This week decoded

This week in federal blockchain policy, the Senate Banking Committee majority is busy collecting feedback on their draft Responsible Financial Innovation Act (RFIA) to clarify crypto regulatory authority. Twelve Senate Democrats released principles for digital asset market structure legislation, and Senate Democratic Leader Chuck Schumer (D-NY) reportedly told a group of Senate Democrats that he wants to pass a market structure bill.

The SEC’s Crypto Task Force announced it will host a public roundtable on financial surveillance and privacy in October. The SEC and Treasury published their regulatory agendas, including digital asset-related actions to watch out for.

Upcoming: I will be in NYC to discuss U.S. emerging tech policy at events around UNGA. If you’ll be there, let me know!

Read more below

Congress

Hearings

• Last week
  • On September 9, the House Financial Services National Security, Illicit Finance, and International Financial Institutions Subcommittee holds a hearing on Evaluating the Financial Crimes Enforcement Network.
• This week
  • No relevant hearings are currently scheduled.

Legislation

• The Anti-Central Bank Digital Currency (CBDC) Surveillance State Act was included in the House FY26 National Defense Authorization Act (NDAA).

• Rep. Nancy Mace (R-SC) reintroduced the American Homeowner Crypto Modernization Act to require the Department of Housing and Urban Development (HUD), Department of Agriculture (USDA), Department of Veterans Affairs (VA), and the Federal Housing Finance Agency (FHFA) to update their mortgage underwriting guidelines, systems, and standards to require lenders participating in federal mortgage programs to factor in a borrower’s verified crypto holdings when assessing creditworthiness. (Press release)

• Sens. John Curtis (R-UT) and Lisa Blunt Rochester (D-DE) introduced the Consumer Safety Technology Act to direct the Consumer Product Safety Commission to establish a pilot program to explore the use of artificial intelligence in support of the mission of the Commission and to direct the Secretary of Commerce and the Federal Trade Commission to study and report on the use of blockchain technology and tokens. (Text) The House passed a similar version from Rep. Darren Soto (D-FL) in March.

• Reps. James Baird (R-IN), Betty McCollum (D-MN), Debbie Dingell (D-MI), Angie Craig (D-MN), Seth Magaziner (D-RI), Jim Costa (D-CA), Tracey Mann (R-KS), Buddy Carter (R-GA), and Brian Babin (R-TX) reintroduced the PART Act to prevent the theft of catalytic converters and other precious metal car parts, including making it unlawful to sell or purchase any catalytic converter for cash or cryptocurrency. (Text)

Publications

• Sens. Lisa Blunt Rochester (D-DE), Ruben Gallego (D-AZ), Mark Warner (D-VA), Kirsten Gillibrand (D-NY), Cory Booker (D-NJ), Catherine Cortez Masto (D-NV), Ben Ray Luján (D-NM), John Hickenlooper (D-CO), Raphael Warnock (D-GA), Adam Schiff (D-CA), Andy Kim (D-NJ), and Angela Alsobrooks (D-MD) released a framework for market structure legislation, with seven pillars: Closing the Gap in the Spot Market for Non-Security Digital Assets; Clarifying the Legal Status of Digital Assets and Regulator Jurisdiction; Incorporating Digital Asset Issuers into the Regulatory Framework; Incorporating Digital Asset Platforms into the Regulatory Framework; Preventing Illicit Finance; Preventing Corruption and Abuse; and Ensuring Fair, Effective Regulation. (Framework)

Trump Administration

Securities and Exchange Commission (SEC)

• The SEC’s Crypto Task Force announced it will host a public roundtable on financial surveillance and privacy on October 17. (Press release)

• The SEC published its Spring 2025 rulemaking agenda, including digital assets and market structure rulemaking reform and modernizing rules regarding custody of assets. (Agenda)

Treasury Department

• The latest Treasury and IRS agenda of regulatory actions includes a notice of proposed rulemaking (NPRM) for guidance to treat digital assets as cash in transactions over $10,000 in the course of trade or business for the purposes of reporting obligations under section 6050I; an NPRM to implement CARF for U.S. digital asset broker reporting; and guidance to be issued in September 2025 under section 6045 digital asset broker information reporting regulations regarding electronic furnishing of written statements reflecting the information reported to the IRS on Form 1099-DA. (Agenda)

Noteworthy Quotes and Events

ADMINISTRATION

Financial Crimes Enforcement Network (FinCEN)

