U.S. Senator Lummis Gives Banks the Green Light for Crypto in 2026, Wall Street Smells Opportunity
U.S. Senator Lummis Pushes Clear Federal Framework to Let Banks Offer Crypto Services
Washington’s long-running debate over how to regulate digital assets is entering a new phase. U.S. Senator Cynthia Lummis is calling for large American banks to be formally allowed to provide crypto-related services under a unified federal framework, arguing that digital assets are no longer a fringe innovation but an established part of the modern financial system.
In a recent post on X, Lummis highlighted the Responsible Financial Innovation Act, a sweeping proposal aimed at bringing cryptocurrencies, stablecoins, and blockchain-based services into the regulated banking environment. According to the senator, the legislation would strike a balance between innovation and oversight by integrating digital assets into existing supervisory structures while maintaining consumer protections.
Lummis currently serves as chair of the Senate Banking Subcommittee on Digital Assets, a role that places her at the center of congressional efforts to define how crypto should be regulated in the United States. She said that crypto has effectively become part of the financial system, and that proper supervision can encourage responsible growth without weakening long-standing safeguards designed to protect depositors and investors.
Her comments come as regulators, lawmakers, and financial institutions continue to grapple with the consequences of rapid crypto adoption, high-profile exchange failures, and ongoing jurisdictional disputes among U.S. regulatory agencies.
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| Source: Xpost |
Banks Could Gain a Green Light for Custody, Staking, and Payments
At the heart of the 2026 proposal is a significant shift in how banks could interact with digital assets. Under the framework outlined in the Responsible Financial Innovation Act, federally regulated banks and depository institutions would be allowed to offer crypto custody, staking, and payment services directly to customers.
Rather than operating in what many in the industry describe as a regulatory gray area, these services would fall under existing banking oversight. That means traditional safeguards, such as capital requirements, risk management standards, and compliance obligations, would apply to crypto activities in much the same way they apply to conventional financial products.
Supporters of the bill argue that this approach could significantly reduce operational and counterparty risk for consumers. Banks already handle complex assets at scale, manage sensitive financial data, and comply with strict regulatory requirements. Extending those standards to crypto, proponents say, could lower the risk of fraud, mismanagement, and sudden platform failures that have plagued parts of the digital asset industry.
Lummis framed the proposal as a practical response to market reality. She said regulated banks are well positioned to act as trusted intermediaries for individuals and businesses seeking exposure to digital assets, without forcing them to rely on lightly regulated or offshore platforms.
Bringing Crypto Into the Regulated Financial System
The senator’s push reflects a broader shift in tone among some policymakers, who now acknowledge that crypto is unlikely to disappear and must instead be integrated responsibly. By allowing banks to participate more fully, the legislation aims to move crypto activity into a space where regulators already have experience and authority.
Industry advocates say this could also help normalize crypto use among institutional investors, corporations, and everyday consumers who have been hesitant to engage with digital assets due to concerns about security and legal uncertainty.
However, critics warn that bank involvement could fundamentally change the nature of crypto markets. Some argue that increased reliance on traditional financial institutions could undermine decentralization, one of the core principles behind blockchain technology. Others worry that large banks could dominate the space, squeezing out smaller crypto-native firms and startups.
Despite these concerns, supporters counter that decentralization and regulation do not have to be mutually exclusive. They argue that offering regulated on-ramps and custodial services does not prevent users from participating in decentralized networks but instead provides safer access points for those who want them.
Regulatory Clarity at the Center of the Bill
One of the most consequential elements of the Responsible Financial Innovation Act is its attempt to clearly define which federal agencies oversee different types of digital assets. For years, uncertainty over jurisdiction has created confusion for companies and investors, particularly amid high-profile enforcement actions and conflicting interpretations of the law.
The bill draws a distinction between commodities and securities in the digital asset space. Under the proposal, most cryptocurrencies, including Bitcoin and Ether, would be classified as commodities and fall under the oversight of the Commodity Futures Trading Commission. Tokens that meet the legal definition of securities would remain under the authority of the Securities and Exchange Commission.
