In a sparsely attended hearing on Tuesday, the U.S. Senate Banking Committee’s Subcommittee on Digital Assets laid out a set of principles for future crypto market regulation despite having no actual legislation on the table. The discussion, framed around providing clearer regulatory lanes and investor protections, highlighted both urgency and uncertainty as lawmakers struggle to keep pace with the fast-moving digital asset space.
Though lacking legal teeth, the principles offer a preview of what federal crypto legislation might eventually contain: delineation between digital commodities and securities, protection of consumer assets during bankruptcies, and support for self-custody rights. The recommendations also propose exemptions for decentralised entities and non-custodial software platforms, an approach in line with the House’s Digital Asset Market Clarity (CLARITY) Act, which recently advanced through two committees.
A Quiet Hearing with Loud Implications
Despite the high-stakes implications for the $2 trillion crypto industry, only five of the 11 subcommittee members showed up to the hearing. Present were Republicans Bill Hagerty (TN), Cynthia Lummis (WY), Bernie Moreno (OH), Dave McCormick (PA), and Democrat Angela Alsobrooks (MD), all of whom are supportive of pro-crypto legislation, according to industry advocacy group Stand With Crypto.
Their four invited witnesses Coinbase, Multicoin Capital, former CFTC Chair Rostin Behnam, and Wharton School’s Sarah Hammer offered nearly identical viewpoints: regulation is needed, and it’s needed now. But the lack of debate or dissenting voices raised eyebrows. The absence of a bill, some speculate, may have kept other lawmakers at bay.
A House-Senate Tug-of-War Over Crypto Strategy
While the Senate inches forward with general guidelines, the House is sprinting ahead. House Financial Services Committee Chair French Hill (R-AR) has remained vague on whether the House will align with Trump’s push for the Senate’s stablecoin bill, GENIUS, or stick with their own approach combining stablecoin (STABLE Act) and market structure (CLARITY Act) proposals into a comprehensive package.
Sen. Moreno emphasised the fragility of Senate consensus, noting that GENIUS passed after “77 different versions,” and warned against reopening debates by adding unrelated provisions. Sen. Adam Schiff (D-CA) echoed that sentiment: “It was challenging enough to get to yes.”
Politico reported that the House might bring a combined bill to a floor vote as early as the week of July 7, though scheduling conflicts, especially over Trump’s sweeping federal spending bill, may cause delays.
De-Debanking, Stablecoins, and the Reputational Risk Reversal
Amid crypto’s push for legitimacy, the Federal Reserve made a notable move this week, scrapping ‘reputational risk’ as a factor banks must consider when vetting crypto clients. Fed Chair Jerome Powell defended the decision during House testimony, saying it was “the right thing to do.” Similar moves came from the FDIC in February and the OCC in March, aligning federal attitudes towards bank-crypto relationships.
This follows persistent claims of “Operation Choke Point 2.0,” a theory suggesting regulators pressured banks to cut ties with crypto firms. While evidence is thin, the perception has lingered. Now, President Trump is reportedly weighing an executive order that would punish banks declining to serve politically sensitive clients.
Powell Supports Stablecoin Framework, But BIS Isn’t Convinced
Powell also voiced support for new stablecoin legislation, calling it a “great thing” during questioning from Rep. Josh Gottheimer (D-NJ). But the Bank for International Settlements (BIS) offered a more sceptical view in its latest report. While stablecoins “exhibit some attributes of money,” BIS concluded they “fall short of the requirements to be the mainstay of the monetary system.”
Citing issues with pseudonymity, inconsistent exchange rates, and limited elasticity, BIS recommends central banks lead the tokenization of financial assets using platforms grounded in fiat and government instruments, not private-sector stablecoins.
TradFi Moves In: Visa, Mastercard, and Fiserv Join the Game
Traditional financial giants aren’t waiting for regulatory clarity. Fiserv announced a partnership with Mastercard to promote stablecoin adoption through its new token, FIUSD, enabling settlement and card issuance across Mastercard’s network. Visa CEO Ryan McInerney confirmed similar efforts on CNBC, touting Visa’s readiness to “scale stablecoin innovations” across its 150 million merchants worldwide.
Yet enthusiasm didn’t extend to USDC issuer Circle, whose stock dropped 15.5% after being identified as a Fiserv partner, reflecting investor unease over competition and distribution limitations. Analysts at Compass Point gave Circle a ‘neutral’ rating, citing narrow market reach compared to legacy financial firms.
The Path Ahead: Principles or Policy?
Despite mounting pressure, Tuesday’s Senate hearing felt more symbolic than substantive. With no draft bill and limited bipartisan engagement, the session underscored the deep divides and strategic conflicts shaping the future of U.S. crypto policy. Whether Congress can translate principles into enforceable legislation before the market outpaces them again remains the critical question.