• In her opening statement at the House Financial Services Committee National Security, Illicit Finance and International Financial Institutions Subcommittee hearing on FinCEN Oversight, FinCEN Director Andrea Gacki said, “Finally, let me highlight FinCEN efforts to promote the administration’s goal of supporting the responsible growth and use of digital assets. Digital assets, like other financial assets, are subject to misuse by illicit actors to unleash the full potential of digital assets in the United States, certain measures should be adopted to deter illicit finance and combat financial crime that targets Americans faithfully and expeditiously implementing the genius act is one of those measures as FinCEN initiates rule making efforts necessary to implement the genius Act’s required regulations. We’ll continue our ongoing engagements with the digital asset industry and with law enforcement, and we also look forward to engaging with Financial Services Committee members as Congress considers further legislation in this area.”

Securities and Exchange Commission (SEC)

• SEC Chair Paul Atkins delivered remarks at the Inaugural OECD Roundtable on Global Financial Markets, including detailing Project Crypto, saying, “It is a new day at the SEC. Policy will no longer be set by ad hoc enforcement actions. We will provide clear, predictable rules of the road so that innovators can thrive in the United States. President Trump has tasked me and my counterparts across the Administration with making America the crypto capital of the world—and the President’s Working Group on Digital Asset Markets has delivered a bold blueprint to guide us in these efforts. As Congress drafts comprehensive legislation, the Working Group has directed U.S. regulators to move swiftly toward modernizing our outdated rulebooks. At the agency, we are delivering on this mandate through Project Crypto, a sweeping initiative to modernize the securities rules and regulations to enable our markets to move on-chain. Our priorities are clear: we must provide certainty regarding the security status of crypto assets. Most crypto tokens are not securities, and we will draw the lines clearly. We must ensure that entrepreneurs can raise capital on-chain without endless legal uncertainty. And we must allow for ‘super-app’ trading platform innovation that increases choice for market participants. Platforms should be able to offer trading, lending, and staking under a single regulatory umbrella. Investors, advisers, and broker-dealers should have freedom to choose among multiple custody solutions as well.” (Remarks)

• SEC Commissioner Hester Peirce said, “Technology that helps Americans protect their privacy is critically important as it enables people to choose when and with whom to share sensitive data about themselves so they can be protected from bad actors. Understanding recent developments in privacy-protecting tools will assist the SEC and other financial regulators as we work on policy solutions in the crypto space.”(Press release)

CONGRESS

House Financial Services Committee National Security, Illicit Finance and International Financial Institutions Subcommittee hearing on FinCEN Oversight

