12-03-2025 
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U.S. regulators insist stablecoin regulations are imminent, the Securities and Exchange Commission (SEC) says ditto for its digital asset ‘innovation exemptions,’ and Vanguard bent the knee for token-based exchange-traded funds (ETFs).
- Debanking report replays Choke Point 2.0 greatest hits
- House hearing shines light on stablecoin rulemaking progress
- SEC says innovation exemptions coming “in a month or so”
- CFTC okays spot crypto trades
- BTC gets boost from Vanguard’s 180° on crypto ETFs
On December 1, the House of Representatives Financial Services Committee issued a report titled Operation Choke Point 2.0: Biden’s Debanking of Digital Assets. The 53-page report focuses on the debanking of “at least 30 entities and individuals engaging in digital asset-related activities” that was allegedly perpetrated by the federal government under the administration of former President Joe Biden.
The report doesn’t break much new ground, nor does it contain any really explosive revelations (mirroring previous document disclosures of this type). But it has added fuel to recent claims by some prominent crypto figures that U.S. banks are once again closing accounts linked to digital asset operations.
The report claims the Biden administration “sought to make it nearly impossible to engage in digital asset-related activities” by failing to enact strict rules regarding blockchain-based activities. Regulators allegedly used this uncertainty to “exert substantial pressure on financial institutions—often through informal guidance, such as interagency statements or interpretive letters—to discourage these entities from engaging in digital asset-related activities.”
The report details the alleged antics of several federal agencies, including the Federal Deposit Insurance Corporation (FDIC), sending ‘pause’ letters to financial institutions, “effectively encouraging them to stop efforts to engage in digital asset-related activities.”
The Treasury Department’s Office of the Comptroller of the Currency (OCC) is said to have “layered on additional red tape,” including “requiring each supervised institution to receive a non-objection letter before engaging in digital asset activities.”
The SEC “refused to establish a clear, functional regulatory regime governing digital assets and used regulation by enforcement tactics” against blockchain operators, exceeding its statutory authority “on several occasions.”
The Federal Reserve’s board of governors “discouraged banks from engaging in digital asset-related activities through policy statements, supervision and regulation letters, and the creation of a Novel Activities Supervision Program.”
The GOP-crafted report praises President Donald Trump’s administration for having flipped this script by rescinding Biden-era rules, regulations, and instructions while “pursuing straightforward, commonsense regulation and ending debanking.” The report also gives Congress a pat on the back for ensuring that federal agencies “encourage innovation and ensure lawful businesses can thrive in America.” No word yet on when heads might appear on pikes, but watch this space.
House hearing shines light on stablecoin rulemaking
As if on cue, on Tuesday, representatives of both the FDIC and the Fed testified before the Financial Services Committee at a hearing on the Oversight of Prudential Regulators. FDIC chair Travis Hill stated the obvious in his prepared remarks, saying his agency has “taken a more open-minded approach with respect to banks that offer products and services related to digital assets.”
On a more tangible front, Hill stated that the FDIC has begun working on promulgating rules to implement the stablecoin-focused GENIUS Act, which Trump signed into law this summer. Hill says the FDIC expects to “issue a proposed rule to establish our application framework later this month and a proposed rule to implement the GENIUS Act’s prudential requirements for FDIC-supervised payment stablecoin issuers early next year.”
The FDIC is also working on implementing the recommendations of the 166-page report issued this summer by the President’s Working Group on Digital Assets, including the tokenization of assets and liabilities. Hill said the FDIC is “developing guidance to provide additional clarity with respect to the regulatory status of tokenized deposits.”
Also testifying Tuesday was Michelle Bowman, the Fed’s vice-chair for supervision, who said the Fed’s board of governors was “working with the other banking regulators to develop capital, liquidity, and diversification regulations for stablecoin issuers as required by the GENIUS Act.”
Bowman said the Fed also needed to “provide clarity in treatment on digital assets to ensure that the banking system is well placed to support digital asset activities.”
The hearing itself didn’t feature much blockchain content, but Rep. Stephen Lynch (D-MA), the Committee’s ranking member, pressed Bowman on her appearance last month at a banking conference during which she encouraged banks to “engage fully” with “cryptocurrencies.”
