Three Bills that Shape Crypto, and America's Fiscal Policy
OBBB, GENIUS, and CLARITY cheatsheet.
Hi,
I’m back with another special. It’s one of my fabled I read the technical thing and made it not technical to my own liking. So notes, what I’m talking about is, I’m sharing you my notes.
Today I write about the various bills going through US Legislation to get me you a quick recap.
One Big Beautiful Bill (signed July 4)
GENIUS Act (expected to sign July 2025)
Clarity Act (expected to sign July 2025)
GENIUS / Clarity are on the floor now and could be voted in any second now. Anyway…
One Big Beautiful Bill
TL;DR: 2025 Tax Bill. Guys I don’t know how to TL;DR this one with out inserting commentary.
Also known as let’s straddle every citizen from birth with a debt bill equal to 120% of their expected net worth, if they had any. The Big Budget & Tax bill impacting every American passed July 4. Never have I paid attention more to a bill than that one from a personal household, corporate, and opportunist perspective.
How it impacts Crypto-based companies and individuals is only in the area of financial tax enforcement, and foreign entity ownership.
General Impacts
State and Local Tax Deductions for 2026 - 2029 - Raised to $20k (single) $40k (married) for for anyone having adjusted gross income under $500k. Yes W2 withholdings count to it.
Big Ouch to the Green Sector as many, many green credits and tax incentives are repealed or phased out.
100% Depreciation in the year an item is put into service, so have fun expensing things.
Crypto Impact
IRS has $60b in funding, and is direct to use AI, and to target Digital Asset Flows, High Income Filers with Underreporting Risks, and Foreign Financial Accounts.
The IRS laid off 25% to 33% of its workforce, won’t be replenishing it, and will instead tell them to be productive to use AI, and to go after the targeted amounts.
That said, the IRS directed to look at Foreign Account Holders & Crypto folks.
Controlled Foreign Corporation (CFC) and Transfer Pricing takes on higher scrutiny under OBBB and a significant majority (dare I say, all blockchain foundations?) are at risk for any IP or Token-Based revenue flowing through foreign holdings.
Aka everyone that used FDII / GILTI is on a short change list.
Aka if you count some of your money as “off-shore money earnings”, you are on the shit list.
Domestic R&D 100% expensing is back, and yes you can take any amortized R&D from previous periods (2021-2024) and fully expense it out in 2025. Every single blockchain company has R&D to expense, that’s for sure.
*ahem* Foreign R&D however, is a 15 year amortization.
aka if you use foreign developers, how dare you. If you use on-shore devs, you are a patriot and will be rewarded.
Stupid question: What’s stopping me now from buying a luxury car under an entity, putting it into service (TURO/UBER), and then depreciating it fully in the first year, taking the taxable income liability reduction, and then dissolving the entity? I don’t know but I think the answer is something about California.
GENIUS Act
TL;DR: Let’s define stablecoin as regulated financial products, like cash
“Guiding and Establishing National Innovation for U.S. Stablecoins Act”
This bill can be referred to as the Stablecoin pill, paving the way forward for a confluence between stablecoin, traditional finance, and decentralized finance. Remember folks, the concept of a non-central finance entity isn’t new; we just call that different country’s currencies. Anyway-
GENIUS acts focus on the following:
Definition of Stablecoins
Only
USDfiat backed stablecoins. So, good bye “algo coins”, you are out. Good riddance.From a qualified issuer in the United States.
See giant note on reserve requirements later on.
Who can issue stablecoins
The path to Federal Recognition & Regulation for IssuersA very tightly defined (this is good) list, stablecoins can only be issued by banks, OCC license, or state-certified issuers. Here’s who can issue:
Federal Non-bank issuers with a special license from the OCC (Office of the Comptroller of the Currency) with a $10m minimum capital requirement, monthly reserve attestation and public disclosurers, no activity other than issuing stablecoins, and it must have a Chief Compliance Officer and a maintained Audit Committee.
Aka Tech Company partners with Reserve Bank or Credit Union to create new subsidiary dedicated to the deployment of, management of, and responsibility of, stablecoin issuance.
which btw, the OCC has a 120-day decision window - this moves fast.
State-Qualified Issuers - entities approved by home state based on the state banking requirements, as well as approval from the federally-sized Stablecoin Certification Review Committee (Multiple Federal Treasury Agencies here) who can prove that the entity operates in a “substantially equivalent” regime following federal standards. Caveat: If the issuer hits $10b in circulation, they must go federal in 1 year or figure out a way to not be $10b.
