US crypto sector in mad holiday rush to get all the things done

The United States Senate will hold a digital asset market structure markup session in January—this time, they mean it—while the holiday rush brought us new regulatory chiefs, a new crypto-friendly bank, and a whole bunch of tax talk.

With Congress officially done with work for the year, the Senate’s digital asset market structure legislation (the Responsible Financial Innovation Act (RFIA)) won’t make any more progress in 2025. But progress will come early next year, according to David Sacks, President Trump’s ‘AI & Crypto Czar.’

On December 18, Sacks tweeted that he’d had “a great call today” with Senators Tim Scott (R-SC) and John Boozman (R-AR), who respectively chair the Banking and Agriculture committees, both of which will have to sign off on market structure legislation before it gets to the Senate floor for a vote.

Sacks said the chairmen had “confirmed that a markup for Clarity is coming in January.” Sacks claimed “we are closer than ever to passing” this legislation and all interested parties “look forward to finishing the job in January.”

The CLARITY Act was passed by the House of Representatives this summer, but the Senate opted to start from scratch on its own market structure legislation (against House leadership’s advice) that built upon CLARITY’s foundations. However, Senate Dems (along with the odd rogue GOP’er) have continued to press for revisions/additions to the RFIA that the Senate’s GOP leadership has so far balked at including.

The year’s final bipartisan meeting was held late last week on Capitol Hill in the hopes of resolving some of the lingering issues, which include (deep breath): how much responsibility decentralized finance (DeFi) developers bear when bad actors use the platforms; whether digital asset exchanges can circumvent the GENIUS Act’s prohibition on stablecoin issuers offering ‘yield’ to users holding their tokens; ethical concerns regarding the Trump family’s lucrative roster of crypto ventures; who gets to decide whether tokens are commodities or securities; and ensuring minority party representation on the federal agencies that make those commodity/security decisions.

All told, herding these crypto cats may prove more problematic than Sacks believes, and that’s not even accounting for the fact that 2026 is a midterm election year, during which legislative progress tends to drop off sharply by late spring.

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Banks v crypto: show me the money

The stablecoin ‘yield v rewards’ fight pits traditional bankers versus the crypto upstarts, with bankers fearing that the outsized stablecoin ‘rewards’ offered by exchanges like Coinbase (NASDAQ: COIN) could spark a flurry of bank deposit withdrawals that could negatively impact banks’ ability to offer loans (particularly smaller community banks).

On December 18, the Blockchain Association released a letter signed by over 125 crypto individuals/entities beseeching the chair and ranking member of the Senate Banking Committee to oppose “efforts to reinterpret and expand the GENIUS Act’s prohibition on interest or yield beyond what Congress enacted.”

The letter goes on to claim that any effort to limit non-issuers from offering “rewards or incentives” for holding stablecoins on their platforms “would reopen a settled issue, undermine a carefully negotiated compromise, reduce consumer choice, suppress competition, and inject uncertainty into the implementation of a new law before regulations have even been proposed.”

Since 2024, the crypto sector has established itself as a major player in campaign financing circles, a development that hasn’t gone unnoticed by the banks. Last week, the Financial Services Forum (FSF), a group that includes the country’s eight largest banks, launched their own 501(c)(4) group, American Growth Alliance (AGA), to press Congress on “an array of important national economic and financial issues and priorities.”

Axios quoted FSF’s president/CEO Amanda Eversole, saying banks plan to be “loud and proud of who we are and what we stand for. We’re going to be much more affirmative in saying, ‘We have a lot of positive benefits to the economy’. We want to make sure that champions in both parties, Republicans and Democrats, understand that.”

FSF said the AGA would be seeded with “tens of millions of dollars” to push the banking agenda, but Politico quoted one industry source saying AGA spending could hit $100 million. That would still be less than half the dry powder the crypto sector has amassed ahead of the midterms, but it’s clear banks don’t intend to let crypto’s voice be the only one speaking on fintech issues.

