Banking Regulators Clarify Crypto Custody Expectations, Congress Advances Landmark Digital Asset Legislation and Senate Releases Market Structure Draft

In a pivotal week for digital asset policy, federal banking regulators issued long-awaited guidance outlining risk-management expectations for crypto-asset safekeeping activities. The OCC, Federal Reserve and FDIC released a joint statement defining core risk management principles for banks that hold crypto-assets on behalf of customers, marking substantive federal guidance on crypto custody.

Meanwhile, Congress advanced a trio of high-profile crypto bills as part of a coordinated legislative push dubbed “Crypto Week.” The House passed the GENIUS Act, the CLARITY Act and the CBDC Anti-Surveillance State Act. The next day, the President signed the GENIUS Act into law, enacting the most significant digital asset law to date. The GENIUS Act is the first federal law to create a comprehensive regulatory framework for payment stablecoins, digital tokens pegged to the U.S. dollar and intended for payments. A full summary of the GENIUS Act is available here.

The White House also weighed in on tax policy, expressing support for a de minimis exemption for small crypto transactions.

This week, the Senate Banking Committee released its own discussion draft of digital asset market structure legislation. The Senate version contains key differences from the House’s CLARITY Act, including the introduction of a new category of digital assets called “ancillary assets.”

Together, these developments signal accelerating regulatory and legislative activity as policymakers move toward a more structured digital asset framework in the United States.

Congressional Updates

GENIUS Act, CLARITY Act and Anti-CBDC Bill Clear House During ‘Crypto Week’

• On July 18, the House wrapped up “Crypto Week,” a coordinated legislative effort led by the House Financial Services Committee, House Agriculture Committee and House leadership. Over the course of two days, the House passed three significant digital asset bills:
  • GENIUS Act. On July 17, the House passed the GENIUS Act (S.1582) with a bipartisan vote of 308-122. The next day, the President signed the bill into law, enacting the most significant digital asset law to date. The GENIUS Act is the first federal law to create a comprehensive regulatory framework for payment stablecoins, digital tokens pegged to the U.S. dollar and intended for payments. A full summary of the GENIUS Act is available here.
  • CLARITY Act. On July 17, the House passed the CLARITY Act (H.R.3633), by a vote of 294-134, with support from 78 Democrats. The bill would establish a market structure framework for digital assets, including a division of regulatory authority between the SEC and CFTC. The Senate is working on its own version of market structure legislation.
  • CBDC Anti-Surveillance State Act. On July 17, the House passed the CBDC Anti-Surveillance State Act (H.R. 1919) by a narrower vote of 219-210. The Speaker of the House promised conservative members of Congress that he would include the legislation as part of the House National Defense Authorization Act for Fiscal Year 2026, which is must-pass legislation. The NDAA determines how defense funds can be used and sets Congress’ priorities for national security. Both the House and Senate Armed Services Committees have passed their versions of NDAA out of committee and are awaiting floor consideration. The language in H.R. 1919 would have to be included in the Senate and House versions during floor consideration as part of the underlying text or amendment that passes on the floor of the House and Senate. It can also be added during the conference committee, where the two bills will be reconciled.

Senate Banking Committee Releases Discussion Draft of New Market Structure Legislation

• On July 22, Senate Banking Chair Tim Scott (R-SC) and Sens. Cynthia Lummis (R-WY), Bill Hagerty (R-TN) and Bernie Moreno (R-OH) released a discussion draft of digital asset market structure legislation. While these members of the Senate Banking Committee, which has jurisdiction over the SEC, released a portion of the bill, the Senate Agriculture Committee, which has jurisdiction over the CFTC, is expected to release their draft of the bill in early September. The bill includes key differences from the House’s CLARITY Act, including provisions that would create a new category of digital tokens called “ancillary assets.”

Senate Agriculture Committee Holds Hearing on Oversight of Digital Commodities

• On July 15, the Senate Agriculture Committee held a hearing entitled “Stakeholder Perspectives on Federal Oversight of Digital Commodities.” The hearing centered on digital asset market structure legislation and the appropriate division of regulatory authority between the CFTC and the SEC.
• In his opening remarks, Chairman John Boozman (R-AR) emphasized that the CFTC should have exclusive jurisdiction over the trading of digital commodities. Several witnesses echoed this view. Others, however, advocated for a joint regulatory framework involving both the CFTC and SEC, reflecting ongoing debate over how best to structure oversight of the digital asset ecosystem.

House Appropriations Advances Funding Bill With Crypto Provisions

• On July 21, the House Appropriations Subcommittee on Financial Services and General Government (FSGG) advanced the FY 26 FSGG Appropriations Bill. The funding bill includes several provisions related to digital assets. It prohibits the Treasury Department from using funds to design, build or develop a U.S. Central Bank Digital Currency. See Sec. 130. It also directs the Treasury to report to Congress on the practicability of establishing a Strategic Bitcoin Reserve and U.S. Digital Asset Stockpile. See Sec 137.

House Passes the Financial Technology Protection Act of 2025

• On July 21, the House voted under suspension of the rules to pass the Financial Technology Protection Act of 2025 (H.R. 2384). The bill would establish a Financial Technology Working Group to research how illicit actors use digital assets and develop legislative and regulatory proposals to enhance anti-money laundering and counter-illicit financing efforts. The group would be led by the Treasury’s Under Secretary for Terrorism and Financial Crimes and consist of members from federal agencies, financial institutions, private interest groups and blockchain companies.