• In the House Financial Services Committee National Security, Illicit Finance and International Financial Institutions Subcommittee hearing with Andrea Gacki, Director of the Financial Crimes Enforcement Network (FinCEN), members asked questions about digital assets:
• Rep. Sam Liccardo (D-CA)
  • Rep. Sam Liccardo (D-CA): “I want to thank you and your team, Ms. Director Gacki, for the really important work that FinCEN. I was a federal prosecutor many years ago and relied frequently on the great work of fence and as we were trafficking narco trafficking at that or we were prosecuting narco trafficking at the border. And in particular, we are seeing more and more of the illegal transactions relating to money laundering occurring in crypto as well as fraud. And I commend you and your team for the work that you recently done on convertible virtual currency kiosks or crypto ATMs, which I know has been particular source for FinCEN and a lot of law enforcement. And in your August 6 statement, you acknowledge that there’s rising fraud and cyber crime and drug trafficking through these kiosks, and I presume that the concern arises because of this pseudonymity that relates to crypto transactions, is that right? It’s difficult, often, for people to identify who exactly is doing the transacting.”
    • Director Andrea Gacki: “Thank you, Representative Liccardo for that question. I think there I do yes, there can be some anonymity, enhancing aspects to convertible virtual currency. I do know that our team works very closely and uses blockchain analytic tools in order to be able to aid investigations to ensure that that doesn’t remain a barrier, and to put out guidance for financial institutions to be to be alert to any any aspects of the misuse of these types of tools.”
  • Rep. Sam Liccardo (D-CA): “And particularly with the use of mixers and other tools, criminals are able to evade even some of the more sophisticated detection techniques in terms of identifying them. Is that right?”
    • Director Andrea Gacki: “Yes, sir. Now mixers are something that we’re currently taking a look at. We issued a proposed rule on mixers in the previous administration, and are exploring the next, the next step on that we have to take a look at the fact that that, you know, we have to make sure that we tailor any approach here to be really directed at illicit activity, and that we are not sweeping in any legitimate transactions. Sure, and are trying to leverage, you know, these tools to, for example, shield their transactions from repressive regimes. Sure, delicate thing. We’ve got to work through administration guidance, and I look forward to engaging with you on it.”
  • Rep. Sam Liccardo (D-CA): “And I recognize that there’s legislation pending clarity, act in which we are looking to impose BSA requirements to help you do your job and law enforcement do your job with regard to centralized exchanges, but of course, there’s also decentralized finance defi, where there are no such requirements. How exactly are you able to do your job when millions of dollars may be moving through defi, particularly given recent studies that showed as recently as January, that 91% of fraud and theft that was occurring in the 1100 cases that was examined under this study, 91% was happening on defi protocols. What exactly, what tools you have left this?”
    • Director Andrea Gacki: “Thank you, Representative. This is something that we are actively working on, not just in in implementing different reporting and different exploratory subjects set forth in the genius Act of which FinCEN is a critical implementer, but also outcomes from the President’s Working Group on digital assets and the report there. So looking at defi, looking at the appropriate requirements for the Bank Secrecy Act requirements for that industry, is something that my agency is taking on, and we look forward to working with both industry and law enforcement to make sure we’re striking the right balance.”
  • Rep. Sam Liccardo (D-CA): “Perhaps I can, just given my limited time, identify my big concern right now your agency, through its rule making, is decided that would not collect beneficial ownership information from US corporations or US persons. And all that’s required for to satisfy those standard beneficial ownership information requests is the name, date of birth, residential street address and the ID from your driver’s license, that’s all. It’s required. And we know that US companies, shell companies, can be created to move millions of dollars, billions of dollars, through these illicit channels, using defi. You won’t be able to identify, nobody will identify who these folks are, because we don’t have BOI requirements, and you don’t have any mechanism for identifying who they are on defi protocols, The gentleman’s time doesn’t this create an enormous opportunity for criminals.”

• Rep. Andy Barr (R-KY)
  • Rep. Andy Barr (R-KY): “Thank you. There’s a narrative that and critics of the innovation in crypto and digital assets, that that the gravity that the movement of transactions to the blockchain is creates additional fraud risks and risk for criminal activity. Can you share FinCEN views on how the movement of transactions to the blockchain actually could assist in law enforcement and preventing fraud, criminal activity, money laundering and the like.”
    • Director Andrea Gacki: “Thank you, Representative Barr. And I know that I have very little time, but I can tell you that, yes, the blockchain actually has brings transparency and with the right tools you can use it. To leverage to really help detect illicit transactions for law enforcement, and I’m happy to engage with you.”

