[{"_1":2,"_86":-5,"_87":-5},"loaderData",{"_3":4,"_26":27},"root",{"_5":6,"_17":10,"_18":19,"_20":21,"_22":10,"_23":-5,"_24":-5,"_25":10},"user",{"_7":8,"_9":10,"_11":10,"_12":-5,"_13":-5,"_14":15,"_16":-5},"roles",[],"isAuthenticated",false,"isPremium","planName","subscriptionStatus","featureFlags",{},"insightsBudget","isDevelopmentHost","userPreferences",{},"recaptchaSiteKey","6LcvOJcUAAAAAHsB-gPGfGktcRlKpH7OTIU_dMTD","isImpersonating","impersonation","affiliateStatus","isFreedomPortal","routes/v2/article/layout",{"_28":29,"_30":31},"notFound",true,"relatedArticles",[32,74],{"_33":34,"_35":36,"_37":38,"_39":40,"_41":42,"_43":44,"_45":46,"_47":48,"_49":50,"_51":52,"_53":54,"_55":56,"_57":58,"_59":60,"_61":62,"_63":64,"_65":66,"_67":56,"_68":69,"_70":71,"_72":71,"_73":71},"mediaId",6661534,"mediaKeyId","2407386-1e422d02c9f6b35f53450d4515fffd81","parentId",2407386,"title","Subcommittee debates market structure and asset classification; witnesses press for clear CFTC/SEC lines","audioSeconds",1938,"startMs",130000,"endMs",2068000,"viewUrl","/Search/View?dp=1&key=2407386-1e422d02c9f6b35f53450d4515fffd81&start=130&end=2068","thumbnailUrl","https://assets.pipeline.soar.com/2407386-1e422d02c9f6b35f53450d4515fffd81/thumbnail_130000.jpg","articleUrl","/articles/6661534/Subcommittee-debates-market-structure-and-asset-classification-witnesses-press-for-clear-CFTCSEC-lines","mediaUrl","https://secure.pipeline.soar.com/6661534-a3eded5e6e46d2aa457406e0fa354584/orig.mp4?Expires=1774998919&Signature=Gdj7WqLFHq1-68kS~9qIqeobZND3qsIaf0NyLdjxVA~heGHfyvJmrcY3IneErjKLzR1ENaWLqYNwEC~cIHVoJv5ONlOK5uH2nK9d51fg-930hbFBfknrZ7xodfzQR2nR3EMDRTZkm7aRWxec1uV5DdmYtcvZY~115hYl6CZPIzsAVSJJIW2IxypHbn53iamQXtgrdr5z-oRohHKWCsBnKaNfWdf82zxdZDLTpX7Ys6FOVdlRA1WtWM4MWnJY-ZRPfJp5atCKgOR81T2E~3pYSveUEgCcwZaROtenUvLPbM2w0Od~7dXX94Ba7Z8RrYVsvoukT6r5-mArIqFOvsXhGQ__&Key-Pair-Id=KUT5TJCACFTXG","author","U.S. Senate Banking Committee GOP","date","2025-02-26T21:52:57.517Z","article","The Senate Banking subcommittee’s inaugural hearing also focused on market structure and the legal classification of digital assets, with witnesses calling for explicit, durable lines between securities and non‑securities activity so exchanges and intermediaries can operate under clear rules.

Louis Cohen, a partner at Cahill Gordon & Rindell, told senators that many widely traded digital assets do not fit traditional securities categories because they lack an identifiable issuer that could be held to ongoing disclosure obligations. \"A security is a legal relationship between an issuer and the investor,\" Cohen said; without an issuer, he argued, secondary trading is difficult to regulate under existing securities law and courts have resisted stretching the Howey Test to cover all tokens.

Kraken’s Jonathan Yacom urged Congress to grant the Commodity Futures Trading Commission spot‑market authority to register and oversee centralized intermediaries and secondary‑market trading, arguing that nearly 90% of trading is executed through centralized platforms today and that basic market regulation should be set in statute.

Former CFTC Chairman Tim Massad warned against a wholesale rewrite of securities law to address decentralization. He said regulators should exercise caution before changing core securities statutes and suggested letting current agency rulemaking proceed in parallel with legislative efforts on stablecoins.

