Government Relations Insights: July 31, 2025

TOP LINES

The President’s Working Group on Digital Asset Markets released a report outlining legislative and regulatory recommendations to position the U.S. as a global leader in digital assets. Backed by Executive Order 14178, the report calls for a fit-for-purpose market structure, expanded oversight authority for the Commodity Futures Trading Commission (CFTC), modernization of banking regulations, and implementation of the GENIUS Act to support dollar-backed stablecoins. In remarks at the White House regarding the report, Treasury Secretary Scott Bessent emphasized that the next step is enacting market structure legislation like the CLARITY Act and implementing the Working Group’s 100+ recommendations to modernize crypto oversight, banking, and taxation.

House Financial Services Committee Chairman French Hill (R-AR) and Subcommittee on Financial Institutions Chairman Andy Barr (R-KY) issued a request for feedback from the public on current federal consumer financial data privacy law and potential legislative proposals to account for changes in the consumer financial services sector. Interested members of the public may send their comments and answers by August 28, 2025.

Rep. Hill, Rep. Ritchie Torres (D-NY), and a bipartisan group of House and Senate members introduced the Unleashing AI Innovation in Financial Services Act (H.R. 4801). The bill would establish regulatory sandboxes at federal financial agencies to support supervised testing of AI technologies in the financial sector. The legislation aims to encourage responsible innovation, strengthen consumer protections, and help maintain U.S. leadership in financial technology. The proposal aligns with the Trump administration’s AI Action Plan and reflects growing bipartisan momentum for a national AI strategy.

What We’re Reading:

From Owl Explains: TLDR Global Crypto Policy in 2025 (from MiCA to Abu Dhabi and beyond)

WEEKLY UPDATE

The Securities and Exchange Commission (SEC) approved orders permitting in-kind creations and redemptions for bitcoin and ether exchange-traded products (ETPs), marking a shift from prior cash-only mechanisms. Chairman Paul Atkins described the move as part of a broader effort to create a fit-for-purpose regulatory framework for crypto markets. The Commission also approved additional orders expanding access to crypto-based investment vehicles, including mixed bitcoin/ether ETPs, listed options on bitcoin ETPs, and increased position limits. These actions are expected to improve efficiency and lower costs for issuers and investors while aligning crypto ETPs with standard practices for other commodity-based products.

SEC Chairman Atkins voiced support for the President’s Working Group report on digital assets, calling it a key step toward building a unified federal framework. He emphasized the need for clear regulations to protect investors and promote U.S. leadership in crypto innovation. Additionally, Chairman Atkins announced “Project Crypto,” a Commission-wide initiative to modernize the securities rules and regulations to enable America’s financial markets to move on-chain.

The Office of the Comptroller of the Currency (OCC) named Adam Cohen as Senior Deputy Comptroller and Chief Counsel. Cohen brings extensive experience from the private sector and federal regulatory agencies, including the Federal Reserve and CFTC. He will lead the OCC’s Law Department and serve on the agency’s Executive Committee, advising on supervision, enforcement, digital assets, and broader policy matters.

The Federal Trade Commission (FTC) received a $14.6 million technology modernization fund grant to build a cloud-based analytics platform and expand its in-house data processing capacity. The upgrade will allow the agency to analyze investigative data faster and reduce reliance on external contractors, aligning with President Trump’s push for more efficient, cost-effective government operations. The initiative will also incorporate AI tools and staff training to enhance fraud and antitrust enforcement.

At its fourth open meeting of 2025, the National Credit Union Association (NCUA) Board received briefings on artificial intelligence, post-exam survey findings, and the Central Liquidity Facility (CLF). Staff highlighted emerging AI use cases in the credit union industry, the launch of a new AI resource page, and ongoing efforts to provide tailored guidance as technology evolves. Chairman Kyle Hauptman emphasized the need for regulatory clarity to support responsible AI adoption.

