Two Weeks After the Legislature Failed, the Fed and SEC Accelerate the “Administrative Takeover” — and Crypto Mom Walks Out Before the Rules Land

After the CLARITY Act collapsed on September 15, three agencies issued four rule documents in a single week, while the industry’s most trusted internal advocate, Hester Peirce, announced her resignation on the eve of the rules actually taking shape.

The Fed Delivers on GENIUS: Stablecoins Get a Prudential Framework for the First Time

On September 24, the Federal Reserve Board voted unanimously to seek comment on two proposals (Docket No. R-1899) that build a complete framework for payment stablecoin issuers under its supervision, from reserves to licensing. It is the first time the Fed has moved on stablecoin prudential supervision since the GENIUS Act was signed into law in July 2025, marking the shift of US federal stablecoin regulation from a “legislative framework” into a “capital and reserve execution rules” phase.

The first proposal would require issuers to back outstanding stablecoins fully with eligible assets (generally 1:1), including cash, insured deposits, and short-term US Treasury securities among other high-quality liquid assets; it also sets standardized capital requirements to cover credit and operational risk and specifies custody arrangements for reserve assets. The document also implements the GENIUS Act’s anti-tying prohibition, which bars any permitted payment stablecoin issuer, regardless of its primary regulator, from conditioning service on a customer buying an additional paid product or accepting an exclusivity arrangement. The second proposal establishes a dedicated application process for Fed-supervised insured state member banks to issue payment stablecoins through a subsidiary; applicants must submit a business plan and financial information, with procedures for appeals, hearings, and final determinations.

Federal Reserve Vice Chair Michael Barr issued a statement supporting advancement, calling it an “important step” and explicitly backing the reserve-asset limits and standardized capital requirements. But he also flagged two open questions: whether the proposals adequately address interest-rate and foreign-currency risk, and whether the “significant or systemic” anti-money-laundering enforcement standard might, in practice, limit the Board’s supervisory effectiveness. Barr’s position shows that even on the administrative path, the Fed is internally divided over the details of stablecoin reserves, especially the redemption pressure that market-value swings in rate-sensitive assets like Treasuries could create.

On the timeline, these rules move toward final form after a 60-day comment period beginning on publication in the Federal Register. Combined with the customer-identification rules jointly proposed by FinCEN/OCC/FDIC/NCUA in June and the OCC’s February GENIUS framework, they complete the landscape of US federal stablecoin regulation. For institutions, the meaningful signal is this: stablecoins are being regulated as “part of the banking system,” with full reserves, capital adequacy, anti-tying rules, and two-day redemption (per OneBullEx’s report of the proposal details), rather than as a fringe product outside the banking perimeter. This stands in sharp contrast to the ESCB’s September 22 position favoring looser stablecoin reserves, exposing yet another transatlantic regulatory divergence.

A Double Whammy on the Same Day: CFTC Opens Up Tokenized Investment, SEC Draws a New Line on Asset Classification

On the same day, the CFTC’s Market Participants Division, Division of Market Oversight, and Division of Clearing and Risk jointly updated their crypto asset and blockchain technology FAQs (originally published March 20), adding four questions that address two things directly: tokenized investment of customer funds and on-chain recordkeeping.

On tokenized investment, the CFTC clarified that futures commission merchants (FCMs) and derivatives clearing organizations (DCOs) may invest customer funds in tokenized forms of otherwise permitted investments under Regulation 1.25, provided the underlying asset is a permitted investment, the tokenized form grants holders the same legal and economic rights as the traditional form, and all applicable requirements, including liquidity, concentration limits, and depository standards, are met. This extends the path the CFTC established in its tokenized collateral guidance: moving traditional financial assets “on-chain without changing the rules,” where the assets and the rules stay the same and only the underlying infrastructure changes. On recordkeeping, the CFTC confirmed that Regulations 1.31 and 45.2 are “technology neutral,” allowing registrants to maintain records on a blockchain without keeping off-chain copies, provided they can retain and produce records under all circumstances, including network disruptions.

