Casey Wagner

Democrats and Republicans hosted dueling roundtables with crypto industry executives on Wednesday in an effort to advance cryptocurrency market structure legislation.&nbsp;



More than three months after the House passed the CLARITY Act, the bill has yet to make meaningful progress in the Senate. According to people familiar with Wednesday’s discussions, both parties are pointing fingers.&nbsp;



Democrats, gathered by Sen. Kirsten Gillibrand on Wednesday morning, are growing frustrated with the crypto industry’s tendency to align itself with Republicans.&nbsp;



“Don’t be an arm of the Republican Party, they used you all and your megaphones to f*** us,” Democrat Sen. Ruben Gallego told industry members and fellow Democrats during the roundtable discussion, according to two people in attendance.&nbsp;



Senate Banking Committee Chair Sen. Tim Scott, who hosted fellow Republicans and industry voices Wednesday afternoon, disagreed, saying Republicans have been waiting for Democrats to come to the table.&nbsp;



“Despite repeated requests for edits and redlines from Democrats, they have yet to provide formal feedback or agree to a markup date,” a spokesperson for Sen. Scott told Blockworks.&nbsp;



The roundtables come after Senate Banking Committee Republicans released a <a href="https://www.banking.senate.gov/imo/media/doc/senate_banking_committee_digital_asset_market_structure_legislation_discussion_draft.pdf">second discussion draft</a> of the legislation last month. Democrats responded with a list of <a href="https://www.gallego.senate.gov/wp-content/uploads/2025/09/Market-Structure-Framework-Final.pdf">principles</a> they’d like to see in the legislation. An additional Democratic proposal focused on DeFi was <a href="https://docs.google.com/document/d/16Ws48Myk5E_iwaBrhjgZmxFUnhPG0KdQ/edit">leaked</a> earlier this month, furthering the divide between the two parties.&nbsp;



The industry’s public — and widely negative — response to this leaked document derailed negotiations between Democrats and Republicans, a person familiar with the matter told Blockworks. Democrats specifically warned industry members that the reaction thwarted the bill’s progress, the person added.&nbsp;



Committee Republicans originally wanted to markup the legislation in late September, but delayed “to give Democrat colleagues additional time to come to the table and substantively engage on legislative text,” the spokesperson added.&nbsp;&nbsp;



Republicans have not ruled out scheduling a markup amid the government shutdown, which has now entered its fourth week, a person familiar with the matter said.&nbsp;



Several Democrats are still concerned about President Trump and his family’s crypto business dealings, a person in attendance noted.&nbsp;



Coinbase CEO Brian Armstrong, who attended both the Democrat and Republican meetings, told reporters Wednesday that these ethical concerns are “much broader than crypto.”&nbsp;



The industry is still waiting on the Senate Agriculture Committee to release its market structure bill draft. This version of the legislation will focus primarily on the Commodity and Futures Trading Commission’s role in overseeing crypto markets.&nbsp;



The bill was “close” to the finish line before the government shutdown, a person familiar with the matter said, but with CFTC staffers who work with Congressional committees now furloughed, it’s unclear when progress could be made.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Capitol Gains

Capitol Gains: What’s the market structure holdup? Depends who you ask

The US government has <a href="https://blockworks.co/news/doj-seeks-forfeiture-of-more-than-14b-in-bitcoin-tied-to-global-fraud-ring">seized</a> nearly 130,000 BTC —&nbsp;worth almost $15 billion —&nbsp;marking the largest forfeiture action in history and spurring discussions of what this could mean for the newly-created strategic bitcoin reserves.&nbsp;



Experts warn that the road ahead is lengthy.&nbsp;



The actual seizure of the assets is only the first step, though. Should the court find that the assets were illicitly obtained, investigators will then have to go about finding and compensating victims.&nbsp;



“Yes, they&#8217;ve seized the assets, but that doesn&#8217;t mean they own it. It means they&#8217;ve laid a claim to it,” Aidan Larkin, co-founder and CEO of Asset Reality, said during a keynote address at DAS London Wednesday.&nbsp;



Larkin continued: “It could take five years, seven years, ten years. But the good news is there is a greater focus on asset management, because the next big concern is, historically, we don&#8217;t do well as a global society managing seized assets.”



