12-12-2025 
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United States digital asset market structure legislation remains a bipartisan slapfight, Do Kwon finally faced justice, and Caroline Pham wants to make this the best crypto Christmas ever.
- Dems’ response to GOP market structure offer
- Clock ticking, hopes fading
- Do Kwon faces the music, hears sour note
- OCC debanking report says something happened
- All the CFTC wants for Christmas is no more crypto rules
- SEC hosting financial privacy roundtable
- SEC’s outgoing commish Crenshaw plays crypto Cassandra
Late last week, the Republican leaders of the Senate Banking Committee sent their Democratic colleagues a ‘comprehensive offer chart.’ The chart detailed 38 aspects of the GOP-authored Responsible Financial Innovation Act (RFIA) that the GOP was willing to compromise on, and the 32 aspects on which the GOP expects the Dems to give a little reciprocal ground.
On Wednesday, Politico published the response the Dems sent the GOP, and it suggests that the parties remain a long way from consensus. The Dems claim they “have accepted significant portions of RFIA—including meaningful concessions on major elements like token classification—in an effort to meet Republicans where they are. However, despite these substantial compromises, the offer Republicans sent on December 4th still fails to meet the core principles Democrats released in September.”
The Dems claim their counteroffer “would accept the vast majority of RFIA, either wholesale or with targeted edits, in exchange for a limited set of good-governance, consumer protection, and anti-terrorist financing safeguards.”
These safeguards include a desire for “continued disclosure requirements” around token projects in which founders continue to exert managerial control, “reasonable limitations on fundraising through exempt digital asset sales,” and investor protections in secondary markets.
One of the principal sticking points remains decentralized finance (DeFi) protocols and the developers behind them. Dems want to close “terrorist and illicit finance loopholes” and “effectively isolate” platforms used by bad actors from the U.S. financial system. Another ask is for “tools to prevent bad actors from using sham or false ‘decentralization’ to bypass requirements under the Bank Secrecy Act and sanctions guardrails, while preserving protections for legitimate decentralized software development.”
The ’ethics’ and ‘quorum’ sticking points remain, with Dems insisting on “limits on elected officials and their families from issuing, endorsing, or profiting from digital assets while in office.” The Dems similarly insist on ensuring bipartisan representation in federal agencies by putting an end to President Trump “firing countless Democratic commissioners for political purposes.”
Finally, the Dems want to preserve “the intent of the GENIUS Act” by applying its prohibition on stablecoin issuers offering ‘yield/interest’ to token holders. The Dems appear to be taking the side of traditional banks by extending this prohibition to “intermediaries and affiliate relationships,” like Coinbase (NASDAQ: COIN) offering ‘rewards’ to customers holding stablecoins on the digital asset exchange.
Tick, tick, tick… no boom?
Bipartisan market structure talks were reportedly scheduled on Capitol Hill on Thursday. But with this much left to be debated and just six sitting days on the Congressional calendar before the holiday break, it will be a proper Christmas miracle if Banking is able to hold an RFIA markup session next week as desired by committee chair Tim Scott (R-SC).
Committee member Catherine Cortez Masto (D-NV) told Politico “we’re not ready for” a markup session. “We’ve still got to work through illicit activity, money laundering issues that need to be addressed.” Mark Warner (D-VA) noted that there remain “wide swaths where we don’t have agreement—even any language.”
Warner is referring to the ethics/quorum language, which the White House has yet to sign off on. Sen. Cynthia Lummis (R-WY) said this week that the White House balked at language proposed by Republicans on the committee, but they planned to keep giving it the old college try until they found something on which Trump and his family’s numerous profitable crypto ventures could agree.
Scott’s spokesperson issued a statement saying he “remains committed to a bipartisan path forward, but progress requires coming to a compromise on legislative text, not press statements or shifting objections.” Earlier this week, Politico called the market structure impasse “the biggest test of [Scott’s] legislative career.”
An unidentified GOP member of the House of Representatives Financial Services Committee said Scott’s other role as the chair of the Senate’s GOP campaign arm “has caused probably more speedbumps in all of this than anything. ‘I need to work with you, but I’m trying to beat the shit out of you’—that just structurally creates problems.”
With a GOP majority on the committee, Scott could probably hold a markup session and pass the RFIA draft as is, but the bill will need significant Dem support when it hits the Senate floor for a final vote. Proceeding in a purely partisan fashion now could make soliciting Dem support later more difficult.