Lynch appeared to want to distinguish between ‘cryptocurrency’ and ‘digital assets,’ and to know whether Bowman was urging banks to involve themselves in “highly speculative” tokens. Bowman claimed she’d “misspoke” by using the C-word, noting that Congress had directed the Fed to provide “a pathway and a framework for banks to be able to engage … in digital assets,” with a specific focus on stablecoins.
Rep. Sean Casten (D-IL) singled out stablecoins and the ongoing yield/reward debate between banks and digital asset platforms. Casten asked Hill if the FDIC has any tools in place to monitor how much capital flight might occur if bank customers withdraw their deposits to seek higher yield from stablecoins. Hill said the FDIC was “paying a lot of attention” to the situation but said no one has any real idea of the impact stablecoins might have on bank deposits.
Rep. Bryan Steil (R-WI) sought assurance from the witnesses that they were moving heaven and earth to ensure that stablecoin regulations would get “done on time.” The GENIUS Act requires these rules to be finished by July 18, 2026, one year after it became law. Nonetheless, Steil related “instances across years in this committee where sometimes bills are passed [but] we don’t see the regulations come out on time.”
Kyle Hauptmann, chairman of the National Credit Union Administration (NCUA), said he and his fellow regulators are “fully committed” to meeting that July deadline. Hauptmann thanked Treasury Secretary Scott Bessent for his assistance in this matter, adding, “I think we’re on track.” Hauptmann said that the first set of regulations likely to emerge “will be the one on how to apply to be an issuer.”
The Committee has another hearing scheduled for Thursday, November 4, on ‘Innovation Revolution: How Technology is Shaping the Future of Finance.’ Invited witnesses include the CEOs of crypto custodian Anchorage Digital and the Stellar Development Foundation, which recently partnered with U.S. Bancorp (NASDAQ: USB) on a new dollar-denominated stablecoin.
SEC: Start your innovation engines!
Also trying to implement crypto-friendly rules before the holidays is the SEC, whose chair, Paul Atkins, gave a speech to the New York Stock Exchange on Tuesday titled “Revitalizing America’s Markets at 250.”
The speech celebrated America’s “long sweep of innovation” and its “willingness to tolerate and accept risks within a system that rewards those who take them.” But Atkins said “in recent years, our regulatory frameworks have veered from the founding ideals” and “rules have multiplied faster than the problems that they were intended to solve.” This is denying Americans their self-evident right “to innovate endlessly and restlessly.”Atkins later went on CNBC’s Squawk Box, where he was asked how this applies to digital assets. Atkins said the SEC was working with Congress “to make sure that they’re staying on, you know, what makes sense.” But Atkins said the SEC has “enough authority to drive forward” and said he hopes to have his promised ‘innovation exemption’ for digital asset operators “out in a month or so.”
Atkins said the SEC had hoped to debut these ‘get out of regulation free’ cards earlier, but its progress was “impeded a bit” by the 43-day federal government shutdown. Atkins said he was “looking forward to having rules that are focused on helping that sector of the economy move forward.”
A key area for Atkins is the tokenization of securities, having previously referred to it as ‘job one’ for the SEC. Robinhood Markets (NASDAQ: HOOD) began offering tokenized equities to its European customers this year, and Robinhood’s rivals—blockchain and non-blockchain alike—are looking to do the same stateside if given the chance.
On December 2, the Kraken digital asset exchange announced that it was acquiring Backed Finance AG, the company behind Kraken’s xStocks tokenized equities effort. Kraken says xStocks has surpassed $10 billion in combined exchange and on-chain trading volume since its launch six months ago.
Kraken will integrate Backed’s team and infrastructure into its own, while integrating xStocks “more deeply into its broader product suite—including Krak, its global money app—allowing customers to hold and spend in tokenized equities.”
On the other side of this divide, Matt Savarese, head of digital assets strategy at Nasdaq, told CNBC last week that the stock exchange’s plan is to “move as fast as we can” on tokenization once the SEC flashes the green light. Nasdaq wants to “bridge the digital asset world and the traditional world,” but “we want to do it in that responsible investor-led way first, under the SEC rules itself.”
Nasdaq submitted its tokenization proposal in September, seeking a rule change to “enable the trading of securities on the exchange in tokenized form.” Investors would be given the choice of trading securities in their conventional form or via a tokenized blockchain version. The filing suggested tokenized trading on the Nasdaq could get underway by the third quarter of 2026.
