Digital Assets Subcommittee Holds First Market Structure Hearing
The Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence, led by Chairman Bryan Steil (WI-01), held its inaugural hearing titled “American Innovation and the Future of Digital Assets: Aligning the U.S. Securities Laws for the Digital Age” on April 9, 2025, in Washington.
The hearing focused on the significant legal uncertainty surrounding the application of securities laws to digital assets, which leaves users inadequately protected and stifles innovation. Members explored which digital asset activities implicate U.S. securities laws, why current regulations may not apply, and how Congress can take legislative action to address these challenges.
Establishing a Regulatory Framework
Chairman French Hill (AR-02) emphasized the importance of building on the momentum gained from advancing the STABLE Act the previous week. “It is crucial for this Committee to enact legislation that provides clear guidelines for issuers and market participants, facilitates capital formation, and maintains the integrity of both the digital asset ecosystem and the traditional financial system,” said Subcommittee Chair Steil.
Rep. Zach Nunn (IA-03) highlighted the opportunities provided by digital assets, stating that they “are going to open the door to endless possibilities for anyone in both financial, and candidly, non-financial services, and provide possibilities for economic growth domestically produced right here in the U.S.”
Need for a New Regulatory Approach
Rep. Troy Downing (MT-02) criticized the SEC’s current approach under former Chairman Gary Gensler, saying, “Treating every digital asset as a security regardless of its purpose risks the United States forfeiting its leadership in financial technology.”
Witnesses at the hearing echoed support for the Committee’s work. Rodrigo Seira, Special Counsel at Cooley LLP, noted that the current securities regulatory framework “is not a viable option to regulate crypto and fails to achieve its stated policy goals.” He emphasized the need for a predictable framework that protects users and allows companies to innovate without fear of arbitrary enforcement actions.
Tiffany J. Smith, Partner and Co-Chair of the Blockchain & Cryptocurrency Working Group at WilmerHale, stated that while the SEC has taken steps to provide regulatory clarity, “these actions alone are not sufficient.” She believes Congressional action is necessary to achieve true regulatory clarity for the digital assets industry.
Jake Werrett, Chief Legal Officer at Polygon, discussed the transformative potential of blockchain technology, saying, “We have an opportunity to enact law that embraces innovation, while protecting investors, encouraging capital formation, and maintaining fair, efficient, and orderly markets.”
The hearing concluded with a clear call for legislative action to provide a comprehensive regulatory framework for digital assets, balancing innovation with investor protection and maintaining the U.S.’s position as a global leader in financial technology.
