April, May, August or never?

U.S. senators continue to wheel, deal, and appeal to advance their digital asset market structure legislation, while federal regulators are asking crypto operators if they just wanna write their own rules already.

On Tuesday, Senate Banking Committee chair Tim Scott (R-SC) was a guest on Day 1 of the Blockchain Summit 2026 in the District of Columbia, where he offered an update on efforts to restart the digital asset market structure legislative process that has been stalled for over two months now.

Scott said, “We have made a lot of progress over the last, probably 30 days or so.” Scott expressed gratitude that the White House was “getting involved” in this process, singling out White House crypto advisor Patrick Witt as “incredibly helpful.”

Scott also hailed the bipartisan tandem of Banking members Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) for “working on one of the most important issues that remains, uh, undone.”

That would be the ever-thorny question of whether the CLARITY Act should permit crypto operators like Coinbase (NASDAQ: COIN) to offer their customers ‘rewards’ for holding stablecoins on their platforms. That runs contrary to the wishes of America’s banks, who want the platforms subject to the same ‘yield’ prohibition that stablecoin issuers face under the GENIUS Act.

Addressing this impasse, Scott struck an optimistic tone, saying he believes that “this week we will have the first proposal in my hands to take a look at.”

On Wednesday, Politico quoted Tillis saying Committee members and stakeholders “could be in a good final position by next week” (emphasis added) on the rewards issue. Tillis said the negotiators have “made great progress with the White House. We’re vetting some of the changes. I think we’re very close.” Tillis said he and Alsobrooks were “in the final stages of negotiation” and, assuming all parties are bargaining in good faith, “it’s go time.”

On Day 2 of the Summit, Banking member Cynthia Lummis (R-WY) echoed Scott’s optimism regarding a potential yield/rewards resolution, saying “we think we’ve got it.” Lummis predicted that Banking would mark up CLARITY “in April … after the Easter recess.”

But Banking member Bernie Moreno (D-OH) sounded a more strident tone in his video address to Summit attendees, saying if CLARITY isn’t passed by May, “digital asset legislation will not pass for the foreseeable future.”

Meanwhile, TD Cowen analysts suggested this week that efforts to pass CLARITY actually have until August, when Congress takes its annual summer break. But Congress is in session for only 12 days in September and two days in October, leading TD Cowen to conclude that August is “the only deadline that matters.”

White House advisor Witt told Summit attendees that he remained “very hopeful that we are on the cusp of delivering a durable compromise” on yield/rewards. And while he acknowledged that this wasn’t CLARITY’s only unresolved issue, he said “We believe solving this issue will be a major domino to fall.”

Is there enough political grease for all these moving parts?

Speaking of those other dominoes, Scott claimed the committee was “making progress on all the other parts that we don’t hear about.” Scott claimed these other issues “seem to pale in comparison to the rewards issue,” but the committee is nonetheless intent on “nibbling away” at them.

Those would include the ‘quorum’ issue, aka ensuring minority party representation on government agencies like the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC), the two agencies that will handle most digital asset oversight.

The CFTC currently has only one sitting member on its usual five-member panel, while the SEC has three out of five. President Trump has shown zero indication that he’s interested in nominating anyone to fill these seats, let alone Democrats.

Another issue is whether CLARITY should enshrine legal protections for decentralized finance (DeFi) developers when their platforms are used for illicit purposes, something Scott said he was working with Sen. Mark Warner (D-VA) to resolve.

The Blockchain Regulatory Certainty Act (BRCA), a formerly standalone bill added to CLARITY in January, would offer DeFi devs protections. But many Banking Dems oppose this language, and even the GOP leaders of the Senate Judiciary Committee were irked by what they perceived to be Banking’s unwarranted infringement on their regulatory turf.

Also not helping: the at-times confusing stance of the Department of Justice (DoJ), which says it won’t charge a developer who “merely contributes code to an open-source project” while simultaneously pressing ahead with its criminal case against Tornado Cash developer Roman Storm.

On Wednesday, Lummis told the Summit audience that she thinks Banking has “got the DeFi issue put to bed.” Mind you, Lummis is a bit of a crypto cheerleader who not so long ago erroneously believed she and her colleagues had crafted language on the sensitive ‘ethics’ issue that the White House would find acceptable (spoiler alert: it did not).

That ‘ethics’ issue centers on Democrats’ efforts to add language to CLARITY that would prohibit elected officials and their families from profiting off crypto ventures, including those earning bank for President Trump and his family.

Scott said Tuesday that “I think we’re very close to landing the plane” on the ethics question. But the ethics optics got worse this week when the backers of the $TRUMP memecoin announced the second ‘buy $TRUMP and meet the president’ event coming this April.

Unlike last year’s dinner at a Trump golf course, this new ‘gala luncheon’ is promising an actual conference with 18 ‘superstars’ who have some apparent connection to the crypto sector. On Tuesday, we learned the identity of the first of these superstars, none other than Paolo Ardoino, CEO of stablecoin issuer Tether (USDT).