• Rep. Sean Casten (D-IL)
  • Rep. Sean Casten (D-IL): “I want to follow up on the discussion you had with Mr. Liccardo around crypto ATMs, the Mr. Chairman I asked unanimous consent enter into the record a Chicago Sun Times article titled Chicago’s crypto ATMs are magnets for drug dealing and scams on older adults. This has been a particular issue in Illinois, but obviously nationwide. I think in 2024 the FBI had received more than 10,000 complaints about crypto ATMs and reported more than 240 $6 million in losses in August, FinCEN published a notice that emphasized the irreversibility of crypto transactions on ATMs and noted that there’s a high non-compliance with anti-money laundering laws among the operators of crypto ATMs at a high level. Can you give any sense of what you’re seeing as far as the trends and suspicious activity reporting specific to crypto ATMs that we should be monitoring?”
    • Director Andrea Gacki: “Thank you, Representative Casten. And for that question, I will say that crypto ATMs, like other financial institutions you know, are subject to the Bank Secrecy Act, and some are more compliant than others. It is we are seeing, however, as we noted in the alert, high use of certain crypto ATMs to as a critical way of defrauding Americans. So it’s something we’re looking at very closely. I don’t have an estimate in terms of the industry, but outreach to that industry, and ensuring that industry is as compliant as possible is one of our key objectives.
  • Rep. Sean Casten (D-IL): “Okay, I’m particularly interested, you know, as you dig through and maybe we can follow up, off offline, about the impact on seniors. I represent the Chicago suburbs, which, given the way Chicago is lay out, means that I have about 40 mayors who I have to keep in touch with, of lots of little, small towns, and one of them has a very low tax base. It’s one of these towns that depends fundamentally on, you know, the revenue from a couple convenience stores and liquor stores and not a lot of larger tax base in the community. And even in that tricky financial situation, the convenience store operator said they removed the Bitcoin ATM because the owner said it just broke his heart. How many seniors he saw walking in there every day and putting money into the machine and then coming back later and saying, this, this money has disappeared. We’ve had at least 20 states that have adopted are considering laws and regulation on crypto ATMs. Illinois did just enact a new law to require that operators at least impose daily transaction limits. Would you support similar federal requirements on ATMs?”
    • Director Andrea Gacki: “It’s something I’m going to need to look into and take back. I can, I can absolutely commit that something that will look into and work with Treasury leadership on an approach.”
  • Rep. Sean Casten (D-IL): “OK, and I know you had an exchange with Mr. Barr against Wei Wang, if I’m pronouncing that right. A part of what scares me on this and I think we have done a terrible job on this in Congress, is we’ve allowed all of these transactions to operate overseas. The mixers are overseas. The transactions are overseas. And it’s great if we’ve got the SAR, but then we don’t have a way of getting in, right and, and so I guess, with the, you know, with the time that’s left are there, is there specific statutory authority that you currently lack that would allow you to go after the bad guys, like, I’m not talking about going after the good guys, but if you see that crime has happened, if you see that the pig butchering scams. Where are you limited in your ability to prosecute?”
    • Director Andrea Gacki: “One idea that was in the President’s the report to the President on the digital assets working group, and you saw it with our action on the Wei Wang group is we used an authority under Section 311, of the Patriot Act. That was actually built for a different era, when the greatest special, the special measure that we use, that was available to us was to cut off correspondent, payable bank accounting, which doesn’t really factor in for in the virtual asset space, but rather some newer authorities targeted to Russian illicit finance or synthetic opioids trafficking. They allow us to prohibit all transactions involving a group like Wei Wang. Now we use the 311 authority. We’re very proud of that action but involving fraud in other respects would be a way that we could modernize this authority in it. Regardless, my team very much looks forward to working with you.”
  • Rep. Sean Casten (D-IL): “I believe Mr. Himes has been active on the section 311 piece, and let’s talk offline about how we might tweak that and improve it. Appreciate it.” 

Miscellaneous

• Sen. John Kennedy (R-LA) said about a market structure bill, “I don’t think we’re ready. People that I talk to still have a lot of questions. I know I still have a lot of questions.” (Politico)

• Rep. Tom Emmer (R-MN) tweeted, “Any Central Bank Digital Currency (CBDC) that is not open, permissionless, and private – like cash – is nothing more than a surveillance tool.  Earlier this week, the House passed the NDAA, which included our bill to prohibit the development of a CBDC.  It is time for the Senate to do its job and permanently ban CBDCs!”

• Rep. Zach Nunn (R-IA) tweeted, “America can’t afford to let the CCP have unchecked access to critical assets that power our economy. I’m committed to working with SecScottBessent to safeguard American energy, secure our digital asset markets, and defend America’s financial sovereignty and security.”

• Sen. Cynthia Lummis (R-WY) tweeted, “I want to thank my colleagues across the aisle for their constructive digital asset market structure framework. Meaningful legislation takes intentional collaboration & discussion. This is a strong start, and I look forward to working together to secure America’s financial future”

• Rep. Keith Self (R-TX) tweeted, “Good news! The Anti-Central Bank Digital Currency (CBDC) Surveillance State Act was included in the FY26 National Defense Authorization Act (NDAA) This wouldn’t have been possible without HFC fighting to ensure the financial privacy and freedom of all Americans. I will be watching closely to ensure this remains in the bill as it makes its journey into law.”

• Rep. Bryan Steil (R-WI) tweeted, “USA₮ announcement today is a result of Congress passing the GENIUS Act to ensure crypto is: US regulated US domiciled Consumer protections US global leadership. Now is the time for the Senate to pass CLARITY!”

• Sen. Jeff Merkley (D-OR) tweeted, “The Trump family raked in $5,000,000,000 from its crypto con last week. This is CORRUPTION on full display—and it’s why I wrote the End Crypto Corruption Act. NO WAY should elected officials and their families be profiting from crypto schemes.”

What I’m Reading This Week

• Interest By Any Other Name Should be Regulated as Sweetly, Aaron Klein, Brookings.

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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