The DeFi Debrief

Week of May 12, 2025: Market Structure Discussion Draft; Senate Vote on Stablecoins; Congressional Hearings; Update in Samourai Wallet Case; Commissioner Peirce on Tokenization

House Committee Leadership Unveils Draft Market Structure Legislation 

On May 5, 2025, the House Financial Services Committee (HFSC) and House Agriculture Committee released draft legislation for digital asset market structure. The discussion draft legislation, introduced by House Ag Chairman G.T. Thompson (R-PA), HFSC Chairman French Hill (R-AR) Digital Assets Subcommittee Chair Bryan Steil (R-WI), and House Ag Digital Assets Subcommittee Chair Dusty Johnson (R-SD), aims to establish a regulatory framework for digital assets in the United States, including by defining key terms related to digital assets and blockchain, clarifying the application of securities and commodities laws to “digital commodity” transactions, establishing rules for intermediaries, and carving out certain DeFi activities from registration requirements.

The proposed framework defines terms such as “digital commodity” and “investment contract asset,” and introduces the concept of a “mature blockchain” with criteria to determine when a decentralized “blockchain system” is “mature.” Overall, the bill would increase the surface area of CFTC regulation related to digital assets while still maintaining SEC jurisdiction over capital raising transactions. For a section-by-section summary of the legislation, click here. And for a one page summary of the draft legislation, click here. 

DeFi Education Fund applauds the work of both Committees to establish clear rules of the road for the crypto industry. DEF will soon provide more detailed analysis and feedback on the legislation and its implications to DeFi. 

Senate Votes Against Proceeding on Stablecoin Legislation

Last week, the Senate voted on the motion to invoke cloture on the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which is the Senate’s version of a regulatory framework for payment stablecoins in the United States. The cloture vote failed 48-49. Cloture is a Senate procedure used to end debate and proceed to a floor vote on legislation, and requires 60 senators to successfully invoke. Not having sufficient votes, Senate Majority Leader John Thune (R-SD) changed his vote to “no,” utilizing a procedural rule that allows the bill to be brought back to the floor at a later date.

Notably, the GENIUS Act passed out of the Senate Banking Committee 18-6 on March 13, 2025, with all Committee Republicans and 6 Committee Democrats voting in support. The legislation is cosponsored by Senators Bill Hagerty (R-TN), Tim Scott (R-SC), Cynthia Lummis (R-WY), Angela Alsobrooks (D-MD), and Kirsten Gillibrand (D-NY). 

The events related to the cloture vote come in the wake of a statement by a group of Senate Democrats, led by Ranking Member of the Digital Assets Subcommittee, Ruben Gallego (D-AZ), opposing the GENIUS Act as written and citing concerns over gaps in anti-money laundering (AML), national security, and oversight of foreign issuers. The Senators did, however, express willingness to keep working toward a bipartisan stablecoin framework. Key Republicans, like Senator Josh Hawley (R-MO) also opposed the bill, citing concerns that the bill lacked sufficient safeguards to prevent major technology companies from issuing their own stablecoins. 

While the cloture vote was unsuccessful, it is important to remember that the vote was not on the legislation itself but rather on the motion to proceed. This means that the legislation could soon be brought back to the floor for a vote on the bill itself. We expect the Senate to continue negotiations over the coming weeks and maintain the bipartisan momentum behind digital assets in the United States.

DeFi Education Fund’s Executive Director and Chief Legal Officer, Amanda Tuminelli made an appearance on Unchained with Laura Shin and Kristin Smith to discuss the recent developments on stablecoin and market structure legislation, including a discussion about the cloture vote on the GENIUS Act. Amanda and Kristin both noted that despite the setback, progress remains within reach and the industry is motivated to support bipartisan action on digital assets in Congress. 

As Amanda and Kristin both underscored, it is essential that we speak up to support bipartisan collaboration on durable wins like stablecoins and market structure frameworks. Share your thoughts and support for legislation with your representatives: https://www.standwithcrypto.org. You can watch the full interview here. 