Per President Trump’s March <a href="https://www.whitehouse.gov/presidential-actions/2025/03/establishment-of-the-strategic-bitcoin-reserve-and-united-states-digital-asset-stockpile/">executive order</a> establishing a strategic bitcoin reserve, it’s expected that whatever funds remain after victim compensation will be held by the US government.&nbsp;



The US government already holds between $15 billion and $20 billion in forfeited bitcoin, Treasury Secretary Scott Bessent said in August.&nbsp;



The process of asset recovery itself doesn’t differ much depending on the asset, Larkin said. For governments, recovering physical goods or cryptocurrencies comes with the same steps: find, recover and secure. The challenges with crypto asset recovery come with the management.&nbsp;



“If I&#8217;m the Lazarus group, and all of a sudden I&#8217;m seeing government agencies all around the world managing billions of dollars of seized crypto, I know where I&#8217;m going next to try and exploit,” Larkin said.&nbsp;



As part of the alleged money laundering scheme, the DOJ says Zhi and co-conspirators combined illicit funds with newly-mined bitcoin from their China-based mining operation, Lubian. During the time it was active, Lubian was the sixth-largest mining company in the world, prosecutors say.&nbsp;



Onchain sleuths are now speculating about when, exactly, the US government may have taken control of the seized bitcoin.&nbsp;



Blockchain analytics platform Arkham <a href="https://info.arkm.com/announcements/arkham-uncovers">reported</a> last month that Lubian was hacked in December 2020 for 127,426 BTC — worth $3.5 billion at the time.&nbsp;



Crypto data and compliance firm Elliptic now <a href="https://www.elliptic.co/blog/15-billion-us-seizure-reveals-prince-groups-connection-to-iran-china-bitcoin-mining-theft">says</a> that, according to the wallet addresses listed in the indictment, the assets the US government seized appear to be the same ones that were “stolen” from Lubian back in 2020.&nbsp;



According to a person familiar, it’s possible that the US government did seize the assets in 2020. This investigation may have only been recently announced, but it’s been underway for years, the person added.&nbsp;



Elliptic cofounder Tom Robinson agreed, telling <a href="https://www.wired.com/story/feds-seize-record-breaking-15-billion-in-bitcoin-from-alleged-scam-empire/">Wired</a> that it’s possible the US government itself hacked Lubian. He added that there’s also a chance that there was no hack at all, and Lubian faked it as part of the money laundering scheme.&nbsp;



The DOJ did not announce when it gained control over the assets or when the investigation started and did not return Blockworks’ request for comment.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Bitcoin

Capitol Gains: The US seized $15B in bitcoin. What comes next?

The Senate on Wednesday once again rejected both plans to fund the federal government and end the shutdown, which now enters its ninth day.&nbsp;



Senators have so far voted six separate times on partisan measures to extend funding.&nbsp;



Republicans, with 53 Senate seats, need eight Democrats to cross the aisle.&nbsp;



Without a budget, the crypto policy agenda remains in limbo, but Washington insiders insist that momentum isn’t completely lost.&nbsp;



While the House remains in a shutdown-induced recess, the Senate appears to be in session for both budgetary and crypto matters.



Two people familiar with the matter told Blockworks that the Senate Banking Committee remains committed to moving crypto market structure policy along, even if that means holding a markup hearing mid-shutdown. Regardless of whether a budget is passed, Committee leadership hopes to markup the Responsible Financial Innovation Act before the end of the month, they added.



To recap, the House passed the CLARITY Act in July. The Senate Banking and Agriculture Committees have since been working on their own versions of the bill, which will eventually have to merge with each other and CLARITY.



Senate Banking Committee Republicans released a revamped version of their bill last month. Democrats responded with a list of principles they’d like to see in the legislation.&nbsp;



The Agriculture Committee has yet to release its draft, which will focus mainly on the Commodity and Futures Trading Commission’s role in crypto market regulation.&nbsp;



Pre-shutdown, a person familiar with the matter said the draft bill was “close,” but now, with federal agencies operating with limited staff, it’s going to take <a href="https://blockworks.co/news/etf-sec-govt-shutdown">more time</a>.&nbsp;



Agency staffers working with Congressional committees on policy — like cryptocurrency market structure — are largely furloughed during the shutdown, lowering the odds that we’ll see a draft soon, according to a person familiar.&nbsp;



With federal agencies operating with limited personnel, new spot crypto ETFs are not expected to be approved until the shutdown ends. In its shutdown operations plan, the SEC said it will <a href="https://blockworks.co/news/capitol-gains-shutdown-blues">not review or approve</a> registration statements or issue notices of effectiveness.&nbsp;



Given the SEC’s new generic listing standards and the extensive work issuers and agency staff put in ahead of the shutdown, two issuers who spoke with Blockworks said they are confident that new products will get the green light quickly after federal operations resume.&nbsp;



The issuers added that they have not received communication from the SEC since the shutdown began last week.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Capitol Gains: Crypto hearings expected to continue mid-shutdown

As the US government shutdown enters its second day, the crypto industry is left wondering how the closure will impact pending regulatory matters.