But retired Rep. Patrick McHenry (R-NC), who was a prime mover for digital asset legislation in the previous Congress, told Politico that Scott might be better off foregoing bipartisan consensus. “There is wider support [among Democrats] on the Senate floor than in committee. Messy now leads to a better vote on the Senate floor.”
On Wednesday, The Hill quoted an unidentified industry source saying “there’s 48 hours realistically to see if this is going to move next week.” But regardless of how the Banking drama plays out, the Senate Agriculture Committee has yet to achieve consensus among its members on their version of a market structure bill.
On Tuesday, Bloomberg quoted Ag chair John Boozman (R-AR) saying there were still “difficult things to iron out” between the committee members. Boozman didn’t completely eliminate the possibility that a miracle might occur, but suggested 2026 was a far better bet for market structure markups.
Do Kwon gets 15 years
On December 11, Do Kwon was sentenced to 15 years in prison for his role in the downfall of Terraform Labs, the collapse of which in mid-2022 helped set in motion a series of bankruptcies that resulted in the long ‘crypto winter’ that followed.
In August, Kwon appeared in the U.S. District Court for the Southern District of New York, where he pleaded guilty to two counts of wire fraud and conspiracy to defraud. That plea followed years of jurisdictional squabbling between authorities in the U.S., South Korea, and Montenegro, where Kwon was arrested in March 2023 while traveling under a false passport.
U.S. District Judge Paul Engelmayer rejected Kwon’s attorneys’ recommendation for a five-year sentence as “so implausible it would require appellate reversal.” Engelmayer similarly rejected prosecutors’ request for a 12-year stint as “unreasonably lenient” given the $40 billion in losses that Kwon’s failed crypto effort inflicted on its customers. Engelmayer told Kwon that if it wasn’t for him changing his plea to guilty, his sentence “would have been higher.”
Kwon will receive credit against his prison term for both the 17 months he spent in pre-extradition custody in Montenegro as well as the time he’s spent in U.S. custody. Kwon also agreed to forfeit $19 million, but that’s a drop in the bucket compared to the damage he inflicted (and the hundreds of millions of dollars he misappropriated before the collapse).
Terraform went under when its ‘algorithmic stablecoin’ UST failed to hold its 1:1 peg with the U.S. dollar. UST’s value was supposed to be supported by Terraform’s other token LUNA, but both tokens were, in reality, propped up by behind-the-scenes machinations by Kwon and the Terra team. This complex criminal juggling act ultimately failed, sparking other collapses in the overly incestuous crypto ecosystem.
In a pre-sentencing statement, Kwon said “blame should be pointed at me for everyone’s suffering.” In a letter to the court last month, Kwon said that “looking back, I cannot comprehend my own hubris, and wish I had not silenced the warnings. I am sorry.”
This is a significant reversal of his pre-arrest outlook, detailed in a recorded conversation from August 2022 in which Kwon stated his strategy for dealing with law enforcement was to “tell them to fuck off.” Kwon also stated at the time that he was talking to several countries about obtaining “political protection” to avoid extradition.
Prosecutors said they won’t oppose Kwon serving the second half of his U.S. sentence in his native South Korea, where he faces additional charges that carry the possibility of a 40-year sentence. Around 200,000 South Koreans—roughly one-fifth of all Terra investors—reportedly lost money when Terra imploded, so Kwon isn’t likely to find much sympathy in his home country.
Debanking: more sorta/kinda/maybe evidence emerges
On December 10, the U.S. Treasury Department’s Office of the Comptroller of the Currency (OCC) issued the preliminary findings of its review of the alleged ‘debanking activities’ by America’s nine largest banks. The probe sought to learn whether these banks “debanked or discriminated against customers or potential customers on the basis of their political or religious beliefs or lawful business activities.”
The digital asset sector’s louder voices have long considered themselves the victims of Operation Choke Point 2.0, the alleged Biden-era effort to deny crypto operators/founders access to banking services. Actual evidence of this campaign has so far been threadbare, pointing instead to banks reasonably questioning whether they want to associate with some of crypto’s sketchier practices and personalities.
The OCC report claims “many” financial institutions “placed restrictions on banking digital asset activities, including on issuers, exchanges, or administrators, often attributed to financial crime considerations.”For the time being, that’s about the extent of the revelations the OCC is willing to make public, but the OCC says it’s “continuing its work to better understand the full extent and effects of these actions.” The OCC “intends to hold these banks accountable for any unlawful debanking activities, including by making referrals to the Attorney General as required by EO 14331.”
