The Easter Bunny failed to put crypto market structure rules in U.S. stakeholders’ baskets, and hopes are fading that this lame rabbit will ever hop across the legislative finish line.
Congress had been on its Easter break, but that hasn’t paused the squabbling over the Senate Banking Committee’s CLARITY Act. The digital asset market structure legislation’s forward progress has been stalled for nearly three months now, ever since the Coinbase (NASDAQ: COIN) exchange threw a hissy fit over the Act’s plans to limit stablecoin ‘rewards.’
Long story short: the GENIUS Act prohibits stablecoin issuers from offering ‘yield’ (aka interest) to token holders. Non-issuing crypto operators claim nothing is stopping them from offering ‘rewards’ (aka interest) to customers who hold stablecoins on their platforms, but America’s banks want all crypto operators subject to the GENIUS ban.
Efforts to achieve a mutually acceptable compromise on the yield/reward issue have gone nowhere, despite the White House attempting to put its thumb on the scale by pressuring banks to knuckle under. Meanwhile, Treasury Secretary Scott Bessent wrote an op-ed in the Wall Street Journal on April 8 in which he decried “industry nihilists” for gumming up the works.
Banking Committee member Bill Hagerty (R-TN) appeared at the Digital Assets and Emerging Technology Policy Summit at Vanderbilt University earlier this week, where he was asked where CLARITY stood. Hagerty claimed that “we’re very close, and my expectation is that we get it into committee in this next work period that starts on Monday [13] of next week.” Hagerty expressed faith that CLARITY would clear the committee at some point “in April.”
Hagerty acknowledged that “there are several issues still outstanding,” but “none of them are insurmountable.” These issues include ‘quorum’ (ensuring minority party representation on federal agencies overseeing digital assets), ‘ethics’ (prohibiting elected officials—including President Trump—and their families from profiting off crypto ventures), and whether to offer legal protections for decentralized finance (DeFi) developers when their platforms are used by others for illicit purposes.
The DeFi issue took on new dimensions last week after Politico reported that several U.S. law enforcement groups, including the National Sheriffs’ Association (NSA) and the National District Attorneys Association (NDAA), had written letters to lawmakers opposing plans to limit devs’ legal liability.
The NSA warned that CLARITY’s DeFi language “risks creating gaps in oversight and reducing access to critical information that federal, state, and local law enforcement rely on in financial crime investigations.” The NDAA warned that CLARITY would “materially limit prosecutors’ ability to pursue financial crime cases involving the movement of funds outside established regulatory frameworks.”
In January, similar concerns about CLARITY’s DeFi language were voiced by the Senate Judiciary Committee, which felt that the successful prosecutions of DeFi devs like Tornado Cash co-founder Roman Storm would have been difficult if not impossible had such language been law at the time Storm was charged. (The Judiciary members were also annoyed by what they perceived as Banking infringing on the Judiciary’s turf, but whatever.)
In short, while everyone in D.C. has been focused almost solely on resolving the stablecoin impasse, the issues that Hagerty claims are ‘surmountable’ may prove more thorny than many people realize.
Not for nothing, but only around one-quarter of D.C. lobbyists currently believe CLARITY will head to Trump’s desk for signing into law this year, while two-thirds believe there’ll be no action on this front until 2027. Prediction market bettors are more optimistic, with Polymarket showing (as of mid-Thursday) a 59% chance of CLARITY being signed into law this year, while bettors at rival Kalshi are slightly more bullish at 63%.
White House stablecoin report pleases some, annoys others
For weeks now, crypto operators have been begging the White House to release internal data that reportedly showed the faulty logic behind the banks’ concerns that stablecoin rewards will lead to mass deposit flight and the subsequent impairment of banks’ lending capacity.
This week, the White House’s Council of Economic Advisers (CEA) obliged, publishing the ‘Effects of Stablecoin Yield Prohibition on Bank Lending’ on the White House website. The report claims that banning crypto platforms from offering stablecoin rewards would increase bank lending by only $2.1 billion, representing a mere 0.02% of total loans currently being issued.
