DSG FINTECH UPDATE — AUGUST 2025
UNITED STATES
CFTC Considers Allowing Spot Crypto Trading on Registered Futures Exchanges: On August 4, Acting Commodity Futures Trading Commission (CFTC) Chairman Caroline Pham said the CFTC wants stakeholders to work with it to provide regulatory clarity on listing spot crypto asset contracts on registered DCMs. The CFTC is considering allowing spot crypto asset contracts to be listed on registered futures exchanges, launching a “listed spot crypto trading initiative” in response to President Trump’s Digital Asset Working Group report and in coordination with the SEC’s “Project Crypto,” alongside broader congressional market structure legislation. More here, and the CFTC’s press release is available here.
President Trump Signs Executive Order Letting Crypto into 401(k) Retirement Plans: On August 7, President Trump signed an executive order to allow crypto investments in 401(k) retirement plans. The order directs the Department of Labor and Securities and Exchange Commission (SEC) to go through rulemaking processes to revise guidance for retirement accounts. While it was never technically prohibited to add crypto to a retirement plan, the Department of Labor previously put out guidance for fiduciaries to “exercise extreme care before they consider adding a cryptocurrency option to a 401(k) plan’s investment menu for plan participants.” In May, that guidance was fully rescinded. More here, and the White House’s fact sheet is available here.
President Trump Signs Executive Order on Financial Institutions ‘Debanking’: On August 7, President Trump signed an executive order prohibiting “politicized or unlawful debanking,” directing federal regulators to remove “reputational risk” from supervisory guidance, review institutions for past or current debanking practices, impose fines or consent decrees where appropriate, and refer religion-based cases to the Attorney General. The order also requires the Small Business Administration (SBA) to reinstate clients previously denied services and instructs the Treasury Department to develop a broader anti-debanking strategy following allegations about “Operation ChokePoint 2.0.” More here, and the White House’s fact sheet is available here.
Director Hines of the White House Crypto Council Steps Down: On August 9, Bo Hines, the Executive Director of President Trump’s White House Crypto Council, announced he is stepping down to rejoin the private sector. Hines was appointed by the President in December 2024. On August 19, Tether announced that Hines will serve as its Strategic Advisor for Digital Assets and U.S. Strategy, effective immediately. More here and here.
Senate Banking Committee Ranking Member Signals Opposition to the CLARITY Act: On August 10, Senator Warren (D-MA) signaled Democratic opposition to the Digital Asset Market Structure Clarity (CLARITY) Act, stating in a MSNBC interview that crypto regulation should curb corruption rather than be shaped by the industry. The CLARITY Act, passed in the House with bipartisan support in July, is expected to be considered by the Senate in September, with Republican leaders aiming for passage by September 30. More here.
Treasury Secretary Bessent Clarifies Still Exploring Bitcoin Purchases for Strategic Reserve: On August 14, Treasury Secretary Bessent said Treasury is continuing to explore “budget-neutral” ways to buy Bitcoin for the Strategic Bitcoin Reserve, contradicting earlier remarks to FOX Business that triggered a $55 billion market sell-off. Secretary Bessent reaffirmed that confiscated Bitcoin will remain the Reserve’s foundation, ruled out further government sales, and said potential acquisition strategies may require congressional approval, while the Reserve’s current value is estimated between $15 billion and $20 billion. More here.
SEC Chairman Says Commission Preparing Updates to Digital Asset Custody and Guidance: On August 15, Chairman Paul Atkins the SEC is “mobilizing” to update rules on digital asset custody and related guidance, citing authority to act while awaiting congressional action on broader market structure legislation. Speaking about his Project Crypto initiative, Chairman Atkins said the SEC is aligning with recommendations from President Trump’s Digital Asset Working Group, with priorities including custody standards for broker-dealers, asset managers, and advisers, within efforts to provide regulatory certainty. More here.
Fed to End Dedicated Oversight Program for Banks’ Crypto Activities: On August 15, the Federal Reserve (Fed) announced it will terminate its “novel activities supervision program,” created in August 2023 to monitor banks’ digital asset and distributed ledger technology activities, and fold oversight back into its standard supervisory process. The Fed said it has strengthened its understanding of crypto-related risks and bank practices since launching the program, and will rescind the 2023 supervisory letter, while continuing to review banks’ crypto activities under its regular supervisory framework. More here.