On December 7, JPMorgan Chase (NASDAQ: JPM) CEO Jamie Dimon spoke to Fox News and was asked about claims by (among others) Devin Nunes, CEO of Trump Media & Technology Group (TMTG) (NASDAQ: DJT), that JPM had debanked the president’s firm before he returned to the White House. (Florida’s attorney general recently opened a probe into JPM re the alleged TMTG debanking.)
An exasperated Dimon said “people have to grow up here, okay? Stop making up things.” Dimon clarified that JPM doesn’t “debank people for religious or political affiliations … we debank people who are Republicans, Democrats, religious people … we’re subpoenaed. We’re required by court to give it to the government.”
Dimon added that he “want[s] to change these rules. I actually applaud the Trump administration who’s trying to say debanking’s bad and we should change the rules … so let’s take a deep breath and fix the problem as opposed to blame someone who’s put in that position.”
CFTC names CEO Council, finds more rules to dismantle
On December 10, Commodity Futures Trading Commission (CFTC) acting chair Caroline Pham revealed the names of the individuals who’ll sit on the CFTC’s new CEO Innovation Council. Pham floated the idea for the Council last month, claiming it is “critical that the CFTC drives public engagement with the support of expert industry leaders and visionaries who are building the future.”
The Council will feature a mix of tradfi, digital asset and crypto-adjacent operators. Representing crypto are Bitnomial CEO Luke Hoersten, Bullish Global (NASDAQ: BLSH) CEO Tom Farley, Crypto.com CEO Kris Marszalek, Gemini (NASDAQ: GEMI) CEO Tyler Winklevoss, and Kraken co-CEO Arjun Sethi.
Also on board are the CEOs of prediction markets Kalshi (Tarek Mansour) and Polymarket (Shayne Coplan), while the tradfi sector is represented by the CEOs of Cboe Global Markets, CME Group, Intercontinental Exchange, London Stock Exchange Group and Nasdaq.
On December 11, the CFTC announced that it was “withdrawing outdated guidance related to actual delivery of ‘virtual currencies,’ given the substantial developments in crypto asset markets.” The withdrawal is part of the CFTC’s effort to follow the recommendations in the voluminous report issued this summer by the President’s Working Group on Digital Assets.
Pham said “eliminating outdated and overly complex guidance that penalizes the crypto industry and stifles innovation is exactly what the Administration has set out to do this year.” The CFTC said it will consider whether it’s “appropriate” to issue updated guidance or FAQs.
Meanwhile, the CFTC approved Gemini’s bid to launch its own prediction market. Gemini first applied for a CFTC-designated contract market (DCM) license five years ago, then reapplied earlier this year. The company said Wednesday that the approval marked “the beginning of a new chapter for Gemini” following the end of the (alleged) “Biden Administration’s War on Crypto.”
Gemini said its initial DCM focus will be on “event contracts that are simple yes or no questions on future events.” Down the road, Gemini will “explore” offering “crypto futures, options, and perpetual contracts or perps.”
Gemini’s shares had been on a relentlessly downward trajectory since the company’s September listing on the Nasdaq exchange, when the shares briefly peaked over $32. The shares fell below $10 earlier this month, but the CFTC news has (for the moment) pushed the price up to ~$15.
The CFTC also issued a no-action letter to another CFTC-regulated DCM, Small Exchange Inc. The CFTC’s dormancy framework prohibits DCMs from going 365 days without engaging in trading, something Small Exchange hasn’t done since January 10, 2025. But in October, Small Exchange was acquired by Kraken, and so Small Exchange requested a reset of the 365-day period, which the CFTC has now granted.
Finally, the CFTC announced that it was taking “a no-action position regarding swap data reporting and recordkeeping regulations.” The position came in response to requests from some of its registered DCMs, including Polymarket, PredictIt, and LedgerX.
This position means the CFTC won’t take any enforcement actions against DCMs “or their participants for failure to comply with certain swap-related recordkeeping requirements and for failure to report to swap data repositories data associated with binary option transactions.”
The CFTC added that the letters apply “only in narrow circumstances and are comparable to no-action letters issued for other similarly situated designated contract markets and derivatives clearing organizations.” The CFTC will still require DCMs to fully collateralize contract positions, clear contracts through their specified platforms, promptly publish post-execution contract data on their websites, and preserve data for possible CFTC inspection.
SEC preps financial privacy roundtable
The Securities and Exchange Commission (SEC) raised some eyebrows last week when it announced the agenda and panelists for its Roundtable on Financial Surveillance and Privacy on December 15. (The roundtable will be livestreamed on the SEC website starting at 1pm ET.)
