Many members of the US Senate Banking Committee’s subcommittee on digital assets were not present for a hearing to discuss market structure.

In a Tuesday hearing, “exploring bipartisan legislative frameworks for digital asset market structure,” the subcommittee chair, Cynthia Lummis, said there had been “a lot of competing committees” on the schedule for the day, which may have explained why only five senators out of the 11 typically on the subcommittee were available to ask questions to former regulators and industry experts. 

Republican senators Dave McCormick, Bill Hagerty and Bernie Moreno joined Lummis, another Republican, and Senator Angela Alsobrooks to ask questions of former US Commodity Futures Trading Commission Chair Rostin Behnam, Coinbase’s vice president of legal, Ryan VanGrack, Multicoin Capital’s general counsel, Greg Xethalis and University of Pennsylvania Wharton School Executive Director, Sarah Hammer.

The lawmakers questioned the experts on the principles behind the Senate’s potential introduction of legislation to establish a crypto market structure bill after its successful passage of a stablecoin bill, the GENIUS Act. Lummis seemed to acknowledge the lack of participation in the hearing, noting that she didn’t “want to come up with a piece of legislation that the other side of the aisle feels they haven’t had adequate input in.”

“I don’t understand what’s changed, at least with regard to this topic,” said Lummis on bipartisan engagement around crypto bills. “Now, I understand what happens when you have a set of leaders that are not engaged in digital assets, and then in comes an administration that has family members that are engaged in digital assets, and maybe that’s what this is about. Maybe this is about concern that certain people that have family members in the administration are going to be advantaged in some way by what we’re doing.”

Alsobrooks, the sole Democratic lawmaker appearing at the hearing, was not a regular member of the subcommittee and appeared to be sitting in for the ranking member, Ruben Gallego. She was a cosponsor of the original GENIUS Act and voted in favor of the amended bill.

Related: Despite Trump’s backing, crypto is choosing MiCA over America: Paybis

Clarity for digital assets originating from the House or Senate?

Moreno also questioned why the proposed legislation appeared to be a partisan issue for many lawmakers, though neither he nor Lummis mentioned US President Donald Trump by name in discussing potential conflicts of interest with the crypto market structure or stablecoin bills.

Many Democrats in the Senate already voted with Republicans to pass the GENIUS Act on June 17, but some have suggested that they would continue to oppose legislation without a carve-out to address the president’s ties to the crypto industry. 

The proposed market structure legislation in the Senate follows efforts in the House of Representatives to pass its own bill, the Digital Asset Market Clarity, or CLARITY Act. The legislation moved out of committee in June and is expected to be considered for a floor vote soon.

Magazine: US risks being ‘front run’ on Bitcoin reserve by other nations: Samson Mow

]]> https://earlybirdsinvest.com/many-senators-absent-from-bipartisan-crypto-market-structure-hearing/feed/ 0 43949 https://earlybirdsinvest.com/metas-stablecoin-in-the-hot-seat-as-senators-demand-answers/ https://earlybirdsinvest.com/metas-stablecoin-in-the-hot-seat-as-senators-demand-answers/#respond Sun, 15 Jun 2025 08:32:39 +0000 https://earlybirdsinvest.com/metas-stablecoin-in-the-hot-seat-as-senators-demand-answers/

Two US senators, Elizabeth Warren and Richard Blumenthal, have asked Meta CEO Mark Zuckerberg to provide more details about the company’s plans to launch a stablecoin.

In a letter sent on June 11, the senators said that due to Meta’s size and reach, it is important for Congress and the public to understand what the company is planning.

They asked Zuckerberg to explain whether Meta had discussed stablecoins with other companies and if it had any influence on the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act during its drafting.

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The senators expressed concern that Meta might receive a waiver under the GENIUS Act. If that happens, the company could avoid rules that would apply to other stablecoin issuers. According to the letter, this kind of exception might give Meta an unfair advantage and could set a troubling example.

