With just over two weeks remaining in its 2025 legislative session, the US Congress is closer than ever to establishing a regulatory framework for digital assets.
Two major developments are driving that shift: the rollout of the GENIUS Act – the first federal law governing US dollar–backed stablecoins – and ongoing Senate negotiations over crypto market structure legislation regulating the rest of the industry.
Together, these efforts could resolve years of jurisdictional uncertainty between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), create standards for stablecoin issuance and provide long-term guidance for crypto markets.
GENIUS Act implementation
Signed into law in July, the GENIUS Act has now entered implementation. Federal regulators – including the US Treasury Department, Federal Reserve, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC) – have begun drafting initial guidance, with additional rulemaking slated for 2026.
The law establishes the first national framework for fiat-backed stablecoins. Issuers must maintain 100 percent reserves in cash or short-term Treasuries and publish monthly disclosures detailing those reserves.
The Act also bans misleading marketing – including any implication of federal backing or deposit insurance – and subjects issuers to bank-style standards for solvency, cybersecurity, risk management, and liquidity. Compliance with AML, sanctions, and KYC obligations is mandatory, and issuers must retain the ability to seize, freeze, or burn tokens under lawful orders.
In the event of an insolvency, stablecoin holders receive priority claims above other creditors.
A central feature of the Act is its uniform federal treatment. For years, issuers operated under a patchwork of state money-transmitter rules that pushed many firms offshore. The GENIUS Act resolves that inconsistency and expressly states that fiat-backed stablecoins are neither securities nor commodities, placing them outside the SEC’s and CFTC’s jurisdiction and under bank-style federal and state oversight, depending on the issuer’s size.
Treasury officials have increasingly emphasised the foreign-policy benefits of the law. Because issuers must hold short-term Treasuries, stablecoins create a closed loop: private firms buy government debt, earn interest on those holdings and circulate non-interest-bearing digital dollars.
“This newfound demand could lower government borrowing costs and help rein in the national debt,” US Treasury Secretary Scott Bessent wrote on X in June, adding that stablecoins could onramp millions globally into a dollar-based digital economy.
Officials say the administration prefers most circulation to occur overseas, where dollar-backed stablecoins can deepen global demand for US debt and lower federal borrowing costs without expanding domestic credit. Keeping circulation offshore, they argue, helps reinforce the dollar’s role as the dominant reserve currency while limiting inflationary pressures at home.
With near-zero credit risk, full reserve backing, and clear regulatory protections, US stablecoins could outcompete weaker currencies and accelerate de facto dollarisation across Latin America, Africa, and parts of Asia. Adoption in advanced economies may be slower due to political resistance, but incentives – especially for banks able to accept deposits and lend against them – could still be significant. For many users in developing countries, regulated US stablecoins may become a safer and more liquid alternative to local bank deposits or informal dollar markets.
The law’s passage may also shape global regulation. Dollar-denominated stablecoins are already widely used in countries like Venezuela, Turkey, Nigeria, and Argentina, where they offer stability and enable low-cost cross-border payments. With a clear US framework, consumer and business use is poised to grow rapidly. A Citi report released in September projects stablecoins could reach a US$4 trillion market by 2030.
By opting for private-sector stablecoins over a retail central bank digital currency – and reinforcing that stance with the House-passed Anti-CBDC Surveillance State Act, which bars the Federal Reserve from issuing or indirectly distributing a retail CBDC – the United States is making a strategic bet: strengthen dollar hegemony through innovation rather than government-run digital money.
While a CBDC would probably face political and diplomatic barriers to global use, market-driven adoption allows private stablecoins to circulate more freely.
Europe remains sceptical. European Central Bank (ECB) President Christine Lagarde warns that stablecoins amount to “private money” that could erode central bank authority. Yet well-regulated stablecoins – backed 1:1 by public money – may enhance payment efficiency and expand access to sound currency rather than undermine sovereignty.
Under the GENIUS Act, reserves must remain in banks or flow into government debt, reallocating capital within the financial system rather than destabilising it.
Senate negotiations intensify
As stablecoin regulation takes shape, the US Senate has moved on to the larger question of how to classify the rest of the digital asset market – and how to divide oversight between the SEC and CFTC. For years, those boundaries were effectively set by the courts, which decided whether a token was fully regulated under securities laws or not regulated at all. A federal framework would replace that binary with rules that adapt as a token’s use, function, and governance evolve over time.
The effort gained momentum this summer in the House. On July 17, lawmakers passed the bipartisan Digital Asset Market Clarity Act, which establishes a taxonomy for digital assets and outlines how tokens can transition from being treated as securities to commodities once they meet statutory decentralisation criteria.
Less than two weeks later, on July 30, the President’s Working Group on Digital Asset Markets – chaired by Special Advisor for AI and Crypto David Sacks – released a long-awaited report echoing the House’s function-based approach and urging Congress to resolve the regulatory gap between the SEC and CFTC.
Those developments set the stage for the US Senate, where the Banking and Agriculture committees are advancing their own versions of a market structure bill on parallel tracks. Senate Banking Republicans released their discussion draft shortly after the GENIUS Act passed in July and had been negotiating revised language with Democrats until talks temporarily broke down in October over a leaked policy proposal.
