Digital asset market construction laws talks in the USA are (allegedly) shifting nearer to a stablecoin consensus, whereas America’s regulators are eradicating ‘friction factors’ limiting Wall Road’s embrace of the dollar-backed tokens.
We’ll begin with the compulsory market construction legislative replace, following last week’s meeting on the White Home between bankers and their crypto counterparts. The assembly, the third of its variety in as many weeks, was supposed to assist these stakeholders resolve their variations on the nice stablecoin ‘yield v reward’ debate.
As soon as once more, with feeling: crypto platforms like Coinbase (NASDAQ: COIN) wish to proceed offering ‘rewards’ to users who maintain stablecoins on their platforms. Bankers need these platforms to be topic to the GENIUS Act’s prohibition on stablecoin issuers providing ‘yield’ to token-holders. The banks say they worry mass deposit flight as their prospects search increased returns. Crypto operators say the banks simply don’t wish to compete for these prospects.
The day after final week’s assembly, White Home crypto advisor Patrick Witt tweeted that the events had made “a giant step ahead” in resolving this deadlock. The White Home beforehand set a March 1 deadline for the 2 sides to decide to a mutually acceptable manner ahead, and Witt stated, “Supplied we proceed to have good religion engagement from either side on this subject, I totally count on we are going to meet our deadline.”
The newest draft of the Senate Banking Committee’s CLARITY Act would have permitted crypto platforms to offer rewards for certain stablecoin ‘activities’ however the parameters of stated actions proved a sticking level.
On February 19, Crypto in America journo Eleanor Terrett tweeted that Witt principally agreed that crypto platforms ought to not be capable of provide rewards for passively holding stablecoins. However whereas some activity-based rewards seem prone to be okayed, the exact scope of stated actions stays unresolved.
Regardless, on Monday, Crypto in America quoted Witt saying the 2 sides’ separation on this entrance had “shrunk significantly.” Assuming the events can work out a compromise, “it’s going to begin a domino impact right here, and I believe issues may transfer fairly quick as soon as it’s resolved.”
CLARITY has been in limbo ever since mid-January, following Coinbase’s abrupt withdrawal of support the evening earlier than the Banking Committee was scheduled to markup the laws. There’s a palpable sense of urgency to restart this course of, because the legislative clock is ticking forward of November’s midterm elections.
As soon as CLARITY has been accredited by a majority of Banking’s members, it must be reconciled with the companion bill advanced last month by the Senate Agriculture Committee. Solely then can it proceed to the Senate ground for a vote. And with a restricted calendar and an ever-growing variety of more urgent considerations (Iran, tariffs, Jeffrey Epstein, and so on.), fears are mounting that this ship may run aground earlier than it reaches its last port of name.
Witt has reiterated how necessary market construction passage is to President Trump, whose household has extensive involvement in crypto ventures. And but, as of Monday night, Polymarket ‘predictors’ consider there’s solely a 25% chance of Trump mentioning either ‘bitcoin’ or ‘crypto’ throughout Tuesday’s State of the Union deal with to Congress. For what it’s price, that’s two factors under those that consider he’ll say ‘UFC’ however 5 factors increased than ‘steroid.’
SEC cool with not planning for stablecoin demise
On February 19, Hester Peirce, a U.S. Securities and Alternate Fee (SEC) commissioner, announced that the SEC’s Division of Buying and selling and Markets had revised its broker-dealer net capital rule (Alternate Act Rule 15c3-1) to loosen restrictions on how broker-dealers deal with the stablecoins of their possession.
Particularly, broker-dealers that beforehand put aside 100% of the market worth of the stablecoins they held as capital (in case of issuer insolvency) can now put aside simply 2% as a potential ‘haircut’ on their worth. In impact, the revised rule now treats ‘cost stablecoins’ as having the identical form of ‘prepared market’ loved by money-market funds.
Peirce stated she ‘appreciates’ the division’s new tips, claiming that stablecoins “are important to transacting on blockchain rails. Utilizing stablecoins will make it possible for broker-dealers to have interaction in a broader vary of enterprise actions referring to tokenized securities and different crypto property.”
The brand new steering applies to ‘cost stablecoins’ as outlined by the GENIUS Act, below which issuers are required to carry fiat reserves like U.S. Treasury payments equal to 100% of the overall worth of their issued stablecoins. As such, Peirce says the 100% haircut that some broker-dealers have noticed “out of an abundance of warning” could also be “unnecessarily punitive.”
