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America’s plan for a digital asset market structure regulatory framework envisions a major role for a regulator that’s having serious trouble staffing its upper echelons.
- Market structure redux
- Why does no one want to work at the CFTC?
- Move fast and legislate things
- Feds don’t care about crypto in 401(k)
- You’re nobody until Saylor sells you a mortgage
On Wednesday, United States Vice-President J.D. Vance gave the keynote address on day two of the BTC 2025 conference in Las Vegas. Vance addressed a number of subjects, including his belief that Congress needs to pass digital asset market structure legislation and get a finished bill on President Trump’s desk for signing into law ASAP.
The following day, the House of Representatives Financial Services Committee (FSC) issued their new digital asset market structure bill, which they’ve christened the Digital Asset Market Clarity (CLARITY) Act. (Section-by-section summary here.) The bill is an updated version of the FIT21 bill that the House passed last year but wasn’t addressed by the Senate before Congress adjourned for the 2024 federal election.
In announcing the bill, FSC chair French Hill (R-AR) offered the necessary homilies to consumer protection, regulatory clarity, and ‘American innovation.’ CLARITY is billed as having bipartisan support, citing Democrat co-sponsors Warren Davidson (R-OH), Angie Craig (D-MN), Ritchie Torres (D-NY), and Don Davis (D-NC).
CoinGeek’s intrepid James Field will be along any moment now with a deeper dive into CLARITY’s nuts and bolts, but as with FIT21, CLARITY establishes the Commodity Futures Trading Commission (CFTC) as the primary regulator of digital assets that aren’t considered securities.
So, basically all digital assets, given the Securities and Exchange Commission (SEC) doesn’t believe any digital assets are securities. To underscore that systematic disengagement, the SEC announced on May 29 that it wasn’t interested in regulating ‘protocol staking activities,’ because someone somewhere will presumably ensure these activities are conducted fairly. (The sole remaining Democrat commissioner at the SEC believes the regulator is doing “more harm than good by purporting to carve out broad categories of crypto products without analyzing the realities of how they really work.”)
CLARITY does envision the SEC having anti-fraud authority over stablecoins that are allowed to operate under the new rules proposed by bills in the Senate (GENIUS) and House (STABLE). The SEC will also take point on digital asset activity by “SEC-registered broker-dealers and national securities exchanges where such registrants are exempt from registration with the CFTC.”
However, the SEC is not allowed to touch “certain decentralized finance activities related to the operation and maintenance of blockchain networks.” These activities include “validating or providing incidental services with respect to a digital asset, providing user-interfaces for a blockchain network, publishing and updating software, or developing wallets for blockchain networks.”
That will likely come as a relief to the SEC, as it will spare staff from having to craft a separate press release denying any responsibility for overseeing DeFi activities. If you want to get ahead of next week’s disavowal, a lobby group just asked the SEC to ignore decentralized autonomous organizations (DAOs), so 5…4…3…2…1…
CFTC exodus leaves no one manning the gates
Looking to the CFTC to shoulder the regulatory burden is complicated by the fact that nobody seems to want to serve as a CFTC commissioner anymore. Incoming Chairman Brian Quintenz has yet to be confirmed by the Senate, but when he finally takes his seat in the corner office, he’ll find himself staring at a lot of empty chairs where commissioners usually sit.
This will be the last week on the job for commissioners Summer Mersinger and Christy Goldsmith Romero, while Caroline Pham has announced her plan to depart once Quintenz is confirmed. Kristin Johnson is also headed for the exits, although she promised to stay until “later this year,” likely just long enough for her replacement to be nominated and confirmed.
With former Chair Rostin Behnam having resigned on January 20, Quintenz will have the CFTC all to himself, at least, until Trump gets around to nominating new commissioners. It’s a good thing that CLARITY gives the CFTC/SEC a 360-day window following passage in which to figure out who’s looking after what. (In the interim? Crypto Thunderdome, apparently.)
Despite having pulled her own ripcord, Romero appeared a little uneasy over the mass exodus at a Brookings Institution event this week. “What happens if the CFTC gets down to one and gets new authority for crypto? It’s going to be really, really hard, right? You’re not going to have the same push and pull … I worry about that at the CFTC, and I worry about that at other agencies as well.”
As befitting America’s public-private revolving door, Mersinger is leaving to become CEO of the Blockchain Association industry lobbying group. Pham is also returning to the private sector, although she said didn’t “have any specific plans” to announce.
Will Trump’s crypto ventures thwart legislative progress?
Vance’s Vegas speech expressed optimism that the Senate could “move quickly on passing a clean GENIUS Act and for the House to follow-up and do the same.” The ‘clean’ reference reflects the hope that when the Senate brings GENIUS to the floor for debate (likely next week), it will largely ignore the 53 proposed amendments to its text.
As for Vance’s urging of Congress to act with similar haste to bring a finished market structure bill to Trump’s desk, concerns are mounting that the president’s seemingly endless list of self-interested crypto ventures could discourage support for legislatively blessing these money-making moves after the fact.