House Ways and Means Holds Crypto Tax Hearing

• On July 16, the House Ways and Means Subcommittee on Oversight held a hearing entitled “Making America the Crypto Capital of the World: Ensuring Digital Asset Policy Built for the 21st Century.” The hearing focused on establishing a framework for treating digital assets in the U.S. tax code.

Agency Updates

Federal Banking Regulators Clarify Crypto Asset Safekeeping Expectations

• On July 14, the OCC, Federal Reserve Board and FDIC issued a joint statement entitled “Crypto-Asset Safekeeping by Banking Organizations,” defining six core risk management principles for banks that hold crypto-assets on behalf of customers. The guidance emphasizes that regulators will be using existing laws, regulations and supervisory standards and are not introducing new requirements. The guidance clarifies that “safekeeping” refers specifically to “the service of holding an asset on a customer’s behalf,” and generally addresses:
  • General Risk Management Considerations. Requiring that banks must conduct comprehensive risk assessments of their custodial activities, considering financial exposure, asset complexity, control frameworks, staff expertise and contingency planning.
  • Cryptographic Key Management. Emphasizing generating, storing and securing cryptographic keys, to manage liability for losses or compromises.
  • Additional Risk Management Considerations. Requiring analysis of vulnerabilities, dependencies and technology compatibility for each specific crypto asset before offering safekeeping services.
  • Legal and Compliance Risk. Requiring strict adherence to BSA/AML, CFT measures OFAC and Travel Rule requirements, with customer agreements clearly outlining respective responsibilities of the parties.
  • Third-Party Risk Management. Confirming that when using sub-custodians or vendors, a bank remains responsible, requiring due diligence on key management and control practices as well as in the event of an insolvency or operational disruption.
  • Audit. Covering key management controls, asset transfer and settlement processes, IT systems and third-party providers (internal or external resources may be used).

SEC Considering Exemption to Incentivize Tokenization

• On July 17, at a press event, SEC Chair Paul Atkins said the agency is exploring an innovation exemption to incentivize tokenization within the SEC regulatory framework. He said the innovation exemption would permit novel ways of trading and more narrowly tailored forms of relief to facilitate the building of other components of a tokenized securities ecosystem. Atkins added that he has seen an increase in assets moving on chain.
• During an interview on the same day, Atkins expressed support for the SEC and CFTC working together. When asked if he would support a merger between the SEC and CFTC, Atkins responded that for years he’s supported a consolidation of the two agencies. However, he added that this should not be the priority. The two agencies should work together to ensure they are in sync to avoid uncertainty in the marketplace and bottlenecks in the process.

White House Preparing Executive Order for Alternative Assets in 401(k) Plans

• On July 17, as reported by the Financial Times, three people brief on the President’s plans said the President is expected to sign an executive order allowing alternative assets like digital assets to be included as investments in 401(k) plans. The Financial Times reported that the executive order would instruct regulatory agencies to review remaining roadblocks, allowing alternative investments to be included in professionally managed funds. This comes after the Department of Labor rescinded its crypto retirement plan guidance on May 28, which had discouraged the use of crypto in 401(k) plans.

White House Says the Administration Supports Crypto Tax Exemption

• On July 17, in a White House press briefing, the White House Press Secretary Karoline Leavitt said the President signaled support for a crypto tax de minimis exemption. Furthermore, she noted that the Administration is exploring legislative solutions to achieve the exemption. A crypto tax de minimis exemption would allow individuals to make cryptocurrency transactions under a specific threshold without tax reporting requirements.
• On a related note, Sen. Cynthia Lummis (R-WY) proposed legislation exempting capital gains on transactions involving digital assets of $300 or less, subject to an annual cap of $5,000 on the total amount of gains that can be excluded from taxation annually.

Gould Sworn in as Comptroller of the Currency

• On July 15, Jonathan Gould was sworn in as the 32^nd Comptroller of the Currency by Deputy Secretary of the Treasury Michael Faulkender. Gould is replacing Rodney Hood, who served as acting Comptroller since February. Gould was nominated by the President for the role on February 11 and confirmed by the Senate on July 10. Gould previously worked at the OCC as Senior Deputy Comptroller and Chief Counsel from 2018 to 2021.

State Updates

• On July 14, the Conference of State Bank Supervisors (CSBS) sent a letter to House and Senate leaders requesting additional amendments to the GENIUS Act, specifically:
  • Preemption for State Uninsured Depositories (Section 16(d)). The CSBS requested the elimination of Section 16(d) of the GENIUS Act, which if passed would prevent host state approval and supervision of money transmission and custody activities of uninsured banks with payment stablecoin subsidiaries. The letter stated that the “unprecedented erosion of long-standing host state authority to license and supervise traditional financial activities … would weaken vital consumer safeguards, invite regulatory arbitrage, and introduce needless financial stability risks.”
  • Preemption of State Authority Over State-Chartered Bank Subsidiaries (Section 5(h)). The CSBS requested an amendment to Section 5(h) of the GENIUS Act to restore a state’s full authority to approve and supervise the activities of a permitted payment stablecoin issuer that is the subsidiary of a state-chartered bank.
  • Application of State Consumer Financial Protection Law to Payment Stablecoin Issuers (Section 7(f) & Section 4(b)(1)). The CSBS requested an amendment to Section 4(b)(1) to clarify that state consumer protection laws are not preempted.
• On July 17, the CSBS issued a statement entitled “Stablecoin Framework Must be Sustainable.” The CSBS stated that they appreciate congressional support for many amendments requested by state supervisors to improve the final bill, particularly changes that promote parity for state-approved stablecoin issuers and narrow the scope of authorized activities for all stablecoin issuers. CSBS urged Congress to make additional changes to the GENIUS Act in future digital asset legislation.