Launchy Regulatory Roundup #49 - Banks Seek GENIUS Fixes as Fed Eases Crypto Oversight

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Welcome to our 49th edition of the regulatory roundup. If you know anybody who would benefit from this content, please help us spread the word!

In Today's Edition:

• Headline: Banks Seek GENIUS Fixes as Fed Eases Crypto Oversight 👀 

• Global Legal Roundup

• Case Study: DEF & a16z Push SEC for Safe Harbor on dApps 🔎 

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HEADLINE

Banks Seek GENIUS Fixes as Fed Eases Crypto Oversight

State of play: US banking groups are pressing Congress to close gaps in the GENIUS Act, warning that stablecoin issuers and exchanges could bypass interest-payment restrictions, siphon deposits, and weaken credit creation.

• The groups urged extending the interest ban to all crypto intermediaries to protect banks’ lending role while allowing payment innovation.

• They argue the law risks deposit flight and higher borrowing costs unless prohibitions extend to all digital asset intermediaries.

• Paul Grewal countered that banks are simply resisting competition.

At the same time, the Federal Reserve said it will wind down its dedicated crypto supervision program and fold oversight back into its normal processes, marking another regulatory pullback under the Trump administration.

What’s Next: Congress will weigh tweaks to the GENIUS Act, with banks pushing stricter limits and crypto firms fighting to keep flexibility. The Fed’s pullback points to looser oversight ahead.

Why it Matters: The two developments highlight an ongoing tug-of-war between banks seeking to preserve their deposit base and regulators increasingly open to digital asset adoption.

Our Take: Banks fear stablecoins draining deposits, but regulators are signaling comfort with more competition. The outcome will decide if stablecoins stay payment tools or drift toward savings products.

GLOBAL LEGAL ROUNDUP

America:

• 🇺🇲 New York lawmaker wants to tax crypto sales and transfers.

• 🇺🇲 US Justice Department unseals warrant to seize millions in crypto.

• 🇺🇲 Do Kwon pleads guilty to two fraud charges in years long US case.

• 🇺🇲 Paxos joins Ripple, Circle in pursuit of national bank charter licenses.

• 🇺🇲 US Treasury Secretary says gov won't buy BTC for strategic reserve.

• 🇺🇲 SEC delays decision on SOL ETF proposals from Bitwise and 21Shares.

• 🇺🇲 DCG files lawsuit against subsidiary Genesis over $1.1B promissory note.

• 🇺🇲 Grayscale seeks nod from SEC for Dogecoin ETF under the ticker 'GDOG'.

• 🇸🇻 El Salvador passes law letting investment banks hold BTC.

Europe:

• 🇹🇷 Dev claims they are being held in Turkey over Ethereum 'misuse' allegation.

APAC:

• 🇻🇳 Vietnam state-run Military Bank to launch crypto exchange.

• 🇭🇰 Hong Kong regulator tightens custody standards for crypto exchanges.

CASE STUDY

DEF & a16z Push SEC for Safe Harbor on dApps

Credits to Cointelegraph & Sarah Wynn for the original article

State of play: The DeFi Education Fund and Andreessen Horowitz are urging the SEC to adopt a regulatory safe harbor for blockchain applications like Uniswap, Coinbase Wallet, and OpenSea.

• They argue these apps are non-custodial tools, not brokers, and should be excluded from broker-dealer rules.

• The dApps should meet conditions such as decentralization, non-custody, and the absence of investment recommendations.

• The proposal comes as the SEC has shifted course, dropping investigations into major DeFi players, shelving enforcement from the Biden era, and launching "Project Crypto" to modernize digital asset rules.

Our Take: dApps don’t fit old financial categories, and the safe harbor will test if the SEC adapts rules to software-driven markets or sticks to outdated broker models.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our comprehensive database of crypto regulations around the world👇

NOTEWORTHY READS & MEME

• Coin Center’s article on six months of crypto policy.

• Nic Carter’s read on Trump’s debanking executive order.

• Daniel Barabander’s read on how stablecoins go mainstream.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.