Secretary of the Treasury Testifies Before HFSC

On May 7, 2025, the House Committee on Financial Services held a hearing entitled “The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System,” in which Secretary of the Treasury, Scott Bessent, testified before the entire committee. During the hearing, Secretary Bessent said that “The US should be the premiere destination for digital assets… and create good market structure around that so that US best practices are used around the world.” Secretary Bessent went on to emphasize that the United States should be setting the pace for digital asset regulation around the world, seeing as they are “important sources of innovation that can drive usage of the US dollar around the world.” 

Senate Banking Committee Nomination Hearing for Key Government Positions

On Tuesday, May 6, 2025, the Senate Banking Committee held an executive session and advanced six Trump administration nominees to the full Senate for confirmation. The nominees approved in the vote included Michelle Bowman for Vice Chair of Supervision at the Federal Reserve and John Hurley, nominated for Under Secretary for Terrorism and Financial Crimes at the Department of Treasury. The nomination of John Hurley is particularly important as the Treasury’s Office of Terrorism and Financial Intelligence (“TFI”) polices certain aspects of the digital assets market. 

DeFi Education Fund congratulates the nominees and looks forward to working with them once confirmed on the Senate floor. 

Revelations in Samourai Wallet Prosecution

On May 5, 2025, defense counsel for the Samourai Wallet developers, Keonne Rodriguez and William Hill, revealed in a bombshell letter that in August 2023, officials at the Financial Crimes Enforcement Network (FinCEN)⸺the primary regulator for money services businesses⸺informed DOJ prosecutors that non-custodial software developers are likely not operating a money services business, or specifically, a money transmitter. As defense counsel explained, this was key Brady evidence that suggests the DOJ should not have charged the Samourai Wallet developers with violation 18 USC 1960, the statute related to operating an unlicensed money transmitting business.

Despite this FinCEN noted, the DOJ brought charges against Rodriguez and Hill, alleging that Samourai Wallet was in fact operating as an unlicensed money transmitter. The defense argues that this exculpatory information was withheld for over a year, only being disclosed on April 1, 2025, in response to a specific Brady request, which obliges the government to disclose evidence favorable to the defense. 

The DOJ’s actions have drawn criticism for potentially violating due process rights and for constituting “regulation by prosecution,” a term that refers to the practice of enforcing regulatory policies through criminal charges rather than clear regulatory frameworks. The case also appears to be in conflict with the DOJ’s own April 2025 memo that advises against prosecuting non-custodial software providers for registration violations. 

This development raises questions about the DOJ’s adherence to its own guidelines, inter-agency cooperation, and the fair application of justice in the rapidly growing digital asset space. 

For additional analysis on the DOJ’s case against Samourai Wallet, check out DeFi Education Fund’s paper entitled, “Prosecuting Privacy: Examining Samourai Wallet, Money Transmitters, and the Criminalization of Innovation” released in February by DEF’s Spencer Peek. 

SEC Commissioner Peirce Releases Statement Discussing Tokenization

On May 8, 2025, Securities and Exchange Commissioner (SEC) Hester Peirce, Head of the Crypto Task Force, delivered a speech at the SEC’s 31st International Institute for Securities Market Growth and Development entitled, “A Creative and Cooperative Balancing Act” in which the Commissioner intimated consideration for an exemptive order to allow firms to use blockchain technology to issue, trade, and settle securities. 

Commissioner Peirce discussed the SEC’s evolving approach to crypto, particularly the tokenization of traditional securities on blockchains. She proposed a potential conditional exemption that would allow firms to issue, trade, and settle securities on blockchain. She pointed out that such a solution would foster innovation while maintaining investor protection, and would draw inspiration from regulatory sandboxes in other jurisdictions that enable firms to experiment under controlled conditions. Finally, Commissioner Peirce called for international collaboration among regulators to facilitate cross-border innovation and reduce regulatory friction. 

DeFi Education Fund Hosts Capitol Hill Happy Hour

Last week, DeFi Education Fund hosted a happy hour on Capitol Hill. DEF distributed DeFi 101 materials and discussed decentralized finance with Hill staff. As always, if you would like to learn more about DeFi and digital assets policy, please reach out to max@defieducationfund.org. 

This week, the SEC Crypto Task Force will host a panel discussion on May 12, 2025 – “Tokenization - Moving Assets Onchain: Where TradFi and DeFi Meet”