Community banks have been particularly vocal regarding the threat that stablecoin rewards pose to their lending capacity, but the CEA claims these smaller banks would see loans rise by only $500 million, representing 0.026% of their current total, should a ban be imposed.
The report claims that “even stacking every worst-case assumption,” a rewards ban would provide ~$531 billion in additional lending (4.4% above Q425 totals for all banks, 6.7% for community banks). The report claims this worst-case scenario would require a number of “implausible” actions to occur, including a sixfold rise in the current stablecoin market cap.
However, it should be noted that Treasury’s Bessent suggested last summer that the overall stablecoin market could reach $3.7 trillion by the end of this decade, representing a more than tenfold increase from its current cap.
The report nonetheless concludes that “a yield prohibition would do very little to protect bank lending, while forgoing the consumer benefits of competitive returns on stablecoin holdings.”
TD Cowen analysts suggested that the CEA report was unlikely to remove “the political obstacles” preventing CLARITY’s forward progress. “As long as small banks view stablecoins as a threat to their future they will oppose crypto legislation unless it contains an explicit ban on stablecoin yield.”
Regardless (and predictably), Coinbase’s C-suite is praising the report, with chief legal officer Paul Grewal calling its authors “the most respected economists in the government” while claiming “we now know why stablecoin rewards critics wanted it suppressed.”
Small banking stakeholders that previously expressed alarm over the rewards issue, including the American Banking Association’s Community Bankers Council and the Independent Community Bankers of America, have yet to publicly respond to the CEA report.
Perhaps this stablecoin medicine is going down more easily thanks to the spoonful of sugar that Treasury’s Financial Crimes Enforcement Network (FinCEN) provided to the entire banking sector this week. FinCEN wants to “fundamentally reform” (read: reduce) financial institutions’ anti-money laundering (AML) and countering the financing of terrorism (CFT) programs under the Bank Secrecy Act (BSA). So, fewer loans, but hey, lower compliance costs?
Back to the top ↑
Maybe it does take a GENIUS
FinCEN and the Treasury’s Office of Foreign Assets Control (OFAC) also announced a proposal on how to implement the GENIUS Act’s AML/CFT requirements. The 303-page proposal calls for stablecoin issuers to (we’re paraphrasing here) report sketchy stuff like they were actual financial institutions with actual compliance teams.
Like FinCEN’s proposed BSA reforms, the stablecoin proposal focuses on requiring issuers to direct “more resources toward higher-risk customers and activities, rather than toward lower-risk customers and activities.” But ongoing due diligence must be conducted on stablecoin customers “to understand the nature and purpose of customer relationships to develop a customer risk profile.”
The proposal offers “a potential FinCEN enforcement and supervision policy” that issuers could adopt, after which FinCEN and other agencies “generally would not take major supervisory action, unless the [issuer] has a significant or systemic failure to maintain that program.”
FinCEN also wants issuers to comply with “any lawful order” to “block, freeze, and reject specific or impermissible transactions.” Assuming the feds are actually willing to back up their words with actions, this requirement could spell the end of USDC issuer Circle’s (NASDAQ: CRCL) reputation for being glacially slow to act following exploits of crypto platforms.
The new rules would also apply to stablecoin-based sanctions evasion, although given the ever-growing role that the ruble-backed A7A5 plays in avoiding U.S. law, and the fact that Iran is now demanding ships pay in BTC to safely navigate the Strait of Hormuz, we don’t expect much to change here.
Last week also saw the Federal Deposit Insurance Corporation (FDIC) issue its proposals for implementing GENIUS. As previously tipped through public statements, the FDIC proposes that “deposits held as reserves for a payment stablecoin would be insured to the [stablecoin issuer] under the FDIC’s coverage rules for corporate deposits, but would not be insured to payment stablecoin holders on a pass-through basis.”
