President Biden’s executive order on crypto gave Attorney General Merrick Garland until October 5 to produce a legislative proposal, if deemed necessary, that would enable the U.S. to issue a central bank digital currency. When the day passed without a report being released, Republican leaders on the House Financial Services Committee sent a letter to Garland saying, “Committee Republicans emphasized in our CBDC principles that the Federal Reserve does not have the legal authority to issue a CBDC absent action from Congress.” They asked DOJ to provide text of its assessment regarding whether or not legislative changes would be necessary to issue a CBDC by October 15.

Senate Banking Committee Ranking Member Pat Toomey (R-PA) introduced a bill, S. 4973, on September 29 that would allow sponsors of 401(k) plans to let their workers put retirement savings into alternative assets like private equity, real estate, and cryptocurrency. He said that while this is not prohibited by the Department of Labor currently, existing standards have a chilling effect on doing so. Cosponsors include Sens. Tim Scott (R-SC) and Cynthia Lummis (R-WY). Rep. Peter Meijer (R-MI) also supports the bill in the House.

Seven Republican lawmakers on the Senate Banking Committee and House Financial Services Committee submitted an amicus brief weighing in on cryptocurrency-focused bank Custodia’s lawsuit against the Federal Reserve for refusing to act on Custodia’s application for a master account. The lawmakers said the court should deny motions to dismiss filed by the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of Kansas City.

The cryptocurrency bill being negotiated by House Financial Services Committee Chairwoman Maxine Waters (D-CA) and Ranking Member Patrick McHenry (R-NC) is facing bipartisan resistance, thus making it unlikely that a vote will be held on the bill this week despite Waters indicating that she hoped to make progress on the bill this week. Members including Rep. Warren Davidson (R-OH) have voiced concerns about the draft text released last week, and he said he is “hopeful that the Financial Services Committee can resolve differences and settle on good legislation in either Q4 2022 or Q1 2023.”

On September 26 regulators in New York, California, Kentucky, Maryland, Oklahoma, South Carolina, Washington, and Vermont sued cryptocurrency lending company Nexo for illegally offering unregistered securities to investors. The group alleges that Nexo’s Earn Interest Product, which provided investors a chance to receive annual interest rates of up to 36 percent on crypto asset deposits, constitutes an investment contract that the company was not properly registered to offer.

Sens. Chris Van Hollen (D-MD) and Elizabeth Warren (D-MA) and Reps. Ayanna Pressley (D-MA) and Jesús “Chuy” García (D-IL) have reintroduced a bill that would compel financial institutions to recognize funds in real time, paving the way for the Federal Reserve’s new faster payments service, FedNow.

U.S. Attorney Damian Williams, Deputy Assistant Attorney General David Hubbert, and IRS Commissioner Charles Rettig announced that a federal judge has authorized the IRS to issue a “John Doe summons,” a term used when the IRS investigates unknown taxpayers. It compels New York-based M.Y. Safra Bank to submit information about taxpayers that might have failed to report and pay taxes on their cryptocurrency transactions and is reportedly specifically looking at users of the crypto exchange SFOX.

The Department of the Treasury filed a Request for Comment to seek feedback from the American people on the illicit finance and national security risks posed by digital assets. The filing comes in response to President Biden’s Executive Order, “Ensuring Responsible Development of Digital Assets” and the Illicit Finance Action Plan released by Treasury last week. The RFC will be open for comment through November 3.

The SEC announced on September 19 that it has reached a $35 million settlement with cryptocurrency company Sparkster Ltd. and its CEO who is alleged to have conducted an unregistered securities offering. The settlement includes an agreement to destroy the remaining SPRK tokens, request the removal of the tokens from trading platforms, publish the SEC's order on its website and social media channels, and pay $30 million in disgorgement, more than $4.6 million in prejudgment interest, and a $500,000 civil penalty.