One crypto-friendly pol that won’t be soliciting any campaign cash in 2026 will be Sen. Cynthia Lummis (R-WY), who on December 19 announced that she won’t seek re-election next November. Lummis cited the “difficult, exhausting session weeks this fall” as convincing her “that I do not have six more years in me.”

The announcement prompted an outpouring of gratitude from both Senate colleagues as well as many crypto luminaries who acknowledged Lummis’s major support of their priorities in Congress. The latter included David Sacks, who called Lummis “a great ally on crypto” adding that he was “very sorry to see her go.”

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CFTC finally gets its man

Also heading for the exits is Caroline Pham, acting chair of the Commodity Futures Trading Commission (CFTC), who confirmed reports from August that she’d secured a gig as chief legal and administrative officer at fiat-crypto bridging firm Moonpay. Pham, who’s been holding the CFTC fort alone since September, previously stated her plan to rejoin the private sector once a permanent CFTC chair had been confirmed by the Senate.

That joyous (and long-delayed) confirmation finally took place last week, as the Senate voted 53-43 to approve Michael Selig—Trump’s second pick for the role after original nominee Brian Quintenz met with opposition from certain crypto quarters—for the CFTC chair gig.

Following his official swearing-in on December 22, Selig tweeted his gratitude to Trump for “placing his trust and confidence in me” and said “today begins a new chapter for the CFTC.” Selig called this “a unique moment” as Congress is “poised to send digital asset market structure legislation that will cement the U.S. as the Crypto Capital of the World to the President’s desk.”

David Sacks tweeted his delight at Selig’s confirmation, declaring himself “extraordinarily excited” to have Selig installed “at this critical juncture for digital assets.” Sacks called Selig and Selig’s former boss—current Securities and Exchange Commission (SEC) Chair Paul Atkins—a “dream team” created by Trump “to define clear regulatory guidelines for the 21st century.”

Pham tweeted her own congratulations to Selig, saying his “tremendous experience and expertise in navigating complex frameworks across both CFTC and SEC markets make him the ideal leader to tackle rules for digital assets, crypto and more.”

In related news, the owner of the New York Stock Exchange (NYSE) is reportedly mulling an investment in the New York-based Moonpay. Last week, Bloomberg reported that Intercontinental Exchange Inc (ICE) was in talks to participate in a funding round that would value Moonpay at ~$5 billion.

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FDIC chair confirmed, crypto-friendly Erebor bank moves closer to launch

At the same Senate hearing that confirmed Selig, Travis Hill garnered approval as the permanent chair of the Federal Deposit Insurance Corporation (FDIC). Hill, who’s been serving as acting FDIC chair since Trump was sworn into office in January, has embarked on his own Pham-like mission to eliminate barriers previously erected to keep crypto uncertainties out of the traditional financial system.

Among the FDIC’s major shifts under Hill’s tenure include withdrawing previous guidance on the ‘reputational’ risks banks face when they embrace digital assets, issuing new guidance on allowing banks to custody digital assets, and supporting the crypto sector’s threadbare ‘debanking’ conspiracy theories.

Last week saw the FDIC approve the deposit insurance application to establish Erebor Bank, NA. In October, Erebor’s de novo charter application was granted preliminary conditional approval by the Treasury Department’s Office of the Comptroller of the Currency (OCC).

Erebor is a new national bank charter linked to a number of tech sector figures, including Peter Thiel, Palantir co-founder Joe Lonsdale, and Anduril co-founder Palmer Luckey, and is intended to fill the space left empty by the 2023 collapse of the crypto-friendly Silicon Valley Bank (SVB).

The FDIC noted that Erebor’s proposed business model “will focus on providing deposit and lending products to businesses and individuals in the technology, payment systems, investment, and defense industries, including virtual currency market participants.”