Treasury Seeks Feedback on Digital ID in DeFi as Part of GENIUS Act Compliance Review: On August 17, Treasury opened a consultation under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act asking for public input on how tools such as digital identity, AI, APIs, and blockchain monitoring could address illicit finance in crypto markets. Among the options outlined is embedding digital ID verification into DeFi smart contracts to automate know-your-customer (KYC) and anti-money-laundering (AML) checks, with comments due by October 17, 2025, ahead of a Treasury report to Congress. More here.
Treasury Department Comment Period for Views on Illicit Activity: On August 18, the Treasury Department launched a sixty-day public comment period to gather input on methods to detect and prevent illicit activity involving digital assets, fulfilling a directive in the recently enacted GENIUS Act. Treasury said it is seeking ideas from regulated financial institutions and other stakeholders on innovative techniques to address risks such as money laundering as it implements the law. More here and here.
Senate Banking Chairman Anticipates 12-18 Votes from Democrats in Favor of Market Structure Bill: On August 18, Senator Tim Scott (R-SC), Chairman of the Senate Banking Committee, said that he anticipates twelve and up to eighteen Democrats will vote in favor of the Senate’s forthcoming legislative draft following the House’s passage of the CLARITY Act. The Senate Banking Committee released a discussion draft in July, with final legislation expected by the end of September, to define SEC and CFTC oversight of digital assets and needing to secure at least sixty Senate votes to advance. The House and Senate need to vote on the same bill or reconcile the differences between their corresponding bills. More here.
Crypto Lobby Pushes Back Against Banks’ Effort to Rewrite GENIUS Act: On August 19, the Crypto Council for Innovation and the Blockchain Association sent a letter to the Senate Banking Committee opposing proposals from the American Bankers Association, Bank Policy Institute, and state banking groups to remove Section 16(d) of the GENIUS Act and restrict yield programs offered by affiliates of stablecoin issuers. Section 16(d) permits subsidiaries of state-chartered institutions to engage in money transmission across state lines to support stablecoin issuer activities, facilitating nationwide redemption of tokens without requiring separate state licenses. More here.
U.S. Tariffs Hit Bitcoin Miners: On August 20, it was reported that U.S. tariffs are having major repercussions for the Bitcoin mining industry, with looming disputes with Customs and Border Protection (CBP) potentially exposing American companies to liabilities, and while manufacturers like Bitmain, Canaan, and MicroBT expand U.S. operations to offset trade barriers. Tariffs on China-origin Bitcoin mining machines have risen to 57.6 percent and to 21.6 percent on rigs from Indonesia, Malaysia, and Thailand, according to the Miner Mag, which reported that CleanSpark could face up to $185 million and IREN $100 million in potential CBP liabilities. More here.
House Adds Language on CBDC Ban for Fed to National Defense Authorization Act: On August 21, the House added language banning the Fed from issuing, testing, or developing a central bank digital currency (CBDC) to the National Defense Authorization Act for fiscal year 2026. The provision, promised by Republican leaders after intraparty negotiations in July, mirrors the House-passed Anti-CBDC Surveillance State Act and would prohibit the Fed from offering digital assets or services directly to individuals while clarifying that the ban does not apply to dollar-denominated private stablecoins. More here.
IRS Digital Assets Chief Turner Departs as New Crypto Tax Rules Take Effect: On August 22, the Internal Revenue Service confirmed that Trish Turner, head of its digital assets unit, is leaving the IRS for the private sector. Turner’s departure comes as the IRS prepares to implement new tax reporting requirements for digital assets, including the rollout of Form 1099-DA, which will be issued by crypto brokers to U.S. taxpayers beginning next year. More here.
Joint Letter to Senate Banking and Agriculture Committees Calling for Developer Protections: On August 27, more than 100 crypto companies and lobbying groups, including Coinbase, Kraken, Ripple, a16z, and Uniswap Labs, sent a joint letter to Senate Banking and Agriculture Committees, warning they cannot support market structure legislation unless it explicitly protects software developers and non-custodial service providers. The coalition stressed that while the House-passed CLARITY Act included such safeguards, the Senate draft may not, urging lawmakers to preserve historical protections for open-source development as final negotiations resume in September. More here.
SEC DCF Staff Says Liquid Staking Arrangements Do Not Trigger Securities Disclosure Requirements: On August 5, the SEC’s Division of Corporation Finance (DCF) said that liquid staking, where users deposit crypto with third-party providers in exchange for receipt tokens, does not require securities law disclosures. The statement, published by DCF, is specific to liquid staking, where participants deposit “covered crypto assets” into a third-party staking protocol provider, which in turn provides receipt tokens to the depositors. More here.