Key points from the exchange
- Howey and issuer concept: Cohen emphasized that the Howey Test historically targets transactions reflecting an investment contract and depends on a recognizable issuer/promoter relationship. Several senators and witnesses said the lack of an issuer for many tokens complicates securities analysis and supports a statutory dividing line for fundraising vs. secondary trading.
- SEC litigation posture: Cohen noted that some prior SEC theories treating tokens broadly as securities have been rejected by courts, and he cautioned that a statutory definition should avoid replicating rejected litigation theories.
- CFTC authority and registration: Yacom and others argued for clear CFTC authority over spot markets and for registration requirements for centralized exchanges to provide market integrity, disclosure and operational rules.
- International comparisons: Witnesses pointed to EU rules (MiCA) and to state initiatives such as Wyoming’s chartering efforts as instructive examples for drawing durable, simple jurisdictional rules.

Context and consequences
Committee members framed market‑structure clarity as essential to keep firms and innovation in the United States. Representatives from exchanges said the threat of litigation and regulatory enforcement by agencies rather than through statute has pushed activity and talent offshore. Senator questions focused on where the U.S. should adopt international best practices and how to avoid regulatory arbitrage.

Ending
Witnesses urged a careful, targeted statutory approach that clarifies when fundraising and secondary trading fall under securities law and when markets should be regulated more like commodity spot markets, so exchanges and intermediaries can operate with durable, predictable rules.","mediaType","Video","parentTitle","Senate Banking Subcommittee on Digital Assets Hearing: Exploring Bipartisan Legislative Frameworks","oneSentenceSummary","The Senate Banking subcommittee’s inaugural hearing also focused on market structure and the legal classification of digital assets, with witnesses calling for explicit, durable lines between securities and non‑securities activity so exchanges and intermediaries can operate under clear rules.","taxTitle","taxId",78664,"location","","headline","shortSummary",{"_33":75,"_35":36,"_37":38,"_39":76,"_41":77,"_43":78,"_45":79,"_47":80,"_49":81,"_51":82,"_53":83,"_55":56,"_57":58,"_59":84,"_61":62,"_63":64,"_65":85,"_67":56,"_68":69,"_70":71,"_72":71,"_73":71},6661539,"Senate digital‑assets subcommittee zeroes in on stablecoin rules; witnesses urge stronger reserves, AML and resolution tools",1629,86000,1715000,"/Search/View?dp=1&key=2407386-1e422d02c9f6b35f53450d4515fffd81&start=86&end=1715","https://assets.pipeline.soar.com/2407386-1e422d02c9f6b35f53450d4515fffd81/thumbnail_86000.jpg","/articles/6661539/Senate-digitalassets-subcommittee-zeroes-in-on-stablecoin-rules-witnesses-urge-stronger-reserves-AML-and-resolution-tools","https://secure.pipeline.soar.com/6661539-8884c8ef5c70197a2f4242d36d2edd90/orig.mp4?Expires=1774998919&Signature=Bz0bN1uMTsKg~Q2yaRe2AcoEAO5i-44-27uoZQg9ezUrobBaRQCxHG50WSPFHcydeh6kmkpJEmgAU9R9WONiXY93bViB39GSIrkprZvDEpy0BY~YOReZ-dXNG~OGWkO0KH4XwZMhFNObbnkkcb07-rAMqqOmGuAclgSObup7JxKhjFMpY7ss5giLABiX83K28Ni~VA5epMdV7KkXCUR5qrUuYVLWwsn2Wk25JsRqQRuCTPAJ7DqbuqTQ3I0oREgbJ6fw7LLPllKqh4urQy9pJ~ehXHQcE7zB2TqNkmihlNSZof3-ruzM~BRp6~FLBNhp3Na4l2T0ujJojtC15xtJIQ__&Key-Pair-Id=KUT5TJCACFTXG","Chairwoman Cynthia Lummis and ranking member Ruben Gallego used the inaugural Subcommittee on Digital Assets hearing to press for bipartisan stablecoin legislation, focusing attention on the \"Genius Act\" and a separate Lummis‑Gillibrand bill that aim to create national rules for payment stablecoins.

The session featured four expert witnesses who recommended clearer prudential standards, stronger AML controls that reach some on‑chain activity, and a dedicated, rapid resolution process for failed stablecoin issuers so holders can recover value quickly.