CFTC okays spot digital asset trading
Over at the Commodity Futures Trading Commission (CFTC), still more ground is being broken. Acting CFTC Chair Caroline Pham, who’s keeping the seat warm while Trump’s nominee Michael Selig awaits Senate confirmation, said last month that she was “pushing to launch leveraged spot crypto trading on U.S. exchanges—as early as next month.”
Enter Bitnomial, a Chicago-based derivatives exchange and a CFTC-approved designated contract market (DCM). On December 1, the company submitted for self-certification its plan to list a ‘Bitcoin US Dollar Spot’ (BTCUSD) contract for trading on or after December 3.
Bitnomial’s ability to self-certify these products was made possible by CFTC regs implemented last year that allow registered DCMs to implement new rules if they determine they comply with the Commodity Exchange Act.
Last month, Bitnomial filed notice of its intentions to update its rules to permit the listing of products like BTCUSD, a spot contract based on the price of 0.00001 BTC. The CFTC doesn’t appear to have voiced any objections; thus, Binomial’s new rules took effect last Friday, clearing the way for BTCUSD’s launch this week.
For the record, Congress has yet to officially authorize the CFTC’s oversight of spot commodity trades, whether leveraged or otherwise. But given the freewheeling regulatory climate, as well as the CFTC being assigned the principal oversight role in the digital asset market structure bills currently winding their way through Congress, don’t expect much pushback on Bitnomial’s presumptions. The only real question now is how soon other exchanges will seek to follow Bitnomial’s lead.
Vanguard bends the crypto ETF knee
The price of BTC and other prominent tokens nosedived on Monday but enjoyed a resurgence on Tuesday. It remains to be seen how long this reanimation will last, but there are a couple of clues as to why the slumping BTC got a boost. First, hopes are rising that the Fed will cut interest rates by another quarter-point at its December meeting next week.
Second, Bank of America (NASDAQ: BAC) announced that it’s now advising its wealth management clients to allocate 1-4% of their portfolios to digital assets. (Rival Morgan Stanley (NASDAQ: MS) advises allocating 2-4% to this “speculative but increasingly popular asset class,” while other rivals offer roughly similar guidance.) The bank’s analysts will also begin covering four BTC-based ETFs on January 5.
That brings us to reason #3, which is the mighty Vanguard investment group doing a complete 180° by allowing ‘crypto’ ETFs on its platform. The move comes nearly two years after a spokesperson for the world’s second-largest asset manager dismissed the idea, saying digital assets’ notoriously high volatility “runs counter to our goal of helping investors generate positive real returns over the long term.”
But Vanguard has since undergone a CEO switch that saw former BlackRock (NASDAQ: BLK) exec Salim Ramji take the reins. Ramji is a longtime blockchain fan who helped launch Blackrock’s IBIT ETF, which has emerged as the dominant crypto ETF with over $66 billion in net assets (and reportedly earns Blackrock more money than any other product).
Vanguard stated that it will now permit trading of “select third-party cryptocurrency ETFs and mutual funds through a Vanguard brokerage account—but we do not offer our own crypto products.” Vanguard will focus on ETFs based on prominent tokens like BTC, ETH, XRP and SOL, but memecoins remain off-limits.
Vanguard insists its “posture has not changed” and warns investors that investing in these ETFs “may involve significant risk.” However, many token-based ETFs “have been tested through periods of market volatility, performing as designed while maintaining liquidity; the administrative processes to service these types of funds have matured; and investor preferences continue to evolve.”
The question now is how many of Vanguard’s over 50 million brokerage customers will pile into the ETFs, and whether they’ll also pull funds from less direct BTC investment products like Michael Saylor’s Strategy (NASDAQ: MSTR). MSTR’s share price has fallen by more than one-half in the past six months and closed Tuesday at $181.33, ~60% off its all-time high of $456 in July.
Strategy holds over 650,000 BTC, making it the leading digital asset treasury firm, but its fortunes are looking more and more grim by the day. If you listen to Strategy, its mNAV (market cap vs. the value of the BTC it holds) is still above the crucial 1.0x mark. Less conflicted analysts put this figure at 0.90x, meaning all the MSTR shares in existence are worth less than the BTC in its vaults.
All of which means this is probably the absolute wrong time for MSTR to be buying a new corporate jet…
Watch | Cut Costs & Streamline Payments: The Case for Stablecoins
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