Warren and Blumenthal also warned that if Meta creates and controls its own digital currency, it might be able to track purchases and other financial behavior across its platforms. They added:

The massive amounts of consumer data it would ingest could help Meta fuel surveillance pricing schemes on its platform, more intrusive targeted advertising.

Meanwhile, during a June 4 hearing of the House Financial Services Committee, Representative Maxine Waters expressed concerns about what she views as a gap in the Digital Asset Market Clarity (CLARITY) Act. What did she say? Read the full story.

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Pro-crypto Republican Senator Cynthia Lummis of Wyoming is pressing the US Treasury to ease crypto tax laws as a means of evening out the playing field with foreign companies.

In a new thread on the social media platform X, Lummis says that the US’s competitive advantage in digital finance is at risk due to US companies being taxed more than their foreign counterparts, a loophole she and Republican Senator Bernie Moreno of Ohio are trying to close.

“Our edge in digital finance is at risk if U.S. companies are taxed more than foreign competitors. [Representative Bernie Moreno] and I urged the US Treasury to lift an unintended tax burden on U.S. digital asset companies. To lead the world in digital assets, we need a level playing field.”

In their letter to Treasury Secretary Scott Bessent, Lummis and Moreno say that when the Biden Administration signed the Inflation Reduction Act into law, they created a new tax known as the corporate alternative minimum tax (CAMT), which imposed a 15% tax burden on certain companies, creating a disadvantage for US firms.

“Corporations that own enough appreciated digital assets to be subject to CAMT must now pay taxes on unrealized gains in the value of those digital assets…

Neither Congress nor the Financial Account Standards Board (FASB) planned this outcome – it is the unintended result of a tax liability on decisions by a private organization that is focused on financial statement accounting standards, not principles of taxation.”

According to Lummis, the Treasury should use its power to change the law by either changing the tax burden owed or by excluding unrealized gains from the formula, because, as things stand now, corporations may be discouraged from holding large amounts of crypto assets.

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On a negative development for the US crypto industry, the highly anticipated stablecoins legislation has failed to advance in the US Senate after not receiving enough support from Senate Democrats. Several Republican senators have slammed the Democratic lawmakers for putting “partisan politics above policy.”

Democrats Block Stablecoins Bill

On Thursday, the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act failed to pass the cloture vote in the US Senate after several lawmakers withdrew their support in the past week.

As reported by Reuters, only 49 senators voted to advance the bill, falling short of the 60 votes required to end the debate on the legislation. Notably, two Republican senators voted against advancing the bill alongside Democrats.

In February, US Senator Bill Hagerty introduced the GENIUS Act to develop a framework to allow tokens like USDT and USDC to fall under the Federal Reserve Rules.

The bill, co-sponsored by Senators Tim Scott, Cynthia Lummis, Kirsten Gillibrand, and Angela Alsobrooks, would establish a “safe and pro-growth regulatory framework that will unleash innovation and advance the President’s mission to make America the world capital of crypto.”

The stablecoins legislation was considered a bipartisan effort to increase regulatory clarity after multiple Democrats showed support over the past few months. Additionally, the bill went through various amendments to address senators’ concerns, including stricter requirements for stablecoin issuers and Anti-Money Laundering (AML) provisions.

Nonetheless, ten Senate Democrats expressed further concerns about the revised version of the bill on May 3, reportedly catching many lawmakers off guard. Among the critics, four Democrats who previously supported the bill signed the opposition statement.

The lawmakers alleged that the draft bill omitted essential AML and national security safeguards and had ambiguous regulations that could expose crypto markets to exploitation.

Similarly, Senator Elizabeth Warren urged Congress to reject the GENIUS Act as it could pave the way for alleged “crypto corruption.” On May 4, the crypto-skeptic lawmaker claimed that the Trump family could benefit from World Liberty Financial’s (WLFI) USD1 stablecoin deal with MGX, a firm based in the United Arab Emirates.

The deal comprises a $2 billion investment connected to Binance and WLFI’s stablecoin. Warren affirmed that the Senate shouldn’t approve the crypto bill “to enable this type of corruption.”

