Summary:
- States are taking action on digital asset policy. From licensing regimes to rules for stablecoin issuers and a new transaction tax framework, U.S. States across the country moved at breakneck speed this year on legislation, rulemakings, and judicial actions with far reaching consequences for digital asset businesses and consumers.
- More policymakers are looking to update their authorization protocols. Digital asset businesses operating nationwide are contending with an increasingly complex patchwork of divergent laws governing money transmission, trust activity, and crypto specific licenses and charters.
- Enabling GENIUS-compliant state regulatory pathways is a key priority. States like Florida, Indiana, Delaware, Pennsylvania, and New York worked to align rules for stablecoin issuers with the GENIUS Act. CCI engaged to ensure that issuers face consistent requirements and stablecoins remain fungible across jurisdictions.
- Conflicting standards are blocking consumer access. Legislatures are stepping in to provide clarity under state securities laws when it comes to critical technical operations like staking-as-a-service.
- Illinois shows what a divergent state regime costs. The Digital Asset Tax Act would violate federal prohibitions against taxing internet activity directly; CCI is challenging it in court alongside the Blockchain Association and backing repeal efforts.
- CCI will continue to track these developments and advocate on behalf of its members.
The Evolving Licensing Landscape
Without federal market structure legislation, states continue to develop their own schema for determining how to authorize digital asset businesses operating in their jurisdictions. Most states are updating their existing rules for money transmitters and trust charters to accommodate digital asset activity. For states with their own digital asset specific frameworks like New York, California, and Illinois, we saw pivotal updates this year to how regulators are implementing them.
- California – In June, Governor Gavin Newsom signed SB 97, critical clean-up legislation to rightsize the Digital Financial Assets Law (DFAL) ahead of its licensing deadline on July 1. This bill refined key definitions in the law and narrowed its scope in order to clarify expectations for potential licensees preparing to comply with the law. Read CCI’s support letter.
- New York – The State Assembly and Senate considered legislation to codify New York’s BitLicense and limited purpose trust charter rules for Virtual Currency Business Activity (VCBA) and reform material business change approvals for businesses operating in the state. Read CCI’s support letter.
Aligning state stablecoin frameworks with the GENIUS Act
The GENIUS Act allows state-qualified issuers to operate under state regimes that are certified as “substantially similar” to the federal framework under the GENIUS Act. In June, CCI submitted a comment letter to the Treasury Department urging consistency among state pathways.
CCI also pressed state legislatures and regulators on this same principle:
- Florida: Prior to passing the nation’s first legislation to establish a state pathway for stablecoin issuers, SB 314, the Florida State Legislature advanced critical amendments to the bill’s licensing and supervisory requirements, yield and rewards provisions, application requirements, and reciprocity provisions for out-of-state issuers.
- Indiana: Indiana considered, but ultimately rejected, problematic prohibitions on stablecoin yield and rewards. Read CCI’s testimony to the Senate Insurance and Financial Institutions Committee.
- Delaware: Governor Matt Meyer signed a legislative package updating the state’s money transmitter rules for digital asset businesses and establishing a regulatory pathway for stablecoin issuers. We were glad to see the state legislature adopt critical amendments to rightsize the legislation’s scope and enable reciprocal licensing recognition for out-of-state issuers. Read our letter.
- New York: CCI responded to the New York Department of Financial Services’ (NYDFS) Proposed Rule Regarding Authorized Payment Stablecoin Issuers. The letter urges NYDFS to refrain from advancing the rule until Treasury finalizes its substantial similarity criteria and the federal framework is harmonized across regulators.
Clarity on Staking-As-A-Service
State legislatures have been stepping in to provide clarity on state securities laws when it comes to staking-as-a-service programs. Staking is integral to the operation and security of proof-of-stake blockchain networks. Despite federal guidance from the SEC and best practices in forty-six states, four state regulators have taken the position that certain staking programs constitute securities activity..
- In states like California and Wisconsin, legislatures are considering important proposals that would align their state’s securities laws with prevailing approaches on staking-as-a-service in 46 other states as well as the federal government.
- CCI testified in support of legislation in both of these states to clarify staking’s role in securing blockchain networks.
Illinois: implementation and a new tax
On the Digital Assets and Consumer Protection Act (DACPA), the State Legislature introduced trailer legislation to refine the bill’s compliance obligations, HB 5303.
- CCI supports this important legislation.
- On the implementation front, the Department of Financial and Professional Regulation (DFPR) published its notice of proposed rulemaking on May 15. Read CCI’s comment letter.
The Digital Asset Tax Act imposes a 0.2% tax on certain digital asset business activity. CCI wrote to Governor J.B. Pritzker urging a veto.
- CCI and the Blockchain Association have filed a suit in the Circuit Court of Sangamon County challenging the law.
- On September 9, the state moved for a preliminary injunction to bar collection before the tax takes effect on January 1, 2027.
- Leading voices from American business, the securities industry, the digital asset ecosystem, and the Justice Department have filed briefs in the Circuit Court of Sangamon County, Illinois, supporting the Crypto Council for Innovation (CCI) and Blockchain Association’s (BA) challenge to the State of Illinois’s Digital Asset Tax Act.
Looking ahead
With federal market structure legislation delayed, state actions like licensing regimes, stablecoin issuance pathways, and tax measures will carry greater weight for digital asset businesses.
Following last week’s elections around the country, Democrats will likely hold majorities in 51 of the 99 state legislative chambers and 26 governors’ mansions. They will also secure trifectas, or control of both a state’s legislative chambers and the governor’s office, in 22 states. This is the largest share of power at the state level Democrats have enjoyed in almost fifty years.
We expect state policymakers will feel empowered on digital asset policy . In states where Democrats control the purse strings, building out capacity for regulators taking on new rules for digital asset businesses operating in their jurisdictions will likely be at the top of the agenda. Democrats will also likely work to ensure that all conversations around any new digital asset policies are centered on sound consumer protection standards. There may be pushback against federal efforts to nationalize certain questions about how best to regulate industry.
CCI will continue to advocate for state frameworks that align with federal law, reduce duplication, and keep innovation in the United States while protecting consumers. CCI stands ready to continue serving as a collaborative and substance-driven resource for policymakers across the country as they tackle these important questions.
