Good morning and happy Friday. As the Senate prepares for a procedural vote to advance the GENIUS Act next week, we cover recently proposed updates to the bill and a slate of new Congressional letters.

Top Points

An updated GENIUS Act includes language to ensure ethics laws apply to special government employees, place restrictions on Big Tech issuers, and strengthen consumer protection and illicit finance safeguards.
Senator Elizabeth Warren (D-MA) led two letters this week flagging President Trump’s ties to World Liberty Financial:
- (1) One letter asks World Liberty Financial to preserve all records of communication between the company and federal government officials regarding its stablecoin; and
- (2) The other requests information about Binance founder Changpeng Zhao’s request for a pardon.
Senators Cynthia Lummis (R-WY) and Bernie Moreno (R-OH) sent a letter asking Treasury to amend a tax rule that could inadvertently force companies holding digital assets to pay tax on unrealized gains.
The SEC Division of Trading and Markets published guidance on “Crypto Asset Activities and Distributed Ledger Technology.”
SEC Chair Paul Atkins is scheduled to testify before a House Appropriations subcommittee next week for an annual oversight hearing.

The Week

Senate GENIUS Act Updates: Senate Majority Leader John Thune (R-SD) filed cloture on the motion to proceed to S. 1582, the GENIUS Act, paving the way for another cloture vote as early as Monday, May 19. If at least 60 Senators vote yes on cloture, debate on the motion to proceed will be limited to up to 30 hours. Prior to Senator Thune filing cloture, Senate offices circulated proposed updates to the GENIUS Act resulting from further negotiations since last week’s cloture vote. Proposed updates include language ensuring ethics laws apply to special government employees, placing restrictions on Big Tech issuers, and strengthening consumer protection and illicit finance safeguards. Summary & analysis of changes and process in Pro.

Senator Warren Voices Opposition: Senator Elizabeth Warren (D-MA), the top Democrat on Senate Banking, is opposing the bill. Here’s the Senate Banking Committee’ Democratic Staff’s analysis on the latest draft.

Stand With Crypto Supports GENIUS: Stand with Crypto is rallying crypto advocates to urge their Senator to support the GENIUS Act next week.

Stand With Crypto🛡️

@standwithcrypto

The Senate is voting on stablecoin legislation next week. Emailing your senator to support this bill is a GENIUS idea!

It takes one minute - click here:

standwithcrypto.org

Stand With Crypto

Stand With Crypto Alliance is a non-profit organization dedicated to uniting global crypto advocates.

Senator Warren Letters Re: World Liberty Financial: Citing a recent announcement that Binance, Emirati firm MGX, and World Liberty Financial (“WLF”) agreed to a $2 billion deal involving WLF’s stablecoin USD1, Senator Warren led two letters this week to White House officials: (1) a letter seeking information about WLF’s communications with federal agencies regarding its stablecoin and (2) a letter asking for information about Binance CEO Changpeng Zhao’s request for a pardon.

Senators Lummis & Moreno Letter: On Monday, Senators Cynthia Lummis (R-WY) and Bernie Moreno (R-OH) sent a letter asking Treasury Secretary Scott Bessent to modify a tax rule that could inadvertently force certain companies holding significant amounts of digital assets to pay tax on unrealized gains.

Senator Cynthia Lummis

@SenLummis

Our edge in digital finance is at risk if U.S. companies are taxed more than foreign competitors. @berniemoreno & I urged the @USTreasury 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.

Proposed Remittance Tax: House Ways & Means Committee advanced a reconciliation measure, which included a tax on certain remittance payments. Coin Center published a blog unpacking “What the Proposed Remittance Tax Means for Crypto Users.”

Administration

New SEC Guidance: The SEC’s Division of Trading and Markets published an FAQ on “Crypto Asset Activities and Distributed Ledger Technologies.” FAQ; Commissioner Peirce Statement.

SEC Tokenization Roundtable: On Monday, panelists from TradFi and crypto shared their views on how the SEC should proceed with rules impacting tokenization. A helpful summary by Ledger Insights here.

CFTC Commissioner to BA: CFTC Commissioner Summer Mersinger will leave the CFTC to become the Blockchain Association’s new CEO. While a CFTC Commissioner, Mersinger dissented from enforcement actions against DeFi protocols, urging the CFTC to lead with rulemaking rather than enforcement (See, e.g., Ooki Dao dissent). BA Press Release.

Courts

Tornado Cash Founder Trial: The DOJ will continue prosecuting Roman Storm, a co-developer of Tornado Cash, after finding prosecution is consistent with Deputy Attorney General Blanche’s memo from earlier this year announcing a shift in DOJ prosecutions of digital asset cases.

Look Ahead

In addition to likely votes on the GENIUS Act, there are a few hearings and events next week before the House and Senate are scheduled to break on Friday for a one-week recess.

Hearings

Appropriations

Tuesday – 10AM: SEC Chair Paul Atkins is slated to testify before House Appropriations for an oversight hearing.

AI

Wednesday - 10:15AM: House E&C hearing on AI Regulation and the Future of US Leadership.
Thursday - 2:30PM: Senate Judiciary - Hearing to examine AI-generated deepfakes.

DC Crypto Policy & Law Events

Wednesday - 9AM-11:30AM: PGP for Crypto Briefings and Roundtable Discussion.
Wednesday - 5pm-8pm: DC Farcaster Law & Policy Happy Hour.

Trivia

Last Week’s A: Pope Francis was the first Pope to address a joint session of Congress.

This Week’s Q: Who was the first Chairman of the CFTC?

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Thanks for reading, and let's go Celts!

-GSL

P.S. For more detailed summaries and analysis of the week in crypto policy, learn more about CHC Policy Pro offerings.