The DeFi Debrief

Week of April 7, 2025: HFSC Advances Crypto Legislation; DEF Files Comment Letter on CFPB Proposed Rule; DEF Files Amicus Brief in Harper v. IRS; Securities Clarity Act; Updates from Senate Banking

Stablecoins and Beyond: HFSC Advances Crypto Legislation

Last week, The House Financial Services Committee advanced three pieces of crypto-focused legislation in a Committee Markup. Namely, the Committee advanced the House’s version of a payment stablecoin regulatory framework, a bill prohibiting the issuance of an American central bank digital currency (CBDC), and bipartisan legislation to establish a working group to study and combat illicit finance in digital assets.

The Markup featured bipartisan support for stablecoin legislation and digital assets. However, there was disagreement among Members about limitations on who may issue a payment stablecoin, reserve and liquidity requirements, and various anti-money laundering (AML) and sanctions issues. All three crypto-focused bills were advanced out of Committee. Next, all of the legislation will go to the House Rules Committee, and if the bills are taken up, they will be up for House floor debate and subsequent voting.

This week, both HFSC and the House Agriculture Committee will be taking up market structure debate during hearings this week. HFSC will hold a hearing entitled, “American Innovation and the Future of Digital Assets Aligning the U.S. Securities Laws for the Digital Age” and House Ag will hold a hearing entitled “American Innovation and the Future of Digital Assets: On-Chain Tools for an Off-Chain World.” Both Committees are expected to debate market structure legislation, resembling that of the last Congress’s FIT21. In HFSC’s Wednesday Markup, Chair Hill alluded to the Committee’s upcoming debate and critical work on “FIT21 2.0.”

The STABLE Act

After the Committee released an updated draft of H.R. 2392, the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act of 2025, HFSC did a markup of the legislation before advancing it to the House floor.

The legislation, sponsored by HFSC Digital Assets Subcommittee Chairman Bryan Steil (R-WI), and co-sponsored by HFSC Chairman French Hill, establishes definitions and regulatory classifications for payment stablecoins, recognizes regulatory paths for approving and regulating payment stablecoin issuers, provides that certain digital asset activities are permissible by depository institutions, and clarifies that permitted payment stablecoins are not securities. Overall, the legislation aims to provide regulatory guardrails on centralized “payment stablecoins” and their issuers.

The updated bill text shows a revised definition of “payment stablecoin” and added a “rule of construction” to exclude certain decentralized stablecoins from being covered by the statute. During Markup, Subcommittee Chair Steil (R-WI) made sure to note in a statement that while the"STABLE Act creates a really robust framework for centralized payment stablecoins backed by high-quality, real-world fiat assets, “…it is not our intention to sweep in non-payment stablecoins. This includes decentralized stablecoins,” also noting a “need to do so in separate legislation.” He also stated: “The Act is not intended to cut off a burgeoning blockchain-based product that is far different from payment products we are seeking to legislate today."

Notably, Representative Warren Davidson (R-OH) led a discussion on self-custody during the markup, proposing language similar to his Keep Your Coins (KYC) Act as an amendment to the STABLE Act. While the committee chose to leave additional self-custody protections out of the legislation, Committee leadership stated that they would explore integrating language to ensure self custody protections from the KYC Act into later market structure legislation.

The STABLE Act was advanced out of committee by a vote of 32-17. All Committee Republicans voted yes on the legislation, except Rep. Davidson, who expressed concern that there was no self-custody language in the legislation. Notably, six Committee Democrats also supported the legislation. The STABLE Act will now proceed out of Committee to the House Floor for debate and voting.

As a reminder, the Senate’s GENIUS Act was recently advanced out of the Senate Banking Committee, where it is soon expected to reach the Senate floor for debate and voting.

DEF’s Take

DeFi Education Fund is deeply grateful to HFSC Committee Staff and Members for their tireless work to deliver legal clarity for US crypto developers, businesses, and users, and to protect DeFi. Centralized stablecoins are an important part of the crypto ecosystem, and HFSC’s markup and vote on the STABLE Act is a big step forward for the industry.

The Financial Technology Protection Act

During the Markup, HFSC unanimously advanced H.R. 2384, the bipartisan Financial Technology Protection Act (FTPA) to the House floor. The FTPA, sponsored by Representatives Zach Nunn (R-IA) and Jim Himes (D-CT), establishes an independent working group among key federal government agencies and crypto industry leaders to research and report on illicit use of emerging technologies, including digital assets, and to provide recommendations on how to improve anti-money laundering and counterterrorist financing efforts.

HFSC advanced the legislation unanimously (49-0), which will now go to the House floor.

DEF’s Take

DeFi Education Fund applauds the work of Representatives Nunn and Himes, as well as HFSC Staff, to constructively engage with both policymakers and industry participants to protect digital assets and emerging technologies by facilitating open-minded research and policy discussion in the proposed working group.

The Anti-CBDC Surveillance State Act

Finally, HFSC advanced H.R. 1919, House Majority Whip Tom Emmer’s (R-MN) Anti-CBDC Surveillance State Act, which now has over 100 cosponsors signed on.