SVB’s high-profile demise—which necessitated an FDIC bailout—loomed large in the FDIC’s announcement of Erebor’s approval. The FDIC imposed certain conditions on Erebor, including implementing “protocols to comply with the FDIC’s regulations regarding processing of deposit accounts in the event of a bank failure.”

In a further reflection of the financial risks related to the sectors to which Erebor plans to cater, Erebor must also maintain “a minimum 12% tier-1 leverage ratio during its first three years of operation,” along with other requirements for its founders to ensure the bank remains ‘well capitalized’ at all times.

Assuming the rest of the vetting process goes according to plan, expectations are that Erebor could open for business early in the new year. Business Insider noted that Erebor’s FDIC approval came within five months of its application filing, a significantly swifter timeline than 2024’s median eight-month duration between filing and approval. Whether that reflects Hill’s new ‘damn the torpedoes’ mindset or the fact that Erebor’s backers have friends (to whom they donate millions) in high places, only Hill knows.

On December 22, Axios reported that Erebor recently raised $350 million at a ~$4.35 billion post-money valuation. The round was led by Lux Capital, with additional funding from undisclosed new investors. Previous investors include Thiel’s Founders Fund and Katie Haun’s Haun Ventures.

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The grinch that stole tax rules

Congress may have headed home for the holidays, but some members were intent on ensuring their spots on Crypto Santa’s ‘nice’ list before the big day.

On December 20, Representatives Max Miller (R-OH) and Steven Horsford (D-NV) released a 14-page discussion draft to “amend the Internal Revenue Code of 1986 to provide for the tax treatment of digital assets.” In a statement accompanying the draft, the bipartisan pair detailed their wish to reduce “unnecessary administrative burdens on taxpayers” who choose to transact in tokens.

Securing a de minimis exemption for small-scale crypto transactions has long been a goal of crypto operators and the politicians who love them (and their funding). This new discussion draft would apply this capital gains exemption to the sale or exchange of ‘regulated payment stablecoins’ (as described in the GENIUS Act) under a $200 threshold. (Broker/dealers would not be eligible for this exemption.)

Among the draft’s more notable elements is an attempt to establish a framework for treating rewards from digital asset staking and block reward mining as income but allowing this income to be deferred for up to five years. This deferral is intended to prevent individuals from being taxed on income they have received from mining/staking but haven’t yet realized (aka withdrawn and sold).

Other aspects of the draft include allowing crypto traders/dealers to apply mark-to-market accounting principles, allowing them to report unrealized losses/gains at the end of a taxation period based on the market value of their tokens on that date.

It’s not all carrots, however, as traders wouldn’t be able to wash trade tokens to accumulate losses that could be used to offset larger taxable gains.

Separately, on December 18, a bipartisan 18-member group of Representatives sent a letter to IRS acting commissioner (and current Treasury Secretary) Scott Bessent asking him to take a look at the IRS’s 2023 guidance on staking rewards.

Nothing much is at stake here, only the security of proof-of-stake networks like Ethereum and Solana that require “taxpayers to stake those [network] tokens, but today the administrative burden and prospect of overtaxation discourages that participation.”

Like Miller/Horsford, these 18 Reps want to end “the double taxation of staking rewards” by enshrining in the IRS code that stakers are to be taxed only once—at the time of sale—to reflect users’ “actual economic gain.”

The Reps have requested “additional information on the rationale and analysis underlying” the IRS’s 2023 position, while also urging the IRS to “promptly review and update guidance on this issue before the 2026 tax year begins.”

It’s kind of a big ask given the exceedingly brief period between now and the new year, not to mention coming on the eve of the holidays. Santa—and presumably Treasury secretaries as well—doesn’t like procrastinators. But the letter says the Reps are only referencing a recommendation to the IRS in the White House’s 166-page report that was released on July 30, so who’s the real procrastinator here?

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Watch: What’s ahead for crypto regulation? Highlights from Blockchain Futurist Conference 2025

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