Currently in limbo: the crypto market structure bill, the status of GENIUS Act policies, and the timeline for approving certain spot crypto ETFs.



<h2 class="wp-block-heading">Spot crypto ETFs&nbsp;</h2>



Perhaps the most direct impact the government shutdown is expected to have on the crypto industry is that new spot crypto ETFs will be delayed.&nbsp;



The Securities and Exchange Commission <a href="https://www.sec.gov/files/sec-plan-operations-during-lapse-appropriations.pdf">said</a> that during the shutdown, staff will not review or approve registration statements or issue notices of effectiveness.&nbsp;



An “extremely limited number” of SEC staff will be monitoring emergency email addresses and phone lines for each commission division, the guidance added. An &#8220;emergency” would be anything that immediately threatens market stability, personal safety or property protection.&nbsp;



One crypto ETF issuer told Blockworks that prior to the shutdown, they were feeling confident about listing on Monday, Oct. 6.&nbsp;



But now things are up in the air.



<h2 class="wp-block-heading">Crypto market structure bill&nbsp;</h2>



Despite the shutdown, members of the Senate Banking Committee plan to work on the market structure bill that is due for a markup, according to a person familiar with the matter.&nbsp;



Lawmakers originally wanted to hold a markup hearing for the Responsible Financial Innovation Act of 2025 at the end of September, Blockworks <a href="https://blockworks.co/news/senate-september-market-structure-bill">previously reported</a>, but the failure to pass an appropriations bill delayed this timeline.&nbsp;



Senate Banking Committee Republicans in September finalized the bill draft, expanding upon the House’s CLARITY Act, which passed in July.&nbsp;



The industry is still waiting for the Senate Agriculture Committee — which oversees the Commodity Futures Trading Commission — to release its version of a market structure bill.&nbsp;



A person familiar with the matter told Blockworks ahead of the shutdown that the Agriculture Committee’s draft was “close” but market structure legislation is proving to be more complicated than stablecoin rules.&nbsp;&nbsp;



Should the Senate Banking Committee move forward with a market structure bill markup mid-shutdown, they wouldn’t be the only Committee proceeding with crypto business as scheduled.&nbsp;



On Wednesday, in the first hours of the shutdown, the Senate Finance Committee held a hearing on crypto tax policy.&nbsp;



In his opening remarks, ranking member Sen. Ron Wyden said that while cryptocurrency taxation is an important issue Senators need to “get right,” holding the hearing yesterday showed a “warped sense of priorities.”&nbsp;



Senate Finance Committee Chairman Mike Crapo said the budget debate will continue, but updating the tax code should be a primary concern for lawmakers.&nbsp;



“Without clear tax rules, taxpayers are left with many unanswered questions and individuals, businesses and our country’s finances bear the burden,” Crapo said. “Lingering tax uncertainty also makes the U.S. a less attractive place to do business and invest, and hurts tax compliance.



<h2 class="wp-block-heading">GENIUS Act&nbsp;</h2>



Stablecoin legislation, as it turns out, may not be as straightforward as lawmakers originally believed.&nbsp;



The GENIUS Act became law in July, but that was only step one. The bill lays out a general framework, but it delegates responsibilities to federal and state regulators, who are now tasked with writing and issuing new rules. These include licensing requirements, enforcement processes, AML procedures, etc.&nbsp;



It’s going to take a long time, and we knew that prior to the shutdown, but with agencies currently operating with skeleton crews, designing stablecoin policy is not a top priority.&nbsp;



Plus, the lobbying around stablecoin legislation didn’t stop when President Trump signed the GENIUS Act. Big banks and crypto companies — mostly exchanges — are still at odds over rules surrounding stablecoin yields, and both sides are prepared for an expensive fight, according to a person familiar.&nbsp;



The GENIUS Act stipulates that no stablecoin issuers can offer any yield or interest on holdings. It prohibits issues from offering yields directly, but does not block exchanges, or “affiliates,” from doing so.&nbsp;



Banks weren’t happy about this language, but the crypto industry, especially Coinbase, was.&nbsp;



Back in March, when GENIUS Act negotiations were underway, Coinbase CEO Brian Armstrong emphasized the need for allowing interest payments on stablecoins.&nbsp;“We can choose to level the playing field and ensure these laws pave a way for all regulated stablecoins to deliver interest directly to consumers, the same way a savings or checking account can,” Armstrong wrote in a <a href="https://x.com/brian_armstrong/article/1906723887112401179">post</a> on X.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Capitol Gains

Newsletter

Blockworks Research