embracing an entire ecosystem of developing technologies, markets, and the varied stores of value and payment rails upon which they run. Although regulatory frameworks and mainstream adoption may feel new, the underlying concept of distributed ledgers as payment vehicles is not. Nakamoto’s white paper cites articles published in the 1980s, 1990s and early 2000s within the cryptology field relating to studies on how to digitally time-stamp documents through cryptographic means. However, it wasn’t until Nakamoto’s white paper proposed the use of cryptography, together with a decentralized and distributed ledger to create a digital asset that did not rely on intermediaries for settlement, that the bitcoin blockchain protocol became globally adopted in a decentralized manner through network effects. That global adoption only further ignited innovation and the exploration of borderless and trustless global ledgers, leading to the GENIUS Act, regulating stablecoins and pending market structure legislation. Digital assets are built on blockchain technology. The Bank for International Settlements published a working paper in 2023 titled “Distributed Ledgers and the Governance of Money,” exploring the economics and feasibility of various models of future global decentralized payment systems built on blockchain, and their limits, noting, “[M]oney, whether it be in the form of clay pots, precious coins or banknotes, is a social convention that serves as a record of goods sold or services rendered in the past. … [Today’s] centralized record-keeping system has been effective. However, the advent of blockchain technology and the concept of a free universal ledger of all past transactions, offers an alternative monetary system that eliminates the need for intermediaries …” In its simplest form, money is a medium of exchange requiring a ledger. Blockchain technologies innovate new ways to maintain a ledger and track exchanges of value quickly, efficiently and without third parties. When talking about any strategic or business use case for blockchain technology, digital assets or crypto in all forms, it is critical to understand not only the newly created legal definitions, but also the underlying technologies, applications, and applicable laws and regulations as the ecosystem develops. For all these reasons, it is essential to openly question and explore precisely what crypto means and how the term is being used. Further Clarity To Come Despite rapid-fire developments since the Executive Order was issued and the passage of the GENIUS Act — which kicked off an entire industry discussion on stablecoins — there is much more regulatory clarity to come that banks need to form a robust, effective, long-term digital assets strategy. Of note: 1. Working Group Recommendations: The Digital Asset Working Group Report includes over 100 policy and legislative recommendations to Congress and the relevant agencies that touch the crypto-ecosystem, digital assets and related markets. Specific to the banking sector, the report calls for specific guidance on the activities banks are most likely to engage in (custody, third-party relationships, stablecoin reserves and holding digital assets as principal); technology-neutral and principles-based risk management guidance, which could include the development of NIST-based or NIST-like standards; clarifying AML/CFT compliance expectations; and capital and liquidity management guidance. 2. GENIUS Act Implementation and Regulations: Although GENIUS was signed into law on July 18, it does not take effect until July 2026, at the earliest, once implementing regulations have been passed. The GENIUS Act requires a “coordinated” rulemaking process to occur within one year, involving numerous federal and state regulators, including the Department of the Treasury, the OCC, the Federal Reserve and state regulators. 3. Digital Asset Market Structure Legislation: Outside of payment stablecoins, there is markedly less clarity on the future state of market structure regulation across the ecosystem. On July 21, 2025, the Senate Banking Committee circulated its 35-page CLARITY Act Discussion Draft, along with a related request for information that included 74 separate inquiries to the industry. The discussion draft was significantly shorter than the 245-page version of the House draft, focusing largely on securities laws with limited attention to the commodities side of the market. Given the volume of industry feedback received and the differences between the House and Senate versions of the CLARITY Act, it seems possible that market structure clarity may not occur in 2025. 4. SEC Project Crypto and the CFTC Crypto Sprint: SEC Chair Paul Atkins announced on July 31 in a speech the launch of “Project Crypto,” emphasizing the need for the U.S. financial markets to be at the epicenter of the global crypto ecosystem. More recently, on Aug. 21, CFTC Acting Chairman Caroline D. Pham announced the CFTC’s Crypto Sprint, which has the stated aim of implementing the recommendations outlined in the Digital Asset Working Group’s report. In her words: “The Administration has made it clear that enabling immediate trading of digital assets at the Federal level is a top priority.” The “Business of Banking” in a “Crypto” Era Digital assets have proven to be a technological disruptor to the traditional “business of banking.” However, the legal authority of banks to participate in the crypto-industry has been recognized by the federal banking regulators since as early as 2020, when the OCC issued a trilogy of Interpretive Letters (IL 1170, IL 1172, IL 1174), regarding the types of digital asset services that fall within the statutory sphere of the “business of banking” for national banks. Those activities include directly or indirectly providing cryptocurrency custody services, holding cash deposits to reserve against stablecoin tokens, and acting as nodes on distributed ledgers to verify and facilitate payment transactions. The GENIUS Act further clarified that nothing within the text limits the authority of a depository institution to engage in the following activities: 1. Accepting or receiving deposits or shares and issuing digital assets that represent those deposits or shares (tokenized deposits); 2. Utilizing a distributed ledger for the books and records of the entity and to effect intrabank 18
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