Congress Crypto Updates

Over the past few weeks, Congress has focused on digital asset regulations through various hearings and press conferences. Committees held key hearings to seek regulatory clarity, proposed new legislation and created a working group dedicated to developing crypto legislation.

Crypto Press Conference — February 4, 2025

• David Sacks, the White House artificial intelligence and cryptocurrency advisor commonly referred to as the “AI and crypto czar,” held a press conference with key congressional leaders, including Senate Banking Committee Chair Tim Scott (R-SC), Senate Agriculture Committee Chair John Boozman (R-AR), House Financial Services Committee Chair French Hill (R-AR) and House Agriculture Committee Chair GT Thompson (R-PA), on developing legislation to provide regulatory clarity. The administration’s executive order on crypto directs Sacks to lead a federal working group of financial regulators.
• The House and Senate committee chairs announced a bicameral working group dedicated to advancing crypto legislation in Congress. This working group includes members of the House Financial Services Committee, the House Agriculture Committee, the Senate Banking Committee and the Senate Agriculture Committee.
• Sacks announced that the Trump administration is exploring the possibility of a U.S. bitcoin reserve.

Senate Banking Committee Hearing on Debanking — February 5, 2025

• The hearing titled “Investigating the Real Impacts of Debanking in America” examined the impact of debanking on the crypto industry, centering on the overuse of “reputational risk” by regulators to justify financial exclusion.
• Prior to the hearing, Sen. Kevin Cramer (R-ND) reintroduced the Senate version of the Fair Access to Banking Act, which aims to prohibit banks from denying services to businesses based on political or reputational criteria.
• Republicans pushed back against debanking practices, arguing that bank regulators have overused the threat of reputational risk to deny financial services to crypto companies.
• Democrats largely agreed, raising concerns about the lack of an appeals process when a business is debanked.
• On a related note, Federal Reserve Chairman Jerome Powell testified in the Senate Banking Committee hearing on the Federal Reserve’s Semiannual Monetary Report to Congress, where Chairman Powell emphasized the Fed’s support for regulatory clarity on stablecoins and his concerns about debanking practices.

House Financial Services Subcommittee on Digital Assets, Financial Technology and AI Hearing on Digital Assets — February 11, 2025

• The hearing titled “A Golden Age of Digital Assets: Charting a Path Forward” focused on the need for regulatory and legislative clarity for digital assets.
• Republicans emphasized the need for stablecoin legislation, suggesting it would promote confidence, expand adoption and preserve U.S. leadership in crypto and payments.
• Democrats called for consumer protections and guardrails to be included in any stablecoin legislation. They also expressed concerns about financial stability.
• For more information on recent stablecoin bills, please visit our tracker here.

House Financial Services Committee on Choke Point 2.0 — February 6, 2025

• The hearing titled “Operation Choke Point 2.0: The Biden Administration’s Efforts to Put Crypto in the Crosshairs” focused on the negative effects of “Operation Choke Point 2.0” on digital asset companies. For more information on this initiative, please visit our tracker here.
• Republicans argued that bank regulators were overreaching when dissuading banks from working with crypto companies, highlighting broader regulatory overreach from government agencies during the Biden administration.
• Some Democrats rejected the notion that bank regulators unfairly debanked crypto companies, while others acknowledged that banks should have clear guidelines when rejecting a company from banking.

As Congress continues to examine the impact of legislation on the crypto industry, we at Paul Hastings will monitor these developments and keep our clients informed. For more on crypto policy, visit our tracker here.