Source: The Block

Original Title: 'Crypto Week' set to be pivotal moment for digital asset legislation: Here's what you need to know

Translation and Compilation: BitpushNews

This week, the U.S. House of Representatives is welcoming the highly anticipated "Crypto Week", where significant progress in digital asset legislation is expected.

Two key bills—the "GENIUS Act" concerning stablecoins and the Digital Asset Market Clarity Act (referred to as the "Clarity Act"—will enter the review stage, with the "GENIUS Act" potentially reaching President Donald Trump's desk for signing before the weekend.

GENIUS Act: Breakthrough in Stablecoin Regulation Imminent

The GENIUS Act has previously passed in the Senate, with its core contents including:

• Requiring stablecoins to be fully backed by U.S. dollars or similar high-liquidity assets.

• Mandating annual audits for stablecoin issuers with a market capitalization exceeding $50 billion.

• Establishing guidelines for foreign stablecoin issuers.

The bill is expected to be submitted to President Trump for signing before the weekend.

Clarity Act: Building a Comprehensive Crypto Regulatory Framework

In contrast, the Clarity Act takes a more comprehensive approach to cryptocurrency regulation, aiming to create a clear regulatory framework. The bill will clarify the regulatory responsibilities of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), and require digital asset companies to provide retail financial disclosures, as well as to separate company funds from customer funds.

Although the Clarity Act has not yet passed in the Senate, Republican senators have established principles and set a deadline of September 30 for legislative completion. Given the complexity of regulating the entire industry, the Clarity Act is seen as a more challenging legislative task.

Insiders have revealed that the House is expected to pass the Clarity Act on Wednesday and the GENIUS Act on Thursday. The House Rules Committee will decide the specific schedule and whether to allow amendments later on Monday, but substantial changes to the bills themselves are not anticipated.

Crypto advocacy organization Cedar Innovation Foundation stated that the Clarity Act represents "the most important vote that this Congress will undertake."

The organization stated: "We can no longer afford a patchwork of century-old regulations to protect consumers and govern the current foundational technology. It is time to establish clear and responsible rules for cryptocurrency to protect consumers, unleash the potential of American developers, and create good jobs at home."

Trump's Conflicts of Interest: Core Concerns of Democrats

During the review of the two bills, President Trump's connections to digital assets have become a focal point of concern for Democrats. Bloomberg estimates that the current president has profited approximately $620 million from his family's crypto projects, including World Liberty Financial's DeFi and stablecoin projects, as well as the issuance of TRUMP and MELANIA meme coins.

Last week, Democratic leaders of the House Financial Services Committee, Maxine Waters and Stephen Lynch, referred to "Crypto Week" as "Anti-Crypto Corruption Week" and stated their opposition to both bills.

Maxine Waters stated in a release on Friday: "In addition to the lack of urgently needed consumer protections and national security safeguards, these bills would make Congress an accomplice to Trump's unprecedented crypto scam—a scheme that enriches him, his entire family, and billionaire insiders in his cabinet while defrauding investors." House Democrats plan to hold a staff-level briefing on Monday at 3 PM ET to explain why these bills should be rejected.

Concerns have also been raised about the World Liberty Financial USD stablecoin operated by the Trump family, which, according to Bankrate, has become one of the largest stablecoins globally. A Democratic aide on the Senate Banking Committee told The Block that they expect the passage of the GENIUS Act to significantly boost the growth of this stablecoin.

The aide also noted that an executive order issued in February titled "Ensuring Accountability Across All Agencies" aims to strengthen the White House's control over independent financial regulatory agencies. The aide stated that under the GENIUS Act, these financial regulatory agencies would approve applications from stablecoin issuers, thereby giving the president control over the approval, ongoing regulation, and enforcement of financial products.

Jennifer Schulp, Director of Financial Regulation Studies at the libertarian think tank Cato Institute, stated that the best regulation establishes certain benchmarks that allow stablecoin issuers to obtain appropriate licenses, which the GENIUS Act accomplishes, but it also grants regulators discretion and includes provisions related to appeals to the judicial system.

In an interview with The Block, Jennifer Schulp noted that past Democratic efforts have tended to establish regulatory frameworks that grant regulators broad discretion. She added: "Regulatory discretion itself is a problem and does raise concerns that regulators may act in a manner that goes beyond merely enforcing the law—that's an issue. The GENIUS Act is not unbounded discretion, although it has more than I would like to see."

Clarity Act: Follow-up Concerns with the DeFi Industry

Jennifer Schulp indicated that the market structure bill is unlikely to pass quickly in the Senate, but the House Democrats' vote on the Clarity Act this week could influence discussions in the Senate.

She believes the key this week is how much support House Democrats can garner to convey bipartisan support for the Clarity Act to the Senate.

An insider revealed that the Senate may not start with the Clarity Act but may borrow some elements from it. The Senate version is more likely to be based on the work completed by Republican Senator Cynthia Lummis of Wyoming and Democratic Senator Kirsten Gillibrand of New York.

Some believe that the Clarity Act has significant issues in the DeFi space. An insider revealed that the DeFi industry is concerned about its position regarding federal preemption. According to the bill's content, centralized exchanges are required to register with federal agencies, and states must comply with federal laws, but there is a lack of the same federal preemption for decentralized exchanges (DEX), making them vulnerable to patchwork regulation and potential enforcement actions from state laws. The insider also noted that the DeFi industry has concerns about registration restrictions in a certain section of the Clarity Act.

Benchmark analyst Mark Palmer noted in a report on Monday that the Clarity Act "could stimulate widespread adoption of digital assets by institutional investors, including asset management firms, hedge funds, banks, and other financial entities that have long shied away from cryptocurrencies due to regulatory uncertainty." Palmer added: "The CLARITY Act will serve as a regulatory unlock, giving institutions confidence in the digital assets they can trade, custody, and hold."

Also the CBDC Bill

This week, the House will also review a bill led by Majority Whip and Minnesota Republican Congressman Tom Emmer, aimed at preventing the Federal Reserve from directly issuing central bank digital currency (CBDC) to individuals. CBDC is the digital form of legal tender, directly issued and regulated by a country's central bank. Some Republican lawmakers are staunchly opposed to CBDC, claiming it could open the door for government surveillance of citizens' transactions.

The Federal Reserve has been exploring the possibility of issuing a CBDC and released a report in 2022 examining the pros and cons of CBDCs, but central bank officials have previously poured cold water on the idea. Federal Reserve Chairman Jerome Powell has also stated that the Fed will not issue a CBDC without congressional approval.

Earlier this year, Treasury Secretary Scott Bessent also stated during his nomination hearing that he had "no reason" to believe the U.S. needs to issue a CBDC.

Investment bank TD Cowen analyst Jaret Seiberg noted in a report that the GENIUS, Clarity, and CBDC bills are all expected to pass with some support from Democrats. Jaret Seiberg stated: "If Republican leaders were not confident that Republican lawmakers would support these bills, they would not bring them to a vote. Moreover, at least some Democrats will see little value in being on the losing side of this legislative battle."

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