The US has had a busy start to 2026 in digital assets and technology regulation. The past three weeks alone have seen the launch of powerful artificial intelligence tools accompanied by heightened debates about economic, social and existential risks, alongside the benefits AI can deliver.
At the same time, congressional and administration efforts on a digital assets regulatory framework are moving ahead despite a major industry player withdrawing support for a bipartisan market structure bill. Against this backdrop, OMFIF held a wide-ranging discussion with Democrat Congressman Bill Foster on regulation and technology. He examined the risks and unintended consequences now facing legislators, policy-makers and regulators.
Foster, a physicist and former tech entrepreneur, serves on the House Financial Services Committee and subcommittees on Digital Assets, Financial Technology and Artificial Intelligence; Financial Institutions; and National Security, Illicit Finance and International Financial Institutions. He also co-chairs the Blockchain Congressional Caucus, leads the House AI Task Force and sits on the House Science, Space and Technology Committee. Foster has said: ‘we must protect our leadership in AI by responsibly regulating this new and high-powered technology.’
A rapidly changing environment
Nowhere is this rapid change more evident than in artificial intelligence. The early February launch of Claude Opus 4.6 and the viral take off of OpenClaw, with advanced agentic planning and complex tasks capabilities, have been rapidly adopted by early users, benefitting individuals and companies, while reinforcing existing AI security and safety concerns. Dario Amodei, CEO of Anthropic, has raised the possibility of superhuman AI arriving by 2027 while Elon Musk, SpaceX and Tesla CEO, predicted AI could be ‘smarter than all of humanity collectively’ by 2030. He foresees more robots than humans.
Parallel to advances in AI, blockchain adoption has also accelerated, improving financial market infrastructure, enabling new digital assets products and services, and expanding market access. This foundational technology has increasingly been adopted by mainstream traditional and decentralised finance players and further boosted by the Genius Act, the first federal framework for payment stablecoins.
Growing acceptance of stablecoins, often called the ’gateway drug to tokenisation,’ is accelerating development of a tokenisation market, with some estimates projecting a $30tn market cap by 2030. Securities and Exchange Commission Chair Paul Atkins has predicted that US securities markets could gravitate to on chain within two years, and in mid-January the New York Stock Exchange announced plans for a new blockchain-based platform to support 24/7 trading and instant settlement of tokenised securities. The need for preparedness along with balanced and ‘responsible’ regulation has never been more pressing.
The Washington-based event with Foster examined several key regulatory challenges.
The Genius Act
While this bipartisan initiative provides a regulatory framework for stablecoins, growth of this market could have significant implications for US Treasuries. The stablecoin market, currently around $300bn, could grow to $3tn according to US Treasury Secretary Scott Bessant. Roughly two-thirds of the market is currently dominated offshore by Tether, which last year made $28.2bn in net purchases of US government bonds.
The rise of agentic AI, combined with faster transaction speed, will also impact Treasury market stability. Broader 24/7 trading and instant settlement on blockchains underscore the importance of mechanisms such as real-time monitoring tools and resilient infrastructure to ensure the financial system’s plumbing can withstand potential bank runs – runs that can now occur in minutes rather than a few days, as with Silicon Valley Bank. These issues will no doubt be part of the Financial Stability Oversight Council’s priorities on market resilience and financial stability.
The Clarity Act
Like the Genius Act, efforts to enact a market structure bill for the broader $3tn digital assets market have proceeded on a bipartisan basis. A key unresolved issue is whether stablecoin holders can earn any type of interest on their holdings. While the Genius Act bars issuers from paying interest or yield, the Clarity Act proposal could extend the ban to digital assets service providers such as custodians, wallets and crypto exchanges like Coinbase.
Banks worry that consumers would shift their money into crypto, leading to deposit flight. Community banks whose deposits fund local business lending, are viewed as being particularly at risk.
Tokenisation and digital ID
Rapid growth in tokenisation, spurred by blockchain adoption, has put the spotlight on digital identity verification, as BlackRock CEO Larry Fink highlighted in his 2025 annual letter. By leveraging distributed ledger technology, tokenisation will transform efficiency and expand access for underserved investors with fractional ownership, but it also poses risks around opacity and fraud. Secure, interoperable digital ID systems that can provide verifiable online identities for authentication are critical.
In late January, the Stop Identity Fraud and Identity Theft Act was introduced, co-sponsored by Foster and Republican Congressman Pete Sessions, to fund states in developing secure digital IDs, such as mobile-based driving licences, that could align with National Institute of Standards and Technology standards. This could help reduce fraud in government programmes, finance and healthcare. Policy-makers could also consider working with a national facility to act as a technical ‘balls and strikes’ arbiter, such as the Fusion Data Science and Digital Engineering Center, which in 2025 created a digital ID verification template modelled on nuclear prototype systems.
Artificial intelligence
Aside from broader existential and social questions, AI offers many benefits but also raises risks around privacy, intellectual property, trust and consumer protections, including how to prevent AI financial advisers from steering investors towards products they might be promoting. In 2025, more than 1,200 AI-related bills were proposed at the US state level, and 38 states adopted approximately 100 AI laws.
In an 11 December Executive Order, the White House called for a single federal framework to avoid a patchwork of different AI regulations across states. Foster has said 50 different regulatory regimes are unworkable and perhaps a few large coalitions of states might find some common ground. In general, Foster has favoured principles-based oversight frameworks, called for international collaboration on AI safety and emphasised evidence-based governance.
In December, Foster and Sessions introduced the Responsible and Ethical AI Labeling Act, a bipartisan bill requiring the labelling of AI-generated content used by federal government entities in contrast to the more restrictive New York and California labelling requirements on private companies and developers. The growing popularity of prediction markets, fuelled by AI tools providing 24/7, high-speed analytics that outperform human forecasting, has also triggered regulatory questions, which Commodity Futures Trading Commission chair Michael Selig is working to clarify.
Finding the right balance – tackling risks and fostering innovation
Congress and the Donald Trump administration have made important strides towards greater regulatory clarity for new technologies, especially digital assets and, more recently, AI. Key questions remain about how to address the emerging risks while allowing innovation to flourish and set guardrails that protect consumers and financial stability without stifling progress.
As White House AI and Crypto Czar David Sacks recently said ‘It’s permissionless innovation. That’s what has made Silicon Valley the crown jewel of the world… Since Hewlett and Packard 85 years ago… the idea has always been that just a couple of founders can have a great idea… and they don’t need to go to Washington to get permission for their idea.’
This is not to underestimate the seriousness of outstanding questions, but over-regulating too early can be damaging. The US not only has some of the world’s smartest developers, scientists and innovators building these technologies but also some of the brightest minds to address the risks and unintended consequences they generate.
Washington needs continued bipartisan efforts, collaboration with states, innovators and industry, and the best and brightest minds at the table to tackle these challenges and find solutions – and to let the US keep doing what it does best: innovate.
Patricia Haas Cleveland is US President of OMFIF.
OMFIF will be in New York on 5 March to examine the next phase of US cryptoasset regulation.
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