Admin and Congress ramp up crypto efforts

Author: The Carta Policy Team
Published date: March 7, 2025

Congress works to establish a market structure framework for stablecoins, and the White House establishes crypto reserves. Also: The Carta Policy Team discusses efforts to expand retail access to private fund investments.

The Topline

• Financial committees ramp up efforts to create stablecoin framework
• White House announces crypto reserves
• Carta Policy Team discusses efforts to expand retail access to private funds
• Virtual event: Policy Outlook 2025: Implications for the private capital ecosystem
• Quick hits

HFSC and Senate Banking ramp up crypto efforts

Congress is making progress to establish a market structure framework for stablecoins, with a House Financial Services Committee hearing and an anticipated Senate Banking Committee markup as early as next week. Republicans in both the House ( STABLE Act) and Senate ( GENIUS Act) have released stablecoin drafts, in addition to a proposal from HFSC Ranking Member Waters. At a high level, all three proposals share similarities, including providing a path for banks and nonbanks to issue stablecoins, ensuring stablecoins are sufficiently backed with highly liquid reserves on a 1:1 basis, and disclosures around composition and redemption policies. Where they diverge is on the balance between federal and state regulatory roles and the extent of consumer protections.

• Primary federal regulator: The STABLE and GENIUS Acts would generally designate the OCC as primary federal regulator for nonbank issuers; the Waters draft would designate the Federal Reserve.
• State pathway: The STABLE and GENIUS Acts would allow stablecoin issuers to opt for a state-based regulatory framework: STABLE would require a state regulatory regime to meet specified standards and requirements, while the GENIUS Act would permit a state regulatory regime if the issuer’s market cap is under $10 billion and Treasury certifies the state regime is “substantially similar” to the federal framework. The Waters draft would require state-approved issuers to also be approved by the Federal Reserve.
• Algorithmic stablecoins: The STABLE Act and Waters draft would call for a two-year moratorium for endogenously collateralized stablecoins, in addition to a study and report; the GENIUS Act would only require a study.
• Resolution: The GENIUS Act and Waters draft provide priority in bankruptcy proceedings, but the Waters draft provides federal payment stablecoin regulators with the authority to appoint a receiver. The STABLE Act is silent on insolvency.

Why it matters: The total global cryptocurrency market capitalization stands at approximately $3 trillion as of March 2025. Proponents of stablecoins note they bridge traditional fiat currencies and the digital asset ecosystem, offering price stability and efficiency in transactions. They facilitate faster cross-border payments, enhance liquidity in cryptocurrency markets, and serve as a reliable medium of exchange for decentralized finance (DeFi) applications. However, the absence of clear federal regulation has led to concerns about consumer protection, financial stability, and potential abuses, such as money laundering and fraud.

Our take: Stablecoins have always been considered the lowest hanging fruit, but even in the new pro-crypto atmosphere, enacting a stablecoin framework is far from a done deal. Support from key Democrats in the Senate will improve the odds, but advancing any legislation in the current political environment and with small voting margins will be challenging. Other crypto efforts like the creation of a digital asset stockpile and concerns around memecoins could also detract from and complicate these efforts.

Trump announces U.S. crypto reserves

President Donald Trump issued an executive order to establish a Strategic Bitcoin Reserve, which aims to integrate digital assets into the national financial infrastructure and promote America's leadership in crypto innovation. The Reserve will be funded exclusively with bitcoin seized in criminal and civil forfeiture cases, which, according to a post by Crypto Czar David Sacks, will ensure taxpayers do not bear a financial burden. The order also creates a U.S. Digital Asset Stockpile, which will consist of digital assets other than bitcoin seized in criminal and civil forfeiture actions. Treasury is expected to report within 60 days on legal and investment considerations for managing these funds, including whether legislation is needed to operationalize management and administration of these accounts.

Ensuring the Reserve remains budget-neutral will address concerns that taxpayers will bear the financial burden for funding this initiative. However, policymakers may remain skeptical about its feasibility and potential impact on the economy, including raising questions about the confidence in the U.S. dollar as the world’s reserve currency. The initiative faces challenges in gaining congressional approval, with some lawmakers expressing skepticism. The proposal has sparked significant market activity, with cryptocurrency values experiencing volatility following the announcement.

Expanding retail access to private funds

The Carta Policy Team was happy to participate alongside a panel of experts to discuss efforts to expand retail access to private fund investments. The event, which was hosted by Kroll, Carta, and Goodwin Law, also covered the regulatory and compliance outlook for private fund managers under the new administration.

One topic that was discussed was expanding co-investment relief. The Investment Company Institute is pushing the SEC to approve a co-investment framework in order to provide more flexibility for retail investment products and permit greater access to private market investment opportunities.

Quick hits

• Treasury Secretary pushes back on regulatory consolidation: In the aftermath of cuts to the CFPB and proposals floated to reorganize and consolidate bank regulators, Treasury Secretary Bessent pushed back: “To be clear, this does not mean consolidation of agencies, but coordination via Treasury, such that our regulators work in parallel with each other and industry.” This is good news for Jonathan McKernan, who the Senate Banking Committee just voted to support to be director of the CFPB. The Secretary further noted he wants regulators focused on material risks rather than box checking.
• Trump directs agency leaders to, well, lead their agencies: This week President Trump told top members of his administration that Elon Musk was empowered to make recommendations to the departments but not to issue unilateral decisions on staffing and policy. Essentially, the head of the department or agency makes those decisions. Not clear how significant of a shift this will be for Musk and DOGE, but likely reflects the legal challenges to DOGE’s power, increasing unease among congressional Republicans about widespread cuts, and subtle resistance of Cabinet members as to DOGE’s influence over their agencies.
• Corporate Transparency Act halted for U.S. entities: The Treasury Department has announced it will not enforce the beneficial ownership filing requirements at this time. FinCEN plans to provide new guidance on compliance by March 21, 2025, but the administration has announced it does not plan to apply this requirement to any U.S. businesses or persons.
• HFSC passes slate of China-focused bills: The HFSC passed a number of bipartisan bills focused on countering security and economic threats posed by China, including safeguarding the financial system against fentanyl trafficking, mitigating risks in the Chinese financial system, and supporting Taiwan in international financial institutions. Notably, the Committee has not yet pursued legislation to restrict U.S. outbound investment in Chinese markets, which was a significant bipartisan legislative effort last Congress, though approaches varied.