Tether and Trump have grown closer during his second stint as president, to the point that Ardoino was invited to the White House last summer to witness Trump sign the GENIUS Act into law. Tether is in a partnership with Wall Street financial services firm Cantor Fitzgerald (NASDAQ: ZCFITX), whose founder, Howard Lutnick, serves as Trump’s Commerce Secretary. Nope, no ethics issues here.

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CFTC, SEC lay out the new rules of the crypto road

In the end, it might not matter whether CLARITY makes it through Congress, given the pace with which the new leadership of the CFTC and SEC keep dismantling regulatory guardrails.

On March 17, the SEC issued a statement regarding its “interpretation clarifying how the federal securities laws apply to certain crypto assets and transactions involving crypto assets.” The CFTC issued its own statement joining this interpretation so that CFTC staff can “administer the Commodity Exchange Act consistent with the SEC’s interpretation.”

The 68-page interpretation includes the long-promised “coherent token taxonomy for digital commodities, digital collectibles [like non-fungible tokens], digital tools, stablecoins, and digital securities.” In keeping with statements over the past year by SEC chair Paul Atkins, none of the above are considered securities, with the exception of digital securities aka tokenized securities, which is a regular security “formatted as or represented by a crypto asset” with an ownership record maintained on a blockchain.

Helpfully, the SEC offered some examples of tokens that qualify as digital commodities, including: Aptos (APT); Avalanche (AVAX); BTC (BTC); BCH (BCH); Cardano (ADA); Chainlink (LINK); Dogecoin (DOGE); Ether (ETH); Hedera (HBAR); Litecoin (LTC); Polkadot (DOT); Shiba Inu (SHIB); Solana (SOL); Stellar (XLM); Tezos (XTZ); and XRP (XRP).

The SEC also explained how a non-security crypto asset can become subject to an investment contract, as well as how said asset may cease to be subject to an investment contract.

Basically, when an issuer offers an asset in a manner that ticks all the boxes of the Howey test, it becomes an investment contract. Conversely, when an issuer either fulfills its representations/promises or fails to satisfy those representations/promises, the asset ceases to be an investment contract.

Finally, the SEC says mining, staking, and wrapping of non-security crypto assets don’t represent offers/sales of securities, and airdrops don’t meet the Howey test’s definition of an ‘investment of money.’

Atkins said the interpretation draws “clear lines in clear terms” that “will provide market participants with a clear understanding of how the Commission treats crypto assets under federal securities laws.”

CFTC chair Michael Selig added that he and Atkins “are committed to fostering a regulatory environment that allows the crypto industry to flourish in the United States with clear and rational rules of the road.” The joint interpretation “reflects a shared commitment to developing workable, harmonized regulations for the new frontier of finance.”

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Forget regulatory capture, how about regulatory surrender?

Atkins also proposed a “fundraising exemption” under which entrepreneurs could raise up to (say) $75 million for a new offering during any 12-month period without the SEC getting involved. Atkins still wasn’t done, suggesting an “investment contract safe harbor” from the definition of ‘security’ for certain crypto assets after an issuer “permanently ceased all essential managerial efforts that the issuer represented or promised that it would engage in under the investment contract.”

Selig gave his own Summit speech in which he emphasized the goal of putting the Biden administration’s “’ecosystem’ theory of security status to bed, once and for all.” Selig vowed to work with market participants “to better understand how existing regulatory requirements apply, if at all, to the emerging technologies they build.” (Emphasis added.)

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SEC enforcement director quits

Under CLARITY, the commodity-focused CFTC is expected to bear the brunt of digital asset oversight. And with the SEC effectively declaring that there really aren’t many digital assets that fall under the SEC’s purview, it’s probably not a surprise that the director of the SEC’s division of enforcement announced her resignation on Monday, effective immediately.

Margaret Ryan, a former appeals court judge for the U.S. military, was named the SEC’s enforcement cop last August, despite a lack of experience as either a criminal prosecutor or securities law attorney. (Her lack of blockchain knowledge wasn’t a liability, given the SEC’s ongoing disinterest in pursuing litigation against crypto operators.)

Atkins praised Ryan for helping the SEC ‘reprioritize’ its enforcement efforts “with a focus on pursuing fraud.” Principal Deputy Director Sam Waldon has been named acting enforcement director, a role he previously held from January 2025 to Ryan’s arrival in August. A permanent successor is expected to be named “in the coming weeks.”

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Fairshake’s early midterms efforts a mixed bag

Ahead of Tuesday’s primary elections in the state of Illinois, the Coinbase-funded astroturf group Stand With Crypto (SwC) tweeted that “crypto is on the ballot.” If that’s the case, crypto lost, bigly.

Results from Tuesday showed Illinois Lt. Gov. Juliana Stratton defeating Rep. Raja Krishnamoorthi for the race to become the Democratic candidate for Senate come November’s midterm elections (a virtual lock in the solidly Democratic state).

