The House Ways and Means Committee passed by party-line vote a joint resolution disapproving of the IRS DeFi broker information reporting regulation finalized on December 27, 2024. A floor vote on the bill in the House, as well as a floor vote on the Senate version, are expected this week.

Bills were introduced to add restrictions on crypto ATMs and meme coins, require assessments on the BSA, and promote blockchain. During all-night debate on the Senate Budget Resolution, amendments pertaining to various digital assets issues were submitted but not ultimately considered. The Senate Banking Subcommittee on Digital Assets held its first hearing to lay the groundwork for consideration of a bipartisan stablecoin bill and future consideration of market structure legislation.

The SEC made clear that memecoins are not securities. President Trump spoke about Bitcoin, efforts to make America the crypto capital, and enforcement action reversals.

Read more below

Congress

Hearings

• Last week
  • On February 25, the House Financial Services Committee held a hearing on Examining Policies to Counter China.
  • On February 26, the Senate Banking Subcommittee on Digital Assets held a hearing on Exploring Bipartisan Legislative Frameworks for Digital Assets.
  • On February 26, the House Financial Services Capital Markets Subcommittee held a hearing on the Future of American Capital: Strengthening Public and Private Markets by Increasing Investor Access and Facilitating Capital Formation.
  • On February 27, the Senate Banking Committee held a nominations hearing for CFPB, FHFA, and CEA.

• This week
  • On March 4, the House Financial Services Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity Subcommittee holds a hearing Examining Monetary Policy and Economic Opportunity.

Legislation

• On February 26, the House Ways and Means Committee passed H.J.Res. 25 Disapproving of Biden IRS DeFi Broker Rule. (Press release)

• Sens. Dick Durbin (D-IL), Jack Reed (D-RI), Richard Blumenthal (D-CT) and Peter Welch (D-VT) introduced the Crypto ATM Fraud Prevention Act which would require cryptocurrency ATM operators to provide clear warnings to consumers about the risk of fraud; require operators to develop fraud prevention policies, register and disclose ATM locations, impose transaction limits, and require receipts and information sufficient to trace transactions. (Text)(Press release)

• Rep. Sam Liccardo (D-CA) and 17 Democratic cosponsors introduced the Modern Emoluments and Malfeasance Enforcement (MEME) Act to prohibit the President, Vice President, Members of Congress, senior Executive Branch officials, and their spouses and dependent children from issuing, sponsoring, or endorsing a security, future, commodity, or digital asset. After the asset’s issuance, the proposal would bar federal officials from engaging in the promotion or other conduct likely to benefit themselves financially. (Press release)(Text)

• Reps. Warren Davidson (R-OH) and Jim Himes (D-CT) introduced the Financial Privacy Act to require FinCEN to annually review and revise protocols or guidance to better tailoring the collection, retention, and dissemination of information filed under the Bank Secrecy Act. (Text)

• Rep. Kat Cammack (R-FL) introduced a bill to direct the Secretary of Commerce to take actions necessary and appropriate to promote the competitiveness of the United States related to the deployment, use, application, and competitiveness of blockchain technology or other distributed ledger technology (Text)

Amendments

• Sen. Catherine Cortez Masto (D-NH) submitted an amendment to the Senate Budget Resolution that would protect Federal financial security, which may include prohibiting Federal employees or officials from issuing, promoting, or financially benefitting from any cryptocurrency that is named after a character, individual, animal, or artwork or that has other humorous characteristics based on internet memes (commonly known as a “memecoin”) in which the Chinese Communist Party has a financial stake. (Text)

• Sen. Chris Murphy (D-CT) submitted an amendment to the Senate Budget Resolution that would mandate public disclosure by the President, or any employee serving at the discretion of the President (without respect to whether such employee is paid or unpaid), of any hold, purchase, or sale of an amount of cryptocurrency the value of which totals more than $500,000 during any 1-year period. (Text)

• Sen. Elizabeth Warren (D-MA) submitted an amendment to the Senate Budget Resolution that would prevent terrorists and human traffickers from using crypto assets to finance their criminal activities or evade sanctions and money laundering laws. (Text)

Correspondence

• House Committee on Oversight and Government Reform Chair James Comer (R-KY) sent a letter to FDIC Acting Chair Travis Hill requesting unredacted documents related to the FDIC’s approach to cryptocurrency-related activities at financial institutions. (Press release)(Letter)