Crypto supporters celebrated the information, with some predicting it is going to “open the floodgates for embedding stablecoins in institutional finance” and that “tokenized treasuries, equities, bonds, on-chain settlement have all turn into economically viable in a single day.”
Others echoed this view, claiming it eliminated “a significant friction level for regulated broker-dealers,” leading to “higher liquidity, more environment friendly settlement, and broader institutional on-ramps.”
SEC chair Paul Atkins was equally effusive, calling the revised rule “one other terrific step in the best route from our workforce within the Division of Buying and selling and Markets to take away obstacles and unlock entry to on-chain markets.”
Ever since Trump returned to the White Home and put in his personal SEC management, the regulator has been systematically removing existing guardrails to crypto adoption. Whereas the digital asset sector cheers, critics declare the regulator is abdicating its accountability to guard traders from the sure doom these critics consider lies forward.
WLF claims USD1 focused by unknown attackers
The principal beneficiary of a stablecoin surge will undoubtedly be USDC, the stablecoin issued by U.S. operator Circle (NASDAQ: CRCL), though different GENIUS-compliant dollar-denominated tokens—together with USD1, the stablecoin issued by the Trump-linked decentralized finance (DeFi) platform World Liberty Financial (WLF)—may even presumably get a lift.
Within the meantime, WLF is crying foul over USD1’s abrupt depeg from its 1:1 worth with the greenback early Monday morning. USD1’s worth briefly slid from $0.9997 to $0.9942 earlier than regaining its $0.999 vary a number of hours later. (USD1’s worth briefly slipped to $0.98 on the Binance change earlier than recovering.)
WLF’s official X account tweeted that USD1 was the sufferer of “a coordinated assault” after the unspecified attackers “hacked a number of WLFI cofounder accounts, paid influencers to unfold [fear, uncertainty and doubt], and opened huge $WLFI shorts to revenue from the manufactured chaos.”
The account claimed the assault was heroically thwarted attributable to USD1’s “sound mint-and-redeem mechanism and full 1:1 backing.” WLF added that “no scammer can shake the long-term dedication of all the WLFI workforce and cofounders to USD1.”
USD1 launched nearly one year ago and swiftly turned one of many more distinguished dollar-backed stablecoins, reaching a market cap of almost $5.4 billion earlier this month. Nonetheless, that cap started to shrink on February 12, falling to simply over $5 billion on Monday earlier than tumbling to $4.75 billion following the alleged ‘assault.’
In probably associated information, the Financial Times reported Monday that President Trump’s ‘Board of Peace,’ the fledgling different to the United Nations that at the moment has more ‘observer’ nations than precise members, may deploy its personal dollar-backed stablecoin to fund its acknowledged major mission: rebuilding Gaza’s economic system following its destruction by Israeli armed forces in response to the October 7, 2022 Hamas assaults.
We will’t say for certain whether or not Trump may press the Board’s members to forego making a brand-new token when USD1 is simply sitting there ready for use. Nonetheless, given the Trump household’s ongoing dismissals of conflict-of-interest concerns associated to their crypto ventures, plus the UAE’s involvement in WLF in addition to the Board of Peace, we wouldn’t rule it out.
Bankers, ours
WLF’s application for a national trust bank charter continues to draw opposition from Congressional Democrats, regardless of few indicators that the Trump appointees within the cupboard and at federal companies see any downside right here.
Earlier this month, Treasury Secretary Scott Bessent rejected requests by Democratic members of the Home Monetary Providers Committee to pause WLF’s utility. Bessent stated it was a matter for the Workplace of the Comptroller of the Foreign money (OCC), which operates below the Treasury’s oversight however is “an impartial entity.”
Final week, the Home Dems tried once more, sending Bessent a letter spelling out their considerations concerning WLF’s utility, together with the truth that the UAE authorities now owns a 49% stake within the firm and {that a} vital chunk of the $500 million price ticket for that stake went on to the Trump household.
The letter, signed by over 40 lawmakers, asks “what safeguards are in place to make sure that overseas authorities officers, sovereign proxies, or politically linked traders can’t use the bank-chartering course of to achieve leverage over the U.S. monetary system or entry delicate monetary or technological infrastructure?”
If Bessent replied, it hasn’t been made public. Regardless, the OCC is displaying zero signal that ties to the Trump household are a dealbreaker for acquiring a nationwide belief constitution. In December, the OCC issued its conditional approval of the functions of a handful of crypto operators, together with a number of stablecoin issuers.