Lawmakers backing the framework say this clarity is essential for fostering innovation while maintaining market integrity. By setting clear rules of the road, they argue, companies can build and invest with greater confidence, and regulators can enforce the law more consistently.
Stablecoins and Systemic Risk
The legislation also addresses stablecoins, a rapidly growing segment of the crypto market that has attracted heightened regulatory scrutiny. Under the proposed framework, stablecoin issuers would be required to maintain full reserves backed by high-quality liquid assets and provide regular public disclosures.
Supporters say these measures are designed to reduce systemic risk and prevent scenarios in which a loss of confidence in a major stablecoin could ripple through the broader financial system. At the same time, the bill seeks to preserve room for innovation in payments and cross-border transactions, areas where stablecoins are often promoted as faster and cheaper alternatives to traditional rails.
By setting federal standards, the proposal aims to avoid a patchwork of state-level rules that could complicate compliance and fragment the market.
Tax Rules and Everyday Crypto Use
Another notable feature of the Responsible Financial Innovation Act is its approach to taxation. The bill proposes a de minimis exemption for small crypto transactions used for payments, potentially removing a major barrier to everyday use.
Under current rules, even minor crypto payments can trigger capital gains reporting requirements, a burden that critics say discourages practical adoption. The proposed exemption would allow small transactions to occur without generating taxable events, making crypto more usable for routine purchases.
The framework would also clarify how mining and staking rewards are taxed. Rather than being taxed when received, rewards would become taxable only when sold, a change that advocates say better reflects economic reality and aligns crypto taxation with other asset classes.
Mixed Reactions From Crypto and Policy Circles
Reaction to Lummis’s comments and the broader proposal has been mixed. Many in the crypto industry welcomed the idea, arguing that digital assets have earned a place within the mainstream financial system. Some described the bill as an invitation for crypto to take a “seat at the grown-up table.”
They say bank involvement could help the industry scale, improve consumer trust, and attract long-term capital. Institutional participation, in particular, is often seen as a key factor in reducing volatility and supporting market maturity.
Others, however, expressed concern that increased regulation could come at the cost of innovation. Critics worry that compliance requirements designed for large banks may be too burdensome for smaller crypto firms, effectively consolidating power among established incumbents.
Policy analysts also note that coordination between regulators will be critical. Past disagreements between the SEC and CFTC highlight how difficult it can be to draw clear lines in practice. Without consistent enforcement and cooperation, some warn, clarity on paper may not translate into certainty on the ground.
A Long Road Through Congress
The Responsible Financial Innovation Act is not new. Versions of the bill have been introduced in multiple congressional sessions since 2022, shaping debate even as they failed to advance into law. Still, Lummis’s recent remarks suggest that momentum may be building as lawmakers look ahead to 2026.
The broader political environment remains uncertain. Crypto regulation has often divided lawmakers along ideological and regional lines, and any comprehensive framework will need bipartisan support to move forward.
For now, the bill stands as a detailed blueprint for how Washington could integrate crypto into the U.S. banking system. Whether Congress can align consumer protection, financial stability, and innovation remains an open question. But as digital assets continue to grow, the pressure to provide clear federal rules is only increasing.
For media coverage and ongoing analysis of U.S. crypto policy, readers can follow updates from hokanews as the debate unfolds.
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Writer @Ethan
Ethan Collins is a passionate crypto journalist and blockchain enthusiast, always on the hunt for the latest trends shaking up the digital finance world. With a knack for turning complex blockchain developments into engaging, easy-to-understand stories, he keeps readers ahead of the curve in the fast-paced crypto universe. Whether it’s Bitcoin, Ethereum, or emerging altcoins, Ethan dives deep into the markets to uncover insights, rumors, and opportunities that matter to crypto fans everywhere.
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