Why this matters: Stablecoins are digital tokens intended to hold a steady value (often a U.S. dollar) and are increasingly used for online payments and trading. Lawmakers said a federal framework would protect consumers, preserve confidence in U.S. markets and keep payment innovation onshore.

Chairwoman Lummis opened the hearing by urging bipartisan progress. \"We want to promote responsible innovation and protect consumers,\" she said. She called for action both on stablecoins and on broader market‑structure legislation and said she hoped to move bills to the White House this year.

Witness recommendations and points of contention
- Reserve design and redemption: Sayeed Masri, chief legal officer of Lightspark, urged 1:1 backing for payment stablecoins and segregation of reserve assets so holders can be made whole. \"Stablecoins must be backed 1 to 1 with reserves of high quality liquid assets with carefully calibrated capital buffers and liquidity requirements,\" she testified. She said issuers should be required to redeem at face value and reserve assets should be held for the benefit of holders and liquidated quickly on resolution.
- Bankruptcy and resolution: Former CFTC Chair Tim Massad warned that the Genius Act does not adequately address issuer bankruptcy or a fast resolution process. He said a standard corporate bankruptcy could leave holders in a long, pari‑passu process and recommended a bespoke, expedited resolution that returns money to holders quickly.
- AML/BSA and unhosted wallets: Multiple witnesses and senators noted a structural challenge under the Bank Secrecy Act: once a stablecoin is issued on a public blockchain it can move through unhosted, self‑custody wallets without traditional KYC. Massad and others urged expanding the regulatory perimeter and developing technical and legal tools (transaction monitoring, freezing capabilities, or code controls) to reduce illicit finance risks.
- Prudential and enforcement standards: Massad and others said the Genius Act includes useful elements but lacks robust prudential standards, strong extraterritorial enforcement language, and clear criminal/civil penalties needed to deter misconduct. Louis Cohen, a partner at Cahill Gordon & Rindell, recommended targeted ongoing disclosure obligations for fundraising issuers and said disclosures could end when the entrepreneurial team’s efforts were no longer essential to value.
- Competition and issuer types: Masri urged a multi‑issuer approach that allows banks, bank affiliates and nonbank issuers under common enhanced standards and limits on affiliate transactions, to encourage competition on payments utility rather than on reserve returns.

Consumer protection and payments law
Senators raised gaps in existing consumer protections. Committee members asked whether the Electronic Fund Transfer Act (EFTA) and CFPB protections clearly apply to stablecoins; witnesses said the legal status is unclear and recommended explicit coverage or equivalent protections for accounts and custodial services that touch consumers. Senators also pressed for vetting of issuer management and boards similar to banking charters; witnesses generally supported such vetting, saying the Genius Act should add character‑and‑fitness review language.

Other details cited in testimony
- The Genius Act includes thresholds and a state/federal parity approach discussed during the hearing; witnesses recommended lowering the proposed $10,000,000,000 market‑cap threshold for federal oversight and making sure states follow minimum federal standards.
- Panelists reported that a majority of dollar‑denominated stablecoin activity is tied to offshore issuers; Massad said \"three of the five largest dollar‑denominated stablecoin issuers are offshore,\" arguing for stronger extraterritorial enforcement.

What happens next
Lawmakers said they expect continued drafting and possible markup of stablecoin legislation in the Senate Banking Committee. Chair Lummis and several members urged swift bipartisan work to finalize reserve, redemption, AML, enforcement and resolution provisions.

Ending
Senators and witnesses agreed on the urgency of creating durable, clear rules for payment stablecoins while protecting consumers and financial stability. Committee members signaled both interest in passing a stablecoin framework soon and continuing debate over the right balance of prudential, enforcement and competition safeguards.","Chairwoman Cynthia Lummis and ranking member Ruben Gallego used the inaugural Subcommittee on Digital Assets hearing to press for bipartisan stablecoin legislation, focusing attention on the \"Genius Act\" and a separate Lummis‑Gillibrand bill that aim to create national rules for payment stablecoins.","actionData","errors"]

Article not found

Subcommittee debates market structure and asset classification; witnesses press for clear CFTC/SEC lines

Senate digital‑assets subcommittee zeroes in on stablecoin rules; witnesses urge stronger reserves, AML and resolution tools