With the government shutdown now resolved, bipartisan talks have resumed. On November 10, Senate Agriculture Committee Chair John Boozman (Republican-Arkansas) and Sen. Cory Booker (Democrat-New Jersey) released a bipartisan discussion draft outlining how the CFTC should regulate spot markets in digital commodities. The committee has jurisdiction over the CFTC and its text aligns closely with the House bill on issues such as market integrity, intermediary registration and consumer protections.
Although several portions of the Agriculture draft – including sections on blockchain developers, decentralized finance and anti–money-laundering rules – remain bracketed or unfinished, Boozman told Bloomberg on November 10 that he expects the committee to have the bill ready for markup “early December.”
On the Banking Committee, Chair Tim Scott (Republican-South Carolina) told Fox Business on November 18 that he plans to hold a markup in December as well, with the goal of sending a combined Senate package to the floor in early 2026. Once both committees approve their drafts, lawmakers will need to reconcile the two texts before any unified bill can advance to a vote.
The three proposals take distinct approaches to defining when a digital asset should be treated as a commodity and when it remains under SEC jurisdiction.
The Senate Agriculture draft focuses on transferability without reliance on an intermediary. Under this model, a digital asset qualifies as a commodity if users can send it peer-to-peer without depending on a centralised actor to validate, process or safeguard the transaction. The draft excludes the term “security” entirely, but leaves that section bracketed, signalling ongoing negotiations over where to draw the line between the two regimes.
The House-passed CLARITY Act takes a more detailed, function-based approach. It classifies digital commodities based on whether their value is “substantially derived” from the use and operation of a blockchain network. Digital assets issued or sold through investment contracts can transition out of SEC jurisdiction once the network meets statutory decentralization criteria and is certified as a “mature blockchain system.”
Those criteria include open-source code; permissionless access; pre-programmed, automated rule enforcement; the absence of unilateral control by any person or group of related persons; limits on concentrated voting power; and distributed ownership thresholds of 20 percent for new systems or 50 percent for preexisting networks. The goal is to create a clear regulatory “exit ramp” once no centralised actor retains meaningful influence over a network.
The Senate Banking draft – the Responsible Financial Innovation Act, or RFIA – takes a different approach built around the concept of an “ancillary asset.” Instead of using a formal decentralisation test, RFIA places certain digital assets under a tailored disclosure regime known as Regulation DA.
Those disclosures end once the “ancillary asset originator” certifies that the network is no longer under “common control by related persons,” unless the SEC rebuts the filing within 60 days. The draft directs the SEC to define “common control” through rulemaking, taking into account factors such as the ability to unilaterally alter the network, the distribution of voting rights, and the degree of economic or technical influence any party may exercise.
While the drafts differ in how they define a digital commodity, they align on several core principles. All three proposals – along with the administration’s report – would give the CFTC exclusive authority over spot trading in non-security digital assets. They also affirm that “permitted payment stablecoins” fall outside both the securities and commodities regimes. Under the CLARITY Act and the Senate Agriculture draft, the CFTC would oversee spot transactions involving these stablecoins on registered platforms, while prudential supervision of their issuers remains with banking and financial regulators under the GENIUS Act.
The drafts also incorporate language from the Blockchain Regulatory Certainty Act (BRCA), which protects developers and providers of blockchain software or hardware who lack unilateral authority over users’ digital assets from being treated as money transmitters. The goal is to ensure that individuals who merely write or publish code – and who cannot access or control customer funds – are not regulated as custodial intermediaries. The proposals additionally emphasise consumer protections such as client-asset segregation, the use of qualified custodians and safeguards against market manipulation.
Several policy areas remain unresolved. The most prominent is DeFi: the Agriculture Committee’s entire section on decentralised finance is still bracketed, while the House bill includes a more developed statutory exclusion for non-controlling developers and protocol operators. Another sticking point is vertical integration – whether and how a single platform can offer multiple business lines, such as trading both securities and commodities, without triggering conflicting SEC and CFTC requirements.
Both Senate drafts call for safeguards to manage conflicts of interest and the PWG has urged regulators to permit integrated platforms under a more efficient licensing structure.
A related issue is how “back-office” rules – covering clearance, settlement, reporting and custody – should apply to tokenised assets. With tokenisation rapidly advancing, regulators and lawmakers increasingly say these processes need to function the same way regardless of whether a token is classified as a security or a commodity, especially as more platforms move toward trading multiple asset classes in a unified interface.
Lawmakers must also address broader interagency coordination issues, including joint rules on portfolio margining and exemptions for dual registrants. How these gaps are resolved – and how the two Senate committees merge their drafts – will shape the next phase of negotiations.
The House bill, the Banking draft, the Agriculture draft and the PWG report mark the most coordinated push yet toward a federal market structure framework. Significant differences remain, but the broad outlines of a two-tier system are beginning to emerge, with the SEC overseeing networks that retain meaningful centralised control and the CFTC regulating trading in decentralized, non-security digital commodities.
Whether Senate negotiators can bridge the remaining divisions – and combine their drafts into a unified package – will determine whether a comprehensive digital asset framework finally reaches the Senate floor in 2026.
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by Jorge Javier Estrada
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