INTERNATIONAL BODIES
Hong Kong’s Stablecoin Licensing Regime Takes Effect: On August 1, Hong Kong’s new law requiring stablecoin issuers to obtain licenses took effect, with the Hong Kong Monetary Authority opening a three-month application window allowing firms to operate pending review until January 31. While about forty companies had expressed interest in applying, HKMA CEO Eddie Yue cautioned that fewer than ten are likely to be approved. More here.
EU Banking Authority Finalizes Draft Rules on BTC and ETH Holdings: On August 5, the European Banking Authority released final draft rules requiring EU-based banks to apply a 1,250 percent risk weight to unbacked cryptocurrencies such as Bitcoin and Ether, meaning they must hold €12.5 million in capital for every €1 million in exposure. The draft, which now moves to the European Commission for review, also bars offsetting between assets like Bitcoin and Ether and sets a 250 percent risk weight for asset-referenced tokens, with the rules expected to take effect if the European Parliament and Council do not object. More here.
El Salvador Approves Law Allowing Bitcoin Investment Banks for Institutional Clients: On August 7, El Salvador passed its Investment Banking Law, enabling investment banks to hold Bitcoin and other digital assets on their balance sheets and provide services to “sophisticated” investors under a Digital Asset Service Provider license. Passage of the law follows recent international partnerships, including a July 30 agreement with Bolivia’s central bank to promote cryptocurrency use amid regional currency pressures. More here.
Ukraine Parliament to Consider Crypto Regulation Bill in Late August: On August 8, it was reported that Ukraine’s Verkhovna Rada is scheduled to hold an initial reading of a draft crypto regulation bill by the end of August 2025, aiming to align with European standards and establish a taxation framework. The proposal would allow holders to legalize previously acquired assets by paying a five percent income tax and five percent military duty, following earlier measures on exchange legalization and discussions of including Bitcoin in national reserves. More here.
Hong Kong SFC Issues Strict Custody Rules and Bans Smart Contracts in Cold Wallets: On August 15, the Hong Kong Securities and Futures Commission (SFC) released new guidance imposing strict standards on licensed virtual asset custodians, including certified hardware security modules, whitelisted withdrawal addresses, 24/7 monitoring, and air-gapped private key environments. The rules, effective immediately, ban the use of smart contracts in cold wallets to minimize attack risks, which is expected to raise security but increase compliance costs and potentially limit smaller custodians’ market participation. More here.
Japan Approves First Yen-Pegged Stablecoin JPYC for Fall 2025 Launch: On August 18, Japan’s Financial Services Agency (FSA) approved JPYC Inc. to issue the country’s first yen-backed stablecoin, set for launch in fall 2025, under rules from the 2023 Payment Services Act amendment. The ERC-20 token will maintain a 1:1 yen peg backed 101 percent by bank deposits and Japanese government bonds, with Circle Ventures as an early investor, positioning JPYC to drive new demand for JGBs and provide yen-denominated options for payments, DeFi, and cross-border transactions. More here.
South Korea Halts New Crypto Lending with Guidelines in the Works: On August 19, South Korea’s Financial Services Commission (FSC) said it sent letters to exchanges requesting the suspension of new crypto lending until it completes guidelines. Existing contracts, like repayments and maturity extensions, will be permitted. On July 31, the FSC and the Financial Supervisory Service (FSS) announced they had formed a joint task force to develop a regulatory framework for crypto lending. The guidelines are expected to cover leverage limits, user eligibility, and risk disclosures for virtual asset lending activities. More here.
Brazil Rejects Bitcoin Reserve Over Volatility: On August 20, a bill was under consideration by the Economic Development Committee of Brazil that would see the national treasury allocate up to five percent of reserves in Bitcoin. The Finance Ministry and Central Bank warned of volatility, IMF classification issues, and reserve asset requirements, leading the government to reject the plan. More here.
Japan’s Finance Minister Endorses Crypto as Portfolio Diversifier: On August 25, Japan’s Finance Minister Katsunobu Kato stated that cryptocurrencies, despite high volatility, merit consideration as part of diversified investment portfolios and pledged to foster a sound trading environment. Speaking at the Web3 Conference WebX 2025 in Tokyo, Kato’s remarks followed FSA’s proposal to shift crypto taxation to a flat 20.315 percent rate, alongside preparing to approve yen-denominated stablecoins and expand blockchain partnerships through firms such as SBI Group. More here.