The race to replace the retiring Sen. Dick Durbin was a costly affair, with the crypto-focused Fairshake political action committee (PAC) reportedly spending $10 million to defeat Stratton, who SwC assigned an ‘F’ rating for holding a ‘strongly against crypto’ stance.

During the campaign, Stratton called out the “MAGA-backed crypto bros” looking to defeat her. End Citizens United president Tiffany Muller said Stratton’s victory “proved that candidates who refuse corporate money can win in tough races when they run against corruption.”

In another losing cause, Fairshake spent $2.5 million on ads opposing state Rep. La Shawn Ford, who defeated Melissa Conyears-Earvin in the race to run for the House of Representatives’ 7th District seat left vacant by the retiring Danny Davis. Ford earned a ‘D’ rating (‘somewhat against crypto’) from SwC due to his vocal support of state-level legislation that imposes tougher consumer protections for crypto users than the federal government appears willing to impose.

Ford sent Fairshake a ‘cease and desist’ letter over their anti-Ford messaging, which the candidate said contained “false, misleading and defamatory statements.” Fairshake ads claimed Ford was “involved in a pattern of corruption” based on his pleading guilty to a misdemeanor tax charge in 2014.

Fairshake had a little more success in the House 2nd District, after spending $817,000 to defeat Robert Peters (who lost to the ‘A’ rated Donna Miller). In a remarkably irony-free fashion, Fairshake sent out mailers accusing Peters of being a “fighter for corporate interests.”

In the 8th District, Fairshake’s pro-Dem offshoot Protect Progress spent $557,000 in a successful bid to nominate the ‘A’ rated Democrat Melissa Bean. Fairshake also spent nearly $84,000 backing 13th District incumbent Nikki Budzinski, who easily won her race. In the 9th District, the ‘A’ rated Evanston Mayor Daniel Biss also came out on top, although it’s unclear whether the crypto PACs got involved.

While Fairshake’s Illinois successes may technically outnumber their failures, the amount of spending in those victories is dwarfed by the sums expended in the two losing races, including the all-important Senate seat.

It’s unclear if there are any larger lessons here that will extend to other races as we get closer to November, but Illinois voters appear to have expressed a distaste for crypto operators spending millions on campaign ads that attack candidates but never mention crypto.

Fairshake, whose primary financial contributors are Coinbase, XRP-issuer Ripple Labs, and the venture capital group Andreessen Horowitz (a16z) (NASDAQ: ZADIHX), reportedly has over $221 million left to spend on the midterm elections.

Earlier this month, the New York Times reported on the “winks and posts” candidates were using online to signal their embrace of digital assets to ensure themselves a cut of that sweet campaign cash. “Talk up innovation. Praise the blockchain. Hail the need for ‘clear’ rules and regulation.”

The Times notes that Conyears-Earvin’s campaign website cited the importance of ‘blockchain-based assets’ before getting around to ‘lower costs & better jobs.’

End Citizens United’s Muller told the Times that candidates’ websites no longer “tell voters what candidates believe. Now they are a signaling apparatus to the wealthy special interests … These industry-aligned super PACs are now having a huge role in deciding who can run, who can compete and who can win, and what they’re expecting on the back side is a return on investment.”

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Cross-border crypto scammers beware!

As noted above, Trump-era federal authorities have almost universally backed off crypto enforcement actions, with one notable exception: ‘pig butchering’ investment or romance scams (mostly) perpetrated by Southeast Asia-based organized crime groups.

On March 16, the U.S. Secret Service announced they’d teamed up with authorities in the U.K. and Canada to conduct Operation Atlantic, a joint initiative seeking to “disrupt organized fraud schemes, assist victims on how to secure assets to prevent further loss, recover stolen funds and raise public awareness about cryptocurrency investment scams.”

The U.K.’s National Crime Agency, the Ontario Provincial Police, and the Ontario Securities Commission (along with “private industry partners”) hope to identify victims of ‘approval fishing’ scams linked to digital assets.

Approval fishing involves scammers sending bogus pop-ups or alerts that appear to come from trusted sources asking a potential victim to ‘approve’ access to their digital wallet. Once access is granted, the wallet is drained and recourse is limited.

In related news, this week saw Canada’s Financial Transactions and Reports Analysis Centre (FINTRAC) announce a flurry of revocations of money services business (MSB) registrations suspected of illicit activity. Finance Minister François-Philippe Champagne said the revocations are intended to “address risks posed by virtual currency businesses, such as cryptocurrency MSBs and crypto ATMs, which can be used to facilitate money laundering and fraud.”

Among the operators targeted with revocation was ATM operator CoinMe, which recently settled with authorities in Washington State after violating the state’s Uniform Money Services Act. CoinMe also operates retail cash-to-crypto/crypto-to-cash businesses, the likes of which have previously been flagged by Canadian authorities as facilitating online scams.

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