• Sen. Elizabeth Warren (D-MA) sent a letter to Director-Designate of the Federal Housing Finance Agency asking questions in advance of his confirmation vote, including, “What role, if any, do you believe cryptocurrency has and will have in the housing market? Please describe any direct effects, including use in home purchases or financing, and indirect effects, including the effects of fluctuations in wealth and income of homeowners who hold cryptocurrency assets.” (Letter)

Trump Administration

Securities and Exchange Commission (SEC)

• The SEC released a staff statement on memecoins saying, “The offer and sale of meme coins does not involve an investment in an enterprise nor is it undertaken with a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others. First, meme coin purchasers are not making an investment in an enterprise. That is, their funds are not pooled together to be deployed by promoters or other third parties for developing the coin or a related enterprise. Second, any expectation of profits that meme coin purchasers have is not derived from the efforts of others. That is, the value of meme coins is derived from speculative trading and the collective sentiment of the market, like a collectible. Moreover, the promoters of meme coins are not undertaking (or indicating an intention to undertake) managerial and entrepreneurial efforts from which purchasers could reasonably expect profit. Notwithstanding the foregoing, this statement does not extend to the offer and sale of meme coins that are inconsistent with the descriptions set forth above, or products that are labeled ‘meme coins’ in an effort to evade the application of the federal securities laws by disguising a product that otherwise would constitute a security.  As noted above, the Division will evaluate the economic realities of the particular transaction. Further, although the offer and sale of meme coins may not be subject to the federal securities laws, fraudulent conduct related to the offer and sale of meme coins may be subject to enforcement action or prosecution by other federal or state agencies under other federal and state laws.” (Statement)

Noteworthy Quotes and Events

ADMINISTRATION

White House

• In remarks before the Future Investment Initiative Institute Priority Summit in Miami, President Trump said, “And Bitcoin has set multiple all-time record highs, because everyone knows that I’m committed to making America the crypto capital. We want to stay — we want to stay at the forefront of everything, and one of them is crypto. And Miami seems to be the center of the action, come to think of it, and maybe it’ll stay there…As part of our effort, I’ve signed executive orders to keep the United States at the forefront of artificial intelligence and to end Joe Biden’s war on Bitcoin and crypto. We ended that war totally. That war is over. They were very hostile toward them until the very end, just because there are so many people on Bitcoin and crypto that — just before the end, the SEC came out, and they were being very nice. I was so nice to people, because so many people were being indicted for no reason whatsoever — very political group of people. That’s all they did was they liked indicting people. But they were being indicted, and many of those indictments were dropped just before the election because they said, ‘Wait a minute. There’s 100 million, 125 million people using this,’ and they didn’t want to have, you know, all these people being — voting against.  But by the time they did that, it was too late. We had that vote entirely, I think.  I think anybody would — smart that believed in that, and there were a lot of people believing it — anybody that was smart voted for Trump. And they pulled the indictments. And I see people that were indicted. I said, ‘I saved your life.  I saved your life.’ Because if they thought that — they actually thought that I was doing — they said, ‘Why is Trump doing it?  Is he doing it for political reasons?’  I don’t do anything for political reasons. I do what’s right. I do — I want to be on the forefront of every industry.” (Remarks)

Securities and Exchange Commission (SEC)

• In association with the SEC staff statement on meme coins, SEC Commissioner Hester Peirce tweeted, “The fact that you might lose money on something does not make it a security. Be careful out there”

• SEC Commissioner Caroline Crenshaw released a statement in opposition to the meme coin staff statement, concluding, “the individualized inquiry Howey requires simply cannot be reconciled with the staff’s conclusion that offers and sales of a vaguely defined category, consisting of hundreds of unique crypto assets, are generally not securities. This guidance is not a reasoned interpretation of existing law. It raises more questions than it answers about what a meme coin is and whether that is a definable or useful categorization for purposes of the existing securities laws. It boils down to a broad statement of general principles that provide little clarity or predictability as to any given coin.” (Statement)

• The SEC released a statement Getting Back on Base: Statement of Commissioner Hester M. Peirce on the Dismissal of the Civil Enforcement Action Against Coinbase, which concluded, “The current Commission has now issued such a directive with the formation of the Crypto Task Force: It is the policy staff who will take the lead in engaging with the public to build a regulatory framework that serves the American public. This new approach drives today’s dismissal of the charges against Coinbase, but it does not signal an end to the Commission’s use of its enforcement tool in appropriate cases.” (Statement)

• In association with the dismissal statement, Commissioner Hester Peirce tweeted, “Enforcement is an important tool for the SEC, but it’s not the right tool for crafting policy.”

