🚀 Crypto Regulation Shakeup: GENIUS Act Takes Aim at Big Tech as SEC Flip-Flops on ETF Approval

Big Tech just got served—and crypto might be the unintended beneficiary. The GENIUS Act's surprise move against tech monopolies coincides with the SEC's latest about-face on crypto ETFs. Talk about regulatory whiplash.

Here's what's really going on behind the headlines.

When lawmakers and regulators play ping-pong with your portfolio

The GENIUS Act's 'algorithmic transparency' requirements could force tech giants to open their black boxes—potentially creating openings for decentralized alternatives. Meanwhile, the SEC's ETF reversal smells like political calculus masquerading as investor protection.

The institutionalization paradox

Every ETF approval brings more Wall Street money into crypto... and more Wall Street headaches. The irony? The same regulators who spent years calling crypto a scam now can't stop greenlighting vehicles to trade it. Someone check Gary Gensler's burner wallet.

Bottom line: In the tug-of-war between innovation and regulation, 2025's proving one thing—nobody's got clean hands. Not Big Tech, not the SEC, and certainly not your friendly neighborhood crypto bro with a 'wen lambo' bumper sticker.

GENIUS Act Draws Line Against Big Tech in Stablecoins

One of the most notable updates comes from the recently enacted GENIUS Act, which includes a provision aimed squarely at preventing Big Tech and Wall Street from dominating the stablecoin sector.

Commonly referred to as the “Libra clause,” the rule references Meta’s failed global currency project and reflects regulators’ determination to avoid similar power consolidation in future digital money systems.

A provision in GENIUS Act aims to curb the influence of tech conglomerates and major financial institutions in the US stablecoin market.#GENIUS #Stablecoinshttps://t.co/IE7FZdWjXw

Under this clause, any non-bank firm aiming to issue a dollar-backed stablecoin must establish a separate, standalone legal entity to house the operation. That entity WOULD be required to undergo antitrust scrutiny and secure clearance from a Treasury-led oversight committee, which holds veto power.

Banks are also subject to restrictions. They must issue stablecoins through legally distinct subsidiaries that are prohibited from engaging in leverage, lending, or any activity that could pose broader financial risks.

This creates a highly controlled environment, with boundaries that Circle’s Chief Strategy Officer Dante Disparte described as more conservative than deposit-token models being explored by large financial institutions like JPMorgan.

The measure shows an aggressive push by U.S. regulators to ensure the stablecoin space does not replicate past issues of too-big-to-fail institutions dominating financial infrastructure. It also sets the stage for a broader reimagining of how the U.S. will handle fiat-backed digital assets in the years to come.

Senate Introduces Market Structure Framework for Crypto

Building on the momentum of the GENIUS Act, the Senate Banking Committee unveiled a new draft bill designed to restructure how digital assets are classified and regulated.

Titled the Responsible Financial Innovation Act of 2025, the bill is co-sponsored by Senators Tim Scott, Cynthia Lummis, Bill Hagerty, and Bernie Moreno.

Senate Banking Chair @SenatorTimScott, @CynthiaMLummis, @SenatorHagerty, @BernieMoreno release a draft on crypto market structure—seeking feedback on 35+ topics.#CryptoMarket #CryptoPolicyhttps://t.co/XUh532lA9j

This new legislation attempts to address long-standing confusion in the crypto sector by providing a clearer framework for when tokens should be treated as commodities versus securities.

It draws from prior legislative attempts such as the bipartisan Lummis-Gillibrand proposal and incorporates elements of the House-passed CLARITY Act.

By creating consistent regulatory definitions and assigning clearer jurisdictional responsibilities to the SEC and the CFTC, the bill hopes to provide digital asset companies with the certainty they’ve long asked for.

It also represents growing bipartisan awareness that crypto markets need regulation — but not at the cost of innovation. If passed, the bill could fundamentally change how digital assets are launched, traded, and reported in the U.S. market.

DOJ Drops Case Against Jesse Powell

In another headline-grabbing twist, the U.S. Department of Justice has reportedly closed its investigation into Kraken founder Jesse Powell, ending a legal saga that began with a raid on his home in 2023.

The Department of Justice has dropped its probe into Kraken founder Jesse Powell, a new report from Fortune alleges.https://t.co/NmCr5ZbobH

The probe originated from a management dispute tied to the Verge Center for the Arts, a nonprofit Powell helped co-found. Allegations included cyberstalking and unauthorized access to sensitive information. While Powell has strongly denied the accusations, federal agents had seized multiple devices from his home during the investigation.

According to recent reports, the DOJ has since returned the seized equipment and dropped all charges, implicitly affirming Powell’s version of events. The Kraken founder had filed a civil lawsuit against members of the nonprofit’s board, citing reputational damage and false claims.

The case’s closure removes a major legal cloud from one of the industry’s more high-profile figures and marks a rare example of federal prosecutors walking back a high-profile crypto-related investigation.

SEC’s Sudden Reversal on Bitwise ETF Stuns Markets

In a MOVE that rattled investor confidence, the Securities and Exchange Commission (SEC) granted — and then rescinded — approval for Bitwise’s 10 Crypto Index ETF within a matter of hours.

SEC Hits Pause on Bitwise ETF Offering Broad Crypto Exposure

The US Securities and Exchange Commission approved and then immediately paused the conversion of Bitwise’s crypto index fund into an exchange-traded fund, leaving it in limbo pending a review.

The SEC's Division of…

The ETF was designed to track a diversified basket of cryptocurrencies including Bitcoin, Ethereum, Solana, XRP, and others, with 85% of its weighting in already-approved assets.

NYSE Arca had received accelerated approval to amend its rules for listing the multi-asset fund. But that decision was quickly stayed by the SEC’s Assistant Secretary Sherry Haywood under Rule 431. The Commission said it would conduct further review of the action taken by its Division of Trading and Markets.

The reversal is especially notable because it came despite the SEC initially finding the fund consistent with investor protection and anti-fraud standards under the Exchange Act.

This abrupt about-face comes as more than 70 crypto-related ETF applications — from major firms like Grayscale, VanEck, and Franklin Templeton — await decisions. It also raises concerns over how internal divisions at the SEC may be affecting the consistency and clarity of crypto asset approvals.

This week’s developments show that the regulatory environment for crypto in the U.S. is rapidly evolving — and still unstable in key ways.

While Congress is beginning to offer structure through bills like the GENIUS Act and the Responsible Financial Innovation Act, federal agencies are still sending mixed signals.