The legislation would amend the Federal Reserve Act to prohibit the Federal Reserve Banks from issuing a central bank digital currency (CBDC), or any substantially similar digital asset. Additionally, the bill would prohibit the Federal Reserve System and the Federal Open Market Committee from using a CBDC to implement monetary policy. The bill also expresses the congressional sentiment that the Board of Governors of the Federal Reserve System currently does not have the authority to issue a CBDC.

HFSC advanced the legislation (27-22). The legislation will now head to the House Rules Committee, and then to the House floor for debate and voting.

DeFi Education Fund Files Comment Letter on CFPB Proposed Rule

On March 31st, DeFi Education Fund submitted our comment letter on the Consumer Financial Protection Bureau’s (CFPB) proposed rule, “Proposed Rule on Electronic Fund Transfers Through Accounts Established Primarily for Personal, Family, or Household Purposes Using Emerging Payment Mechanisms.” The Proposed Rule would expand Regulation E under the Electronic Funds Transfer Act (EFTA) to include emerging digital payment mechanisms, and is ambiguous as to whether it could capture the developers of self-custody crypto wallets.

DeFi Education Fund’s letter cautions the CFPB that the Proposed Rule would unreasonably expand Regulation E beyond the EFTA’s statutory scope, and notes that such significant changes cannot be accomplished by an interpretive rule rather than through notice-and-comment rulemaking.

DEF explains that the Proposed Rule is ambiguous as to whether it applies to developers of self-custody wallets and digital asset software, exhibiting a fundamental misunderstanding of the technology that may be implicated by the rule as drafted. DEF explains that self-custody setups, in which users control their own private keys, cannot and should not be subject to Regulation E.

Consensys also submitted comments outlining similar concerns about the proposed rule. In addition to DEF and other industry participant’s letters, the House Financial Services Committee Republicans sent a letter to the CFPB, noting their concerns that the proposed rule should not be applied to blockchain networks or self-custody setups because “these networks lack traditional financial intermediaries” and “unlike traditional electronic payments, stablecoin transfers are final and executed via smart contracts, meaning there is no central authority to halt, reverse, or amend transactions as required under Regulation E.”

For these reasons, DeFi Education Fund urges the CFPB to refrain from broadening EFTA until legislative and regulatory clarity on digital assets is established, to avoid premature, fragmented, and potentially conflicting oversight.

DeFi Education Fund Files Amicus Brief in Harper v. IRS

On March 28th, the DeFi Education Fund (DEF) filed an amicus brief urging the Supreme Court of the United States to hear Harper v. Werfel, a case challenging the Internal Revenue Service’s (IRS) warrantless collection of crypto user data from Coinbase. The brief argues that the IRS’s warrantless collection of transaction records violates the Fourth Amendment’s protection against unreasonable search and seizure.

Put simply, the case asks whether the government can issue a non-specific subpoena to a company that would result in the government’s ability to track blockchain activity in an unprecedented and indefinite manner—past, present, and future—without a warrant.

Harper’s petition and DEF’s brief call on the Court to affirm the constitutional principle that privacy protections must evolve with modern technology, as recognized in precedent.

DEF’s Take

DeFi Education Fund urges the Supreme Court to take this case, reaffirm that the Fourth Amendment still applies in the digital age, and recognize that the third-party doctrine has limits—especially when it comes to technologies as transparent and far-reaching as blockchain. Without clear judicial limits, the government could gain unrestricted power to look at every financial transaction– without needing a warrant.

Reintroduction of the Securities Clarity Act

On March 26, 2025, House of Representatives Majority Whip Tom Emmer (R-MN) reintroduced the Securities Clarity Act of 2025 alongside Representative Darren Soto (D-FL). The bipartisan bill is aimed at clarifying U.S. securities laws as they apply to digital assets. Specifically, the legislation seeks to amend key provisions across the securities statutes to include a new defined term: “investment contract asset.” The bill defines an investment contract asset, in part, as “a fungible digital representation of value that can be exclusively possessed or transferred without necessary reliance on an intermediary, and is recorded on a cryptographically secured publicly distributed ledger.” Importantly, the bill seeks to amend the federal securities laws to explicitly exempt investment contract assets from qualifying as a security.

DEF’s Take

This bill represents a significant effort towards legal certainty for digital assets. The bill effectively codifies a distinction between an investment contract and the token that may be the asset related to that investment contract. Notably, provisions of this bill were passed by an overwhelming bipartisan vote last year as part of the Financial Innovation and Technology for the Twenty First Century Act (FIT21).

Senate Banking Committee Advances Key Nominations

On April 3, 2025, the Senate Banking Committee (SBC) advanced several key crypto-related nominations out of Committee and onto the Senate floor. SBC advanced the nominations of Paul Atkins to Chair the Securities and Exchange Commission, Jonathan Gould to lead the Office of the Comptroller of Currency, and Luke Pettit to serve as Assistant Secretary of the Department of Treasury.