The FDIC also wants issuers to redeem stablecoins “no later than two business days” following the redemption request being made. However, it’s seeking public input on whether that timeline should be shortened. The FDIC is accepting comments on its overall plan for the next 60 days.
Back to the top ↑
Alas, SEC crypto enforcement, we hardly knew ye
Last week, Securities and Exchange Commission (SEC) chair Paul Atkins told the Vanderbilt summit audience that the White House was now reviewing the agency’s proposed ‘startup exemption’ along with its plans to dismantle other regulatory guardrails.
In March, the SEC proposed allowing crypto operators a four-year window in which to launch projects without worrying about registering with the SEC. The SEC also suggested projects should be allowed to raise up to $75 million in a 12-month period without waiting for the SEC’s permission, while granting an ‘investment contract safe harbor’ to projects that either fulfill their promises to investors or permanently cease the managerial efforts involved in said project.
Atkins said these proposals have been sent to the White House’s Office of Information and Regulatory Affairs (OIRA), the branch of the Office of Management and Budget (OMB) that reviews federal regulations before they’re published.
Atkins has long made clear that the SEC intends to pull back hard on its enforcement efforts against crypto projects, as evidenced by the agency’s decisions to drop or settle (on highly lenient terms) suits launched under Atkins’ predecessor, Gary Gensler.
That shift is reflected in the SEC’s enforcement results for its fiscal 2025, which ended on September 30 of that year. The SEC filed 303 standalone actions in FY25, down from 431 in FY24.
That 2025 figure would be even lower were it not for the fact that its first 3.5 months remained under Gensler’s authority. The SEC now claims this period “was characterized by an unprecedented rush to bring a significant number of cases in advance of the presidential inauguration and the aggressive pursuit of novel legal theories” under Gensler’s rule.
In a statement accompanying the figures, the SEC said it made “a necessary course correction in its approach to enforcing the federal securities laws in the context of crypto assets” in FY25. Atkins said that under his rule, the SEC “has put a stop to regulation by enforcement and recentered its enforcement program on the Commission’s core mission by prioritizing cases that provide meaningful investor protection and strengthen market integrity.”
On April 8, the SEC announced the appointment of David Woodcock as the new director of its enforcement division, effective May 4. Woodcock, who previously served as the director of the SEC’s Fort Worth office from 2011-15, is currently a partner at the law firm of Gibson, Dunn & Crutcher, where he serves as chair of their Securities Enforcement Practice Group.
Woodcock succeeds Margaret Ryan, who resigned abruptly on March 16 after just six months in the role. Reuters subsequently reported that Ryan, who offered no public explanation for her early exit, was frustrated by the SEC’s refusal to allow her to pursue probes of “cases with ties to President Donald Trump and his family.”
Back to the top ↑
FBI says crypto crime is up, up, and away
Crypto’s dodgy reputation doesn’t find any redemption in the Federal Bureau of Investigation’s (FBI) 2025 Internet Crime Report. The FBI’s Internet Crime Complaint Center (IC3) received just over one million complaints last year, up from 859,532 in 2024. The total dollar amount lost via these complaints hit $20.9 billion, up from $16.6 billion in 2024. The average loss last year was $20,699, up from $19,372 the previous year.
Senior citizens were once again the most victimized group, producing 201,266 complaints representing total losses of $7.75 billion. Those aged 50-59 ranked second with nearly $3.7 billion in losses, while those aged 40-49 lost nearly $3 billion.
Cryptocurrency was referenced in nearly one-fifth (181,565) of all complaints but accounted for more than one-half ($11.4 billion) of the total value lost to these scammers. Investment scams—which, along with romance scams, are the hallmarks of so-called ‘pig butchering’ groups—accounted for the bulk ($7.2 billion) of crypto-linked losses.
Digital assets played a role in 72% of investment scam transactions, 43% of tech/customer support scams, 40% of government impersonations, 28% of extortion attempts, and 25% of confidence/romance scams.