US Senators Call Out ‘Political Gamesmanship’

One of the bill’s co-sponsors, Senate Banking Committee Chairman Tim Scott, called out Democrats for “playing politics with bipartisan legislation.” Speaking on the Senate floor on May 8, Scott accused Senate Democrats of putting partisan politics above policy and innovation.

It should have been a historic day for Americans (…) to see their financial system democratized (…). Instead, we witnessed a disappointing display of political gamesmanship that puts partisan politics above policy, and obstruction above innovation.

He affirmed that the GENIUS Act was a bipartisan achievement at the Senate Banking Committee, adding that the shift was not driven by a change in the bill’s “substance.” He alleged that the failure wasn’t a vote against the legislation, but a vote against President Trump and his legislative agenda.

Senator Lummis also expressed her disappointment on X: “Make no mistake, digital assets are the future and America must lead the way,” she stated, adding that “It’s important that we continue moving digital asset legislation forward that preserves America’s dollar dominance and makes America the crypto capital of the world.”

Meanwhile, Treasury Secretary Scott Bessent argued that the world needs American leadership for stablecoins and other digital assets to thrive. He criticized the Senate for missing “an opportunity to provide that leadership” by passing the bill.

“Without it, stablecoins will be subject to a patchwork of state regulations instead of a streamlined federal framework that is more conducive to growth and competitiveness. The world is watching while American lawmakers twiddle their thumbs. Senators who voted to stonewall U.S. ingenuity today face a simple choice: Either step up and lead or watch digital asset innovation move offshore,” he concluded.

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A group of US senators, led by Cynthia Lummis, has urged the Securities and Exchange Commission (SEC) to clarify its position on protocol staking in crypto exchange-traded products (ETPs) in a Feb. 20 letter. 

The lawmakers are seeking answers regarding the exclusion of staking from ETP issuers’ S-1 filings, which they argue impacts the competitiveness of U.S. asset managers and prevents investors from accessing core blockchain functions.

The SEC has allowed the registration of multiple digital asset ETPs but has consistently required issuers to remove protocol staking from their filings. 

As a result, the senators have requested that the SEC provide explicit reasoning for its decision to exclude staking from digital asset ETPs. 

They have posed three key questions regarding the rationale behind the restriction, the risks the SEC identified regarding staking, and whether the regulator would allow staking to be offered within a registered security instrument if the product is seen as an investment contract.

Additionally, the senators argued that increased transparency would help market participants understand the SEC’s regulatory position and inform potential legislative action if needed.

The senators have set an April. 1 deadline for the SEC to respond to its letter.

Competitive disadvantage

The senators contend that this stance limits the investment potential of these products in the US, placing them at a disadvantage compared to similar offerings in Canada, Europe, and the United Kingdom. The latter recently permitted digital asset ETPs with staking, supported by bipartisan backing from Conservative and Labour leadership.

Staking is integral to proof-of-stake (PoS) networks such as Ethereum (ETH) and Solana (SOL). It enables validators to secure blockchain networks by locking up native assets in exchange for transaction fees and newly minted tokens.

The letter authors argue that barring staking from ETPs prevents investors from realizing these benefits, reduces their potential returns, and weakens network security.

Staking discussions are heating up

On Feb. 5, the SEC’s Crypto Task Force met with Jito Labs CEO Lucas Bruder, Multicoin Capital’s Kyle Samani, and legal experts from both firms. The discussion focused on integrating staking into ETP structures while addressing regulatory concerns.

The SEC has cited multiple reasons for its hesitation, including redemption timelines that conflict with the T+1 settlement cycle, the tax implications of staking rewards, and the classification of staking-as-a-service as a securities offering. 

These factors led the SEC to require issuers to strip staking features from initial Ethereum ETP applications. 

During the meeting, industry representatives presented two models designed to mitigate the SEC’s concerns while enabling staking within ETPs. 

The first proposes that a portion of ETP-held assets be staked through third-party validators, while the second model would allow ETPs to hold liquid staking tokens representing staked assets. For example, a Solana-based ETP could include JitoSOL, a liquid staking derivative of SOL.

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