On Monday, the Crypto.com change announced that it too had acquired conditional approval from the OCC for its Foris Dax Nationwide Belief Financial institution. Crypto.com will quickly be capable of provide companies together with custody, staking of property, and commerce settlement. For what it’s price, Crypto.com is a significant know-how accomplice of Trump Media & Technology Group (TMTG) (NASDAQ: DJT).
Final week, Bridge, the merchant-focused stablecoin integration offshoot of cost processor Stripe, announced that its charter application had acquired conditional approval. As soon as the OCC’s last approval arrives, Bridge might be allowed to “function stablecoin services and products below direct federal oversight.”
As for when crypto financial institution wannabes may obtain their last approvals, the OCC granted its first full approval of a Trump 2.0 utility to Silicon Valley darlings Erebor Bank earlier this month. That was about 5 months after Erebor acquired its conditional approval, so the primary batch of crypto operators may turn into banks by Could (however possible earlier).
On February 11, the American Bankers Affiliation (ABA) wrote the OCC to counsel that it sluggish its approval course of for all these new constitution functions. The ABA urged {that a} pause ought to final till the GENIUS Act’s regulatory frameworks are finalized, one thing the ABA acknowledges “is probably going years away” given the quite a few federal companies that get a say in crafting these guidelines.
The ABA says the delay is warranted as a result of “entities engaged in actions considerably much like these wherein some latest OCC constitution candidates presumably intend to have interaction have failed abruptly and for causes which have resulted in significant losses—not just for the broader monetary companies business however customers, too.”
Final week, the Wall Street Journal profiled the present craze amongst crypto operators and fintechs to skip all the utility course of and easily purchase an current financial institution. Charters provide more restricted performance, together with being barred from accepting buyer deposits and making loans, however there are almost three years to go in Trump 2.0, so verify in once more in a yr’s time and see if these guidelines nonetheless stand.
Binance.US again from the lifeless?
Among the many more notable friends ultimately week’s World Liberty Forum crypto shindig at Trump’s Mar-a-Lago property in Florida was Binance founder Changpeng ‘CZ’ Zhao. The looks marked CZ’s first journey to the States following his launch from jail in 2024 after pleading guilty to violating the U.S. Bank Secrecy Act in 2023.
Trump pardoned CZ final October, sparking hypothesis that Binance’s struggling U.S.-facing change Binance.US may make a comeback. CoinGecko put Binance.US’s 24-hour buying and selling quantity at simply $23 million on Monday, lower than half that of the equally irrelevant Gemini (NASDAQ: GEMI), however Binance.US’s determine represented a 257% surge from the day earlier than.
What drove that surge? Probably Monday’s Bloomberg report that quoted CZ saying “we wish to do a lot more enterprise within the U.S. We wish to deliver a superior product into the U.S. We wish to make the superior product providing a lot more accessible to the U.S. shopper.”
CZ made certain to emphasise that he was referring to Binance.US, not the dot-com mothership, the unquestioned international chief when it comes to buying and selling quantity that was on the middle of the shenanigans that led to its $4.3 billion settlement with U.S. authorities in 2023.
Whereas Binance.US has struggled below the obvious eye of regulatory scrutiny over the previous few years, the SEC dismissed its civil suit (with prejudice) towards the corporate final Could, and CZ now says choices beforehand deemed not possible at the moment are “completely potential.”
CZ claimed he’s not the decision-maker at Binance after stepping down as CEO following his responsible plea. However he stays Binance’s largest shareholder, and present co-CEO Richard Teng said earlier this month that CZ “has a say over necessary conversations” involving Binance.
In the meantime, Binance can’t appear to shake the newest allegations concerning its position in Iran’s efforts to circumvent Western economic sanctions. CZ and Teng have been among the many execs pushing again on final week’s Fortune report that Binance fired a number of investigators after they reportedly “uncovered proof that entities tied to Iran had acquired more than $1 billion by the change from March 2024 by August 2025.”
These allegations obtained more durable to dismiss on Monday because the New York Times supplied its personal reporting primarily based on ‘firm data and different paperwork.’ The Instances boosted the overall quantity allegedly flowing by Binance to Iranian entities to $1.7 billion, including that Teng was among the many high Binance execs who acquired the investigators’ studies earlier than their dismissal.
Binance spokesperson Rachel Conlan informed the Instances that not one of the Binance workers in query have been “suspended or terminated for elevating compliance considerations.” Conlan stated “sure people” have been disciplined for the “unauthorized disclosure of confidential consumer data.”
Conlan additionally denied that Binance “shut down” their investigation into the alleged sanctions evasion, and additional claimed that Binance can be submitting a report concerning an organization named within the investigators’ studies to the U.S. Division of Justice this week.
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