Senate Banking Committee Ranking Member Tim Scott (R-SC), joined by Sens. Mike Rounds (R-SD), Cynthia Lummis (R-WY), Pete Ricketts (R-NE), and Bernie Moreno (R-OH) reintroduced the Business of Insurance Regulatory Reform Act. The bill aims to clarify that the Consumer Financial Protection Bureau (CFPB) has no authority over the insurance industry, reaffirming state regulators’ jurisdiction as outlined in Dodd-Frank and the McCarran-Ferguson Act. Citing past instances of CFPB overreach under the Biden administration, the legislation seeks to prevent future federal encroachment into state-regulated insurance markets. Companion legislation is being led in the House by Rep. Bryan Steil (R-WI). The bill has broad support from national insurance and credit union trade associations.

Senators Elizabeth Warren (D-MA) and John Kennedy (R-LA) introduced the Build Now Act, a bipartisan proposal aimed at addressing the national housing shortage by encouraging localities to increase housing production. The bill ties Community Development Block Grant (CDBG) funding to a community’s track record on housing construction, offering boosts to high-performing areas and modest reductions to those that fall behind. The legislation will be included in the Senate Banking Committee’s upcoming housing package, which also features proposals to support rural housing, veterans, and efforts to reduce homelessness.

Senate Banking Committee advanced a bipartisan housing package out of committee. The committee advanced the Bipartisan ROAD to Housing Act, which will implement steps to boost the nation’s housing supply, improve housing affordability, help reduce homelessness, expand access to homeownership, and increase oversight and efficiency of federal regulators and housing programs. The executive session was the committee’s first bipartisan housing markup in over a decade.

Sens. Jeff Merkley (D-OR), Elizabeth Warren (D-MA), Chris Van Hollen (D-MD), Mazie Hirono (D-HI), and Bernie Sanders (I-VT) sent a letter to FHFA Director William Pulte expressing concern over his directive for Fannie Mae and Freddie Mac to explore underwriting policies that account for unconverted cryptocurrency assets. The members warned the move could introduce unnecessary risks to consumers and the broader financial system, citing crypto volatility, liquidity challenges, and heightened risks of theft or fraud. The letter also raised potential conflicts of interest tied to Pulte’s dual role as FHFA Director and Chair of the Enterprises’ Boards.

Sens. Mark Warner (D-VA), Chuck Schumer (D-NY), Jack Reed (D-RI), Chris Coons (D-DE), and Elizabeth Warren sent a letter to Commerce Secretary Howard Lutnick criticizing the Trump administration’s decision to allow U.S. firms to resume sales of advanced semiconductors, such as Nvidia’s H20 chip, to China. The senators warned the move undermines bipartisan efforts to limit Beijing’s AI capabilities and contradicts the administration’s own AI Action Plan.

House Small Business Chairman Roger Williams (R-TX) introduced the INNOVATE Act to reauthorize and reform the SBIR and STTR programs ahead of their September 30 expiration. The bill mirrors Senate legislation led by Sen. Joni Ernst (R-IA) and includes new limits on repeat awardees, rural outreach provisions, and expanded open-topic solicitations. Members are looking to potentially include it in this year’s defense authorization package.

The Senate Finance Committee advanced Jonathan McKernan’s nomination to be Treasury’s undersecretary for domestic finance. McKernan is a former Federal Deposit Insurance Corporation (FDIC) board member who was initially President Trump’s pick to lead the Consumer Financial Protection Bureau (CFPB). The White House withdrew that nomination in May and tapped McKernan for the senior Treasury role instead.

ICYMI

Senator Tim Scott (R-SC), Chairman of the Senate Banking Committee, joined by Senators Cynthia Lummis, (R-WY) Bill Hagerty (R-TN), and Bernie Moreno (R-OH), released a discussion draft of digital asset market structure legislation building on the House-passed CLARITY Act. The draft outlines new definitions, tailored Securities and Exchange Commission (SEC) rules, and disclosure requirements for ancillary assets.

The Trump administration released an AI Action Plan, outlining over 90 federal actions to implement President Trump’s executive order on removing barriers to American leadership in artificial intelligence (AI). The plan is built around three pillars, accelerating innovation, building the U.S. AI infrastructure, and leading in global diplomacy and security and includes initiatives such as fast-tracking data center construction, streamlining federal regulations, and promoting AI exports to allies. The plan also urges the SEC and other federal regulators to establish artificial intelligence-focused regulatory sandboxes.