USDC and Paxos are currently following this via New York DFS.
Foreign Issuers - Foreign companies can also be an issuer, provided that they follow one of the above path ways and subject themselves to US Enforcement, having US Property, and subject to Block/Freeze orders.
bye Tether.
Public Companies - Non Financial Public Companies can’t touch this. So EY FSO is about to 1000x its resource needs.
To be federally recognizes, you either get licensed via non-bank path, or you transition from a state-license to a federal license due to volume.
Issuer Reserve, Audit Requirements, and AML/Compliance/Consumer Protections
On the topic of audits and “stuff”, this is considered the most stringent financial control ever proposed.
Fully backed, 1:1, cash reserves held in segregated FDIC insured accounts, with a liquidity requirement of under 90 days to maturity for any treasury bills.
That are audited and attested for monthly
That can’t be, and are not used, as collateral
And must have a stable value (so handcuffed to US Dollar).
No Exceptions.
Issuers can’t lend, pledge, or use any reserve, excvept for the purpose of redeeming stableocins (sit on your pile of cash, and you will like it). Issuers can only use the cash to get Treasury bill earnings and Repos.
Audit & Attestation is intense.
Reserve Composition (make up of assets) is published publicly, daily.
Monthly attestations certified by CEO and CFO under penalty of law with personal liabilities and criminal charges.
Annual Financial Audit required for issuers over $50b
Any material incident post posted and reported in 5 days.
Consumers msut know what backs the token, how quickly it is redeemable, and whether the reserve is there to match the customer deposit (or bank liability).
Quick Quips:
GENIUS basically mandates by regulation segregated subsidary stablecoin options.
Stablecoins act? More like segregation act. Or subsidiary act.
Financial Compliance Industry just got more intense, and also, more conviction, because of this.
There’s not that many ways for a stablecoin issuer to make money here because the GENIUS act is explicit on what you can do to make money, and what you can’t. Can you figure out how much they need to earn to be able to maintain, and grow, its operations?
CLARITY Act
TL;DR: Let’s define blockchain as markets act
“Creating Legal Accountability and Regulatory Transparency for Innovation in Crypto”
This is the bill that gives definition on whether digital assets are under CFTC or SEC purview.
Often referred to by me as the markets bill, Clarity Act introduces the framework for “mature blockchain system” which is a 4 year timeline for a blockchain to get a Mature Blockchain System Certification.
The Mature Blockchain System distinction is a certification the blockchain files for with an automatic effective date 60 days after submission, unless the SEC objects.
At any time, this standard can be rebutted by the SEC and appealed in corp. It offers a distinct regulatory distinction from being recognized as a tokenized project, to a truly decentralized network.
To qualify as mature:
Open source with transparent programmatic operation rules
Which presumes a publicly distributable codebase which all chains offer by default.
A functional network with validators & publicly available transactions
Validators can’t be owned by a supermajority, no gatekeeping on who can be a validator such that anyone can be a validator should they meet the technical specifications to run a validator
No special permissions to alter the consensus or take control, except for critical fixes
No unilateral ability to modify consensus mechanism.
Publicly accessible and visible governance on code changes
Aka IT Auditors, go find admin permissions.
Not controlled by one person or under common group control
Which agency enforces?
If deemed Mature System → CFTC Jurisdiction under digital commodities.
If an immature system (aka not certified) → SEC Jurisdiction, treated as securities
Why would you want to go for Mature System?
As with anything in the U.S., maturity gives insider sale relief (aka those who came in early and want the safe harbor), and makes trading & listing tokens of that chain significantly easier and faster.
Notes:
Ethereum has demonstrated clear decentralization, but Polygon and Algorand do not. Solana however would the one to argue with as the definition of decentralized network in the form of validator is to be determined.
What does this all mean?
Dollar is becoming the reserve currency for Crypto.
The US is paving the pathway to regulate and industrialize stablecoins. What happens when the US Financially Regulates a product is that it is significantly enhancing the US Dollar position. Specifically, the stability of crypto insured by the US Dollar. The US Dollar Hegemony lives on.
What’s that?
Well that’ll be it’s own post I guess. Let me pull up my January 2025 notes…
p.s. yes it’s just photos of DC this time.
Not your cup of tea?
You can check out my more casual updates post instead.
Q2 Called— It Wants Its Marathon, Muscat, and Michelin Stars Back
Hey, would you like at that? It’s April May June July! That means we’re closer to the end of the year and does it feel like I’ve aged a decade?