Federal Reserve

• In remarks on Promoting Responsible Innovation through the Novel Activities Program at the Alliance for Innovative Regulation, Fed Vice Chair for Supervision Michael Barr said, “We will continue to invest time and resources learning more about innovative technologies such as distributed ledger technology and bank-fintech partnerships to understand how they may benefit the institutions we supervise and their customers. Moreover, interagency coordination and knowledge-sharing with federal and state regulators and the private sector continue to be critical sources of discussion, engagement, and knowledge-building.” (Remarks)

• Fed Governor Michelle Bowman delivered remarks at the Robbins Banking Institute Lecture Series on challenges to community banking, including competition from nonbank financial service providers. (Remarks)

Government Accountability Office (GAO)

• In submitted testimony before the House Oversight and Government Reform Committee, Comptroller General Gene Dodaro said, “Actions are needed to strengthen oversight of financial institutions and address regulatory gaps. The March 2023 bank failures and rapid adoption of emerging technologies in the marketplace have highlighted continued challenges in the regulatory system since we initially designated this area as high risk in 2009 during the financial crisis. In particular, the Federal Reserve should improve procedures so that decisions to escalate supervisory concerns happen in a timely manner, and Congress should consider designating a federal regulator for certain crypto asset markets, as we recommended.” (Testimony)

CONGRESS

• In her opening statement of the Senate Banking Subcommittee on Digital Assets hearing, Subcommittee Chair Cynthia Lummis (R-WY) said, “We have come a long way since I was elected to the Senate in 2020, when many of the members of this body were still trying to wrap their heads around what a bitcoin is, what a stablecoin is, and why the Howey test is important. We are on the precipice of finally creating a bipartisan legislative framework for both stablecoins and market structure. I am hopeful that we can get both pieces of legislation to President Trump for his signature this year.” (Press release)

• Senate Banking Subcommittee on Digital Assets hearing, Subcommittee Ranking Member Ruben Gallego (D-AZ) said, “Digital assets are a fast-evolving sector, and the United States must lead in this space. Innovation should be encouraged, and it must be safe, transparent, and accountable. Without robust oversight, bad actors can exploit loopholes, undermining trust in the system and causing harm to consumers and investors. We must ensure that digital assets are not used to circumvent existing laws on money laundering, tax evasion, or illicit financing.” (Press release)

• Gallego also said, “At the same time, we must ensure that we are encouraging innovation that is productive and useful to everyday Americans. The growth of things like ‘meme coins’ on everything from Trump to DOGE to Peanut the Squirrel are about flashy headlines and trending on social media, not about helping traditionally un- and under-banked communities gain access to the financial system.” (Press release)

• Gallego also said, “I became interested in crypto because I heard from many of my constituents, especially young Black and Latino men, that are excited about what this new technology can offer them in terms of access and investment opportunities that largely they have been shut out of. What they don’t want, though, is to be the victims of fraud or dangerous financial loss. Consumers need transparency, safeguards, and recourse if things go wrong.” (Press release)

• In his opening statement in the Ways and Means markup, Chair Jason Smith (R-MO) said, “Lastly, we will consider legislation to repeal a rule that could stifle America’s digital asset leadership. The IRS’s DeFi Broker Rule, which this joint resolution from Congressman Carey repeals, is such an example. The IRS stretched its directives from Congress in the 2021 infrastructure law to enact a cryptocurrency agenda and unnecessarily regulate the providers of digital wallets. The winners of this last-minute rule are foreign digital asset companies who are exempt from the burdensome requirements. The losers are the roughly 1 in 4 Americans who own cryptocurrency. Not only is it unfair, but it’s unworkable. DeFi brokers do not even collect the information from users needed to implement this rule. Former IRS Commissioner Charles Rettig publicly stated that this regulation would create a blizzard of paperwork that the IRS can neither handle nor administer in an efficient and effective way. Given the importance of protecting and asserting Congress’s Article I authority, I hope we can achieve bipartisan support here in undoing a policy that went beyond the letter of the law.” (Remarks)

• Sen. Dick Durbin (D-IL) tweeted, “I’m on the Senate floor announcing new legislation—my Crypto ATM Fraud Prevention Act—to help stop fraud at crypto ATMs.”