CFTC Chairman Michael Selig’s keynote at the Federal Reserve Bank of New York Treasury Market Conference on September 22 supplied the framing for these rules: he said the CFTC is “committed to providing clear, principles-based rules” for tokenization and on-chain finance, and suggested that “using blockchain technology and tokenized assets could become the foundation of a more efficient financial system.” This is consistent with the FAQs updated on September 24, which clear the way for traditional assets to move on-chain under existing authority, without waiting for Congress.

The genuine controversy came from the SEC. On September 25, the SEC’s Division of Corporation Finance released nine crypto asset FAQs, with an addition on September 28 (“and has no central party”). The set builds on the March 17 joint interpretive release and focuses on two layers: asset classification and investment contract analysis. On classification, the FAQs clarify that Staking Receipt Tokens may be treated as “digital tools” or “digital commodities” depending on the circumstances, and distinguish “receipts” from other financial instruments. On investment contracts, they state that promoting a crypto system’s current utility or potential features, absent promotion of profit potential, likely does not constitute “essential managerial efforts”; once a system is functional, maintenance, improvement, and enhancement activities likewise would not constitute such efforts.

The conclusion that “a buyback on a functional network does not constitute an investment contract” was meant to loosen the grip on fully decentralized networks, especially since crypto projects spent roughly $640 million on buybacks in 2026. But it immediately drew fierce opposition from top venture firm a16z. Its general counsel Miles Jennings wrote on X: “Under this read, any startup can tokenize any revenue stream, sell those tokens to the public, and avoid securities laws. Maybe the biggest loophole ever. No way this holds up in court or in any future administration. Just absurd.” Jennings has long argued that company-backed tokens (analogous to shares) should be treated as securities, while network tokens should be commodities. Peirce responded that the FAQ does not apply when a “central party” exists, but prominent crypto lawyers including VB Capital’s Scott Johnsson and Gabriel Shapiro sided with Jennings, warning the FAQs could “open up a can of adverse selection worms.”

Crypto Mom Leaves: The SEC Drops to Bare Quorum

In the same week the SEC was issuing rules at a rapid clip, on September 25 Commissioner Hester Peirce, nicknamed “Crypto Mom” by the industry, posted a photo of her resignation letter on X with the caption “T minus 7,” announcing she would step down effective October 2. In the letter she called her service at the SEC “the honor of my professional lifetime” and praised the leadership of Chair Paul Atkins and Commissioner Mark Uyeda. Appointed on January 11, 2018, she served for nearly nine years, staying on in a holdover capacity after her term expired in June 2025 until October 2.

Peirce has led the SEC’s Crypto Task Force since February 2025 and is the central driver behind the agency’s shift from “regulation by enforcement” toward guidance on staking, mining, meme coins, and token classification. In a farewell speech at the SIFMA digital assets conference in New York on September 23, she advanced a distinctive argument: regulators can catch criminals while collecting less personal data, because “bigger haystacks make the needles harder to find.” She urged reliance on zero-knowledge proofs and attribute-based credentials, and on reusing identity checks already performed by other regulated institutions, rather than duplicating collection. The stance is consistent with her long-held philosophy of “less regulation, more rules.”

Her departure makes the personnel question urgent. After she leaves, the SEC will have only Atkins and Uyeda as seated commissioners, the bare legal minimum, with three vacancies. Caroline Crenshaw left in January, and the seat vacated by Jaime Lizárraga in January 2025 has remained empty. Federal law caps any single party at three of the five seats, so the White House and Senate must agree on two non-Republican nominees before the commission can be whole again, and such confirmation fights routinely take six to twelve months. As of now, the White House has nominated no successor and named no new Crypto Task Force lead.

The irony is that Peirce leaves just as crypto rules land in rapid succession, including the Reg Crypto proposal she championed (open for comment until October 20) and the five-year innovation exemption for on-chain trading of tokenized stocks approved September 17. Startup Fortune’s commentary makes the point: with three commissioners including two Republicans, the SEC will not reverse course in the near term; what is genuinely lost is “the person who was doing the actual translation work between exchanges’ legal teams and the agency’s rulemaking process,” and translation work does not show up on a vote count. Market data adds texture to that worry: US spot bitcoin ETFs pulled in $2.4 billion in the week ending September 25, the largest weekly haul since October 2025, with BlackRock’s IBIT alone taking $1.2 billion, while bitcoin traded in the $84,000-$86,000 range.

Implications for Practitioners