The SEC announcement contains the standard disclaimer that an invitation to the roundtable “does not serve as an endorsement of the project or any affiliate(s) of the project.” That would seem doubly appropriate on this occasion, given that one of the invited guests is Zooko Wilcox, founder of the Zcash (ZEC) privacy token.
ZEC and other privacy coins have occasionally struggled to maintain their presence on centralized exchanges due to their popularity with bad actors seeking to avoid regulators and law enforcement. Gemini recently launched a ZEC-focused digital asset treasury firm based on Tyler Winklevoss’s view that “if bitcoin is digital gold, Zcash is encrypted bitcoin, or digital cash. One is your store of value, the other is how you privately move your value.”
Also participating on the privacy panel will be Koh Harada, CEO of the privacy-focused Aleo Network, which recently partnered with Circle (NASDAQ: CRCL) on USDCx, a private and programmable version of Circle’s USDC stablecoin. Unlike ZEC, each USDCx transaction will generate a ‘compliance record,’ making USDCx more akin to what Aleo co-founder Howard Wu called “banking-level privacy, as opposed to ‘privacy privacy.’”
Execs from decentralized ID system SpruceID (which has partnered with the Department of Homeland Security for cross-border ID processing), and Espresso Systems (which uses zero-knowledge proofs (ZKPs) to help Web3 developers incorporate configurable privacy into their apps) will also be in attendance.
With the market structure legislation’s approach to DeFi devs’ legal liabilities very much up in the air, expect the panel to mount a vigorous defense of the right to privacy and the right to not be held responsible for how others might use privacy tools. The multi-year prison sentences imposed last month on the founders of the Samourai Wallet coin-mixing service are likely weighing heavily on the minds of the execs behind other privacy-focused projects.
Controversy aside, SEC commissioner Hester Peirce said, “new technologies give us a fresh opportunity to recalibrate financial surveillance measures to ensure the protection of our nation and the liberties that make America unique. I look forward to this chance for the SEC, other federal regulators, and the public to learn from the roundtable participants about how these new tools work.”
Exiting SEC commish: ‘You’re on your own, God help you’
Meanwhile, outgoing SEC commissioner Caroline Crenshaw is continuing her exit warnings about the regulator’s relentless deregulatory push and what that might produce in the years to come. Speaking at the Brookings Institution on Thursday, Crenshaw mused that “it’s been unsettling to see how precipitously one commission is willing to undo the work of the commission that came before it.”
While her comments weren’t solely focused on the digital asset sector, Crenshaw said regulatory protections are “under attack. Instead of safeguarding our markets for investors to fund their retirements in safe and sustainable ways, we are moving in a direction where markets start to look like casinos. The problem with casinos, of course, is that in the long run, the house always wins.”
“The appetite to deregulate has been rapacious. The analysis of the costs and benefits of our policies has been nonexistent. And the repercussions, I would argue, could be dire.”
Crenshaw said people “invest in crypto because they see some others getting rich overnight. Less visible are the more common stories of people losing their shirts.” Crypto investors are “speculating, reacting to hysteria from promoters, feeding a desire to gamble, wash trading to push up prices, or, as one Nobel laureate has posited, ‘betting on the popularity of the politicians who support or stand to benefit personally from the success of crypto.’”
When it came time for the Q&A, a Brookings rep noted that crypto was “the number-one source of questions” submitted in advance from the online audience. One question focused on SEC chair Paul Atkins’ plan to release a ‘token taxonomy’ detailing the types of tokens the SEC has no interest in regulating.
Crenshaw said she worried that if the SEC just continues to issue “more guidance … where we say [tokens] are not securities, where we loosen the basic fundamentals of the securities laws so that [digital assets] can operate in our system but without any of the guardrails that we have in place. I do worry that that can lead to more significant market contagion.”
Crenshaw is the SEC’s sole remaining Democratic appointee, and while ensuring bipartisan representation on federal agencies is one of the Dems’ market structure bargaining chips, Trump appears uneager to support any minority party presence that might present obstacles to his deregulatory goals.
Crenshaw expressed regret that, in the final year of her tenure, “my voice has become one of ubiquitous dissent.” Crenshaw appears to want to go on the record with her views, which, if correct, will have future generations viewing these speeches much like former CFTC chair Brooksley Born’s unheeded warnings ahead of the 2008 economic meltdown. The one thing you won’t be able to say is that you weren’t told in advance.
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