• Durbin also tweeted, “Criminals used crypto ATMs to cheat victims out of $114 MILLION in 2023 alone… and many victims are senior citizens. Congress needs to put common-sense guardrails on the industry, and I just introduced a bill to do so.”

• Durbin also tweeted, “A bogus fraudster scammed an Illinoisan out of $15,000+ by pretending to be a sheriff’s deputy and convincing him to use a crypto ATM. There’s a bill to protect people from these scams… my Crypto ATM Fraud Prevention Act.”

• Durbin also tweeted, “The Crypto ATM Fraud Prevention Act is commonsense, informing consumers about scams and empowering law enforcement to fight fraud. No one should be cheated out of thousands of dollars by a scammer urging the use of unregulated crypto ATMs.”

• Sen. Jack Reed (D-RI) tweeted, “Teaming up w/ Senator Durbin on the Crypto ATM Fraud Prevention Act. Help us fight crypto ATM scams: 1. Educate yourself & loved ones to spot signs of crypto scams 2. Question unusual requests related to crypto payments 3. Report scams to your local law enforcement agency & FTC.”

• Rep. Young Kim (R-CA) tweeted, “The Lazarus Group, North Korean state hackers, stole more than $1.4 billion in crypto that will fund the regime’s nuclear program and human rights abuses. We cannot allow authoritarian regimes and rogue actors to cash in on today’s digital economy.”

• Rep. Mike Carey (R-OH) tweeted, “ICYMI: My bill to overturn the IRS’s burdensome cryptocurrency “Broker Rule” advanced out of the Ways and Means Committee yesterday. This bill helps ensure that the US remains the global leader in the emerging crypto sector.”

• Rep. Dan Meuser (R-PA) tweeted, “Today on Varneyco, I discussed the critical role of crypto in the U.S. economy. We must seize this moment. That means building on the success of FIT 21, which the House passed with bipartisan support last year. The FinancialCmte is committed to crafting a regulatory framework that not only allows digital assets to thrive but also cements America’s dominance in crypto—delivering on the vision of President realDonaldTrump.”

• Meuser also tweeted, “This afternoon, I hosted Michael Saylor, CEO of MicroStrategy for an informative discussion about the value of bitcoin in our economy and the need for a digital asset market structure. Digital assets can unlock a frictionless payment future and enable new sources of access to capital. I look forward to the work the FinancialCmte will do in crafting a commonsense legislative framework to provide clear rules of the road, fulfilling President Trump’s promise to make the U.S. the crypto capital of the world.”

• Rep. Max Miller (R-OH) tweeted, “Digital assets should be treated with the same level of clarity and consistency as traditional assets, but this must be done in a way that accounts for the unique nature of decentralized finance. It’s time to roll back the Biden administration’s crypto tax reporting rules for DeFi platforms.”
• Sen. Cynthia Lummis (R-WY) tweeted, “Bitcoin is digital gold.”

• Lummis also tweeted, “Thanks to all 40k+ of you who tuned in for the first subcommittee hearing! Reminder: We’re in the early stages of bitcoin and digital assets. If we are going to pass any legislation, we’ll need bipartisan support. Today’s hearing was the first step!”

• Lummis also tweeted, “Here’s what we learned from yesterday’s hearing: Most digital assets are not legally securities under the Howey test; The United States is behind other countries in creating laws for digital assets; Stablecoins will bring our payment system into the 21st century”

• Sen. Dave McCormick (R-PA) tweeted, “2025 is the year for digital assets. Blockchain and digital assets offer Pennsylvania and America a chance to lead the next wave of innovation, enhancing our national security and our economy. Proud to be a member of the inaugural Senate Banking Subcommittee on Digital Assets.”

• Rep. Sam Liccardo (D-CA) tweeted, “Today, I introduced the MEME Act, which prohibits top federal officials from issuing, sponsoring, or promoting a security, commodity, or digital asset with criminal and civil penalties.”

What I’m Reading This Week

• What Kind of Financial Regulation for Stablecoins?, Lee Sheppard, Tax Notes

• Trump Unleashes Loper Bright, Marie Sapirie, Tax Notes

About Zero One Strategies

Zero One Strategies is a boutique government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.

The practice focuses on key areas such as artificial intelligence, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.

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