and funding contract property.
- Permitted Cost Stablecoins are outlined and controlled as set forth within the GENIUS ACT.
- Digital Commodities are outlined as digital property “intrinsically linked to a blockchain system,” with worth derived straight from the blockchain’s performance, operation or associated companies. Notably, securities, derivatives and stablecoins are explicitly excluded from this class. The Act grants the CFTC unique regulatory authority over digital commodities. This definition displays Congresses’ intent to attract a line between blockchain-native utility tokens and monetary devices topic to the normal securities or banking regulatory framework.
- Funding Contract Property are outlined as digital commodities that may be completely held and transferred peer-to-peer with out intermediaries, are recorded on the blockchain, and are initially offered pursuant to an funding contract. For instance, commodities initially distributed by capital-raising preparations (e.g., preliminary coin choices) are funding contract property. Funding contract property are handled as securities and are topic to SEC oversight. Nevertheless, this designation ends as soon as the property are resold in secondary markets, at which level they revert to digital commodities. This method might result in line drawing issues, leading to critical uncertainty relating to compliance and enforcement for digital asset issuers.
The Anti-CBDC Surveillance State Act
Alongside efforts to categorise digital property and delineate regulatory authority, Congress additionally moved to curb authorities participation within the fee stablecoin market by the Anti-Central Bank Digital Currency (“CBDC”) Surveillance State Act, which handed the Home in July 2025, and awaits Senate consideration.
The Anti-CBDC Surveillance State Act prohibits a Federal Reserve financial institution from providing services or products on to a person, sustaining an account on behalf of a person or issuing a central financial institution digital forex. Additional, the Act prohibits the Board of Governors of the Federal Reserve System from utilizing any central financial institution digital forex to implement financial coverage or from testing, learning, creating or implementing a central financial institution digital forex, with exceptions as supplied by the invoice.
Supporters of the Act body it as a privateness measure (as indicated by the title of the invoice) designed to forestall authorities monitoring of particular person monetary exercise by a government-issued digital forex. Though, detractors observe {that a} CBDC would facilitate cross-border transactions and cut back reliance on intermediaries. Notably, the Act would foreclose direct authorities participation within the stablecoin fee market, clearing the best way for extra non-public funding in a quickly rising market.
Enforcement Updates
In our last article, we coated SEC v. Ripple Labs, Inc., 682 F.Supp. 3d 308 (S.D.N.Y. 2023), the place the court docket utilized the Howley take a look at and held that Ripple’s XRP tokens have been securities topic to SEC oversight when offered to institutional patrons however not when offered by way of programmatic gross sales. Pursuant to that combined resolution, the court docket ordered an injunction prohibiting Ripple from promoting XRP until the gross sales adjust to Part 5 of the Securities Act and issued a $125 million tremendous. Each events subsequently appealed.
The case took a flip in Could 2025, when, in a joint submitting with Ripple, the SEC requested the court docket to raise the injunction on Ripple and cut back the tremendous to $50 million. The SEC argued that “such decision will facilitate the Fee’s ongoing efforts to reform and renew its regulatory method to the crypto business[.]” The District Court docket rejected the request, finding that neither side had shown the “exceptional circumstances” required to justify undoing its prior judgment and emphasizing the public interest in enforcing the original penalty. After that ruling, each the SEC and Ripple dismissed their pending appeals and the SEC granted Ripple a good cause exemption from the injunction requiring its sales of XRP to comply with Section 5 of the Securities Act.
This about-face by the SEC displays the broader enforcement retreat beneath the Trump administration. For instance, in latest months the Fee has dropped high-profile circumstances in opposition to main crypto exchanges, together with Binance and its founder Changpeng Zhao, Coinbase and Kraken.