While the crypto sector and pro-crypto pols previously suggested that both stablecoin and market structure legislation could be on Trump’s desk by Labor Day, the rising outrage over Trump’s increasingly brazen crypto cash grabs could complicate that timeline. One unnamed ‘crypto executive’ told Politico this week that these concerns could mean market structure legislation ‘won’t move forward until after the midterm elections next year.’
Speaking of, Rep. Jamie Raskin (D-MD) announced Wednesday that he’d launched a probe into Trump’s recent dinner at his Virginia golf club for the top 220 holders of his $TRUMP memecoin. The Washington Post reported that Raskin’s probe is focused on who paid big bucks to breathe the same air as Trump, even though reports suggest that nobody in attendance got much in the way of Trump facetime.
Raskin believes that publicly releasing the list of Trump’s deep-pocketed dinner guests will “let the American people know who is putting tens of millions of dollars into our President’s pocket so we can start to figure out what—beyond virtually worthless memecoins—they are getting in exchange for all this money.”
As with similar Democrat-led probes by the likes of Sen. Richard Blumenthal (D-CT), Dems lack the votes to progress these probes beyond the press release stage. Until their Republican colleagues relocate their lost capacity for outrage, these efforts are purely performative.
Tokenized retirement?
Meanwhile, the Trump administration continues to expunge any and all Biden-era rules and regs that might impede ‘number go up.’ On May 28, the Department of Labor’s Employee Benefits Security Administration formally rescinded Biden-era guidance that has deterred employers from including digital assets in their employees’ 401(k) retirement plans.
The guidance in question was issued in March 2022 and urged 401(k) plan sponsors to exercise “extreme care” before including digital assets alongside more traditional financial investment options. The new guidance neither endorses nor disapproves of tokens in 401(k) plans, just reaffirms the department’s “neutral stance.”
Secretary of Labor Lori Chavez-DeRemer said the Biden administration “made a choice to put their thumb on the scale,” but the new sheriffs in town are “rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats.”
There was nearly $9 trillion dollars held in 401(k) accounts at the end of 2024, with over one-third of Americans contributing to the plans. The ongoing upheaval in the stock market due to Trump’s on-again/off-again tariffs has many contributors looking at alternative investment options, although prominent tokens like BTC haven’t been spared this volatility.
For what it’s worth, the fact that BTC has fallen 5% this week—during the year’s biggest pro-BTC event, and despite announcements by multiple new entrants launching BTC ‘treasury’ strategies that will see them spending billions of dollars acquiring tokens—should give any 401(k) manager pause regarding the wisdom of injecting additional volatility into workers’ retirement schemes.
Saylor told Trumps to mortgage Mar-a-Lago and buy BTC
Among the entities announcing new BTC treasury strategies this week was Trump Media and Technology Group (TMTG), the parent company of the Truth Social platform. TMTG is raising $2.5 billion to buy BTC, swiftly elevating itself to the upper tier of companies that have gone down this road.
Day 2 of the BTC Vegas shindig saw the president’s sons, Donald Jr. and Eric Trump take the stage to discuss TMTG’s BTC buying plans, including the revelation that they were both egged on and inspired by Michael Saylor, founder of Strategy (formerly MicroStrategy) (NASDAQ: MSTR).
Strategy bought another 4,020 BTC on Monday, boosting its treasury to 580,250 tokens, and almost immediately announced plans to raise even more debt to buy even more BTC.
Strategy’s strategy has been mimicked by a growing number of firms, including former meme-stock GameStop (NASDAQ: GME), which announced Wednesday that it had spent $512 million buying 4,710 BTC as the first step in launching its own BTC treasury.
Eric Trump told the Vegas audience that Saylor had long been urging the Trump family to “do what I’m doing,” going as far as to suggest they mortgage Trump’s Mar-a-Lago estate in Florida. (To be fair, Saylor has been telling everyone to mortgage their homes to buy BTC since 2021.)
Trump opted instead to use TMTG to make his BTC bet, but so far, the market’s reaction has been anything but positive. TMTG’s DJT stock briefly spiked in the wake of its BTC announcement but has since fallen below $21, a low it hasn’t touched since early April.
This is by no means an isolated incident. GameStop’s shares surged to nearly $37 in the wake of its BTC announcement but closed Thursday below $30. Like Strategy and its clones MetaPlanet, Twenty-One Capital, and others, there’s little in the way of fundamentals behind these companies, rendering them slaves to BTC’s random surges and plunges.
In TMTG’s case, the company’s high profile belies a nonexistent business model, with revenue in the first three months of 2025 failing to surpass $1 million. The company’s share price values the company at a multiple of 1,800x its annual revenue, meaning if it wasn’t attached to the President of the United States, it would have been taken out behind the barn and put out of its misery ages ago.
But that was yesterday, and Toto, I don’t think we’re in Kansas anymore.
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