Artificial intelligence (AI) was cited in 22,364 complaints last year, with a total value loss of over $893 million ($658.7 million of which involved crypto). The largest category of AI-related complaints (4,356 complaints, $632 million lost) was investment scams, as the technology allows scammers to “quickly generate thousands of conversations that appear different to each prospective victim.” The scammers also employ AI-generated “videos and voices of celebrities, CEOs, or trusted figures to create fraudulent, high-stakes opportunities.”
Other scammers are using AI to perpetrate “grandparent scams, or ‘distress’ scams, in which voice cloning technology is used to mimic the sound of a loved one in distress.” The report warns that these types of scams are “evolving to mimic other family members or close friends in different types of emergency scenarios.”
Back to the top ↑
Seniors want crypto ATMs banned, Bitcoin Depot having really bad year
The FBI report found that crypto ATMs/kiosks accounted for 13,460 complaints totaling losses of $389 million, up from 11,000 complaints and $247 million in 2024. Nearly half (6,188) of 2025’s complaints were filed by victims over 60 years of age, while the sum lost by seniors represented two-thirds ($257 million) of the ATM/kiosk total.
Last week, the American Association of Retired Persons (AARP) issued a report on The Fraud Crisis in America that found 41% of Americans over the age of 50 have experienced fraud, despite 71% of this age group claiming to recognize that “being directed to convert cash to bitcoin to handle an urgent financial matter is a scam tactic.”
And yet, scammers were recently caught running social media ads in which a deepfake cop tells Nebraska residents to ignore scam warning stickers on crypto ATMs. The AI-generated cop also claimed that ‘bailing kiosks’ are legitimate conduits for making restitutions and paying other government-related bills.
AARP Massachusetts director Jen Benson told the Boston Globe that losses suffered by state residents to these ATMs are “staggering,” and the AARP is pushing state and federal authorities to ban the machines. Benson believes “very few people use [crypto ATMs] for legitimate purposes, because the fees are so high” compared to digital payment apps like Venmo, PayPal (NASDAQ: PYPL), or CashApp.
In February, Massachusetts sued kiosk operator Bitcoin Depot (NASDAQ: BTM), alleging that 60% of the company’s Massachusetts revenue between August 2023 and January 2025 was scam-related. State Attorney General Andrea Joy Campbell said Bitcoin Depot “knowingly facilitated crypto scams that robbed Massachusetts consumers of more than $10 million dollars.”
Numerous other states have either taken legal action against ATM/kiosk operators or are threatening to do so. On March 16, Bitcoin Depot reported its Q4 revenue falling 15.2% year-on-year, and then-CEO Scott Buchanan claimed the company’s diversification efforts are “crucial for reducing our dependence on the Bitcoin ATM sector amid regulatory uncertainties.”
On March 19, Bitcoin Depot announced that Buchanan had resigned as CEO, despite only occupying that role for three months, without specifying a reason for his exit. Also stepping down as executive chairman was Brandon Mintz, who Buchanan replaced as CEO on January 1. Alex Holmes, who was named a Bitcoin Depot director only last November, has been appointed both CEO and chairman.
If you needed more proof that things tend to get worse before they get better, April 8 saw Bitcoin Depot inform the SEC of its discovery on March 23 that “an unauthorized party gained access to certain of its information technology systems” and made off with 50.9 of the company’s BTC tokens worth nearly $3.67 million. (Blockchain sleuth ZachXBT claims the heist actually took place three days before the company realized the tokens were gone.)
Bitcoin Depot “believes” that the unauthorized intrusion “was contained to the Company’s corporate environment” and “has not identified evidence that customer personally identifiable information was accessed or exfiltrated in connection with the incident; however, the investigation remains ongoing.”
Back to the top ↑
Watch: Breaking down solutions to blockchain regulation hurdles
Source: https://coingeek.com/what-easier-passing-clarity-act-or-escaping-from-mordor/
