Throughout most of 2025 and the beginning of 2026, discussions about U.S. crypto regulations dominated the landscape, but concrete action was slow to materialize. While lawmakers drafted bills, reached compromises, and government officials voiced support, the actual process of creating and enforcing regulations – including formal approvals, official directives, appointments, and legal cases – was consistently delayed and unpredictable. Progress started and stopped frequently, rarely happening when expected.
May 2026 marked a turning point for crypto regulation in the United States. Over a four-week period, the country saw more progress on clear, actionable crypto rules than in any single month since 2015 – and potentially the most important developments for U.S. crypto policy since the initial talks about approving Bitcoin ETFs. For the first time, the Senate Banking Committee worked together across party lines to advance a comprehensive bill for how crypto markets should be structured. The President issued an executive order requiring the Federal Reserve to study a key issue that crypto companies have been fighting in court for years. Additionally, the House Agriculture Committee urged the government to staff the agency that would oversee these new rules. The CEO of a major Bitcoin custodian publicly committed his company to leading the way in this new regulatory environment. Globally, Singapore filed criminal charges against a former executive of a failed crypto lending platform, showing a renewed focus on accountability after the 2022 crypto market downturn. All of this happened as a new Chair took over at the Federal Reserve.
Each of these changes would be significant on its own. But happening all in May 2026, they mark a major turning point for crypto regulations. Here’s a detailed look at what occurred, the reasons behind it, and what it means for the crypto world over the next six months.
The CLARITY Act Markup: A Bill That Almost Didn’t Survive May 14
The Digital Asset Market CLARITY Act, a potential new law that would clearly define which federal agencies – the CFTC and the SEC – oversee different types of digital assets, faced an uncertain path to approval on the morning of May 14th. The CFTC would regulate digital commodities and spot markets, while the SEC would oversee digital securities.
The bill passed only because a small group of Democrats and Republicans reached an agreement at the last minute, in a room just off the main committee chamber, after the official meeting had already begun.
Our negotiations concluded Wednesday evening, May 13th, without reaching an agreement, though we had made substantial headway on establishing ethical guidelines for government officials. The talks unfortunately hit a roadblock when we began discussing proposed amendments to the Blockchain Regulatory Certainty Act – specifically, the part intended to protect software developers who don’t hold customer funds from being prosecuted under money transmission laws. Ultimately, Republicans weren’t willing to compromise on the changes Democrats were proposing.
The disagreement stretched into Thursday morning. Five Democratic senators who support cryptocurrency – Mark Warner, Catherine Cortez Masto, Raphael Warnock, Alsobrooks, and Gallego – met in Warner’s office to plan their approach before a 10:30 a.m. hearing in the Dirksen Senate Office Building.
The situation changed after Chairman Tim Scott had begun the hearing, while reporters were focused on a disagreement over an amendment. Meanwhile, in a small room just off the main hearing chamber, a group of senators from both parties – including Thom Tillis, Cynthia Lummis, Alsobrooks, and Gallego – quickly reached an agreement to try and secure support from Democrats.
The final agreement involved changes to five amendments originally proposed by Senator Lummis. According to Crypto in America, the main adjustments included removing a reference to the Blockchain Regulatory Certainty Act, allowing banks and credit unions to work with digital assets, a minor change to rules about tokenization, a prohibition on insider trading of related digital assets, and maintaining existing state laws designed to protect consumers.
Following Scott’s decision, all the previously removed amendments were reinstated and approved with support from both Democrats and Republicans – some passed with nearly unanimous votes of 18 or 19. This broad, bipartisan support was key to gaining the votes of committee members Gallego and Alsobrooks.
The bill ultimately cleared the committee in a 15-9 vote.
The DeFi Cost of the Deal
As an analyst, I’ve been following the negotiations, and it’s clear this compromise came at a price. Removing the reference to the Blockchain Regulatory Certainty Act from Section 301 is worrying some in the DeFi community. They’re concerned this change could eliminate important safeguards for software developers as the bill progresses.
As a researcher following the developments in crypto regulation, I’ve been closely watching a debate since early May regarding whether developers who create non-custodial platforms should be protected from legal responsibility under Section 1960 of Title 18, which covers money transmission. Recently, a compromise was reached to keep a bill related to this issue moving forward. However, it seems this deal involved reducing the very protections for developers that the DeFi industry had been strongly advocating for.
Everyone will be paying close attention to whether parts of the bill are kept, changed, or removed as it’s debated and voted on next.
Lummis Thanks the Coalition
On May 17th, three days after the committee vote, Senator Cynthia Lummis, a Republican from Wyoming who leads the Senate subcommittee on digital assets, publicly thanked the bipartisan group that helped make the vote happen. Her post on X (formerly Twitter) received over 150,000 views.
She expressed gratitude to her colleagues, the Treasury Department, the White House, and industry partners for their hard work and collaboration, and urged everyone to finalize the Clarity Act so it could be sent to the President for approval.
Lummis carefully chose her words, thanking members of both parties, the Treasury Department, and the White House. This was to recognize that the bill only passed committee because Democrats and Republicans worked together and compromised. She then presented the committee’s success not as the end of the process, but as a turning point before the much more challenging debate on the Senate floor.
As I understand it, this bill now moves to the Senate where it will be combined with the Agriculture Committee’s version. Then, it goes to the full Senate for a vote, and it will take 60 votes to pass – meaning a filibuster is possible. Based on my assessment, around seven Democratic senators will be key to whether the White House can get this signed into law by July 4th. Even if everything goes smoothly, though, we’re probably looking at 2027 before any actual rules can be enforced.
The Trump Fintech Executive Order: A Federal Reserve on the Clock
On May 19th, just five days after the CLARITY Act was reviewed, President Donald Trump signed an executive order focused on bringing financial technology innovation into government regulations. This order could become the most important fintech policy of his presidency.
This order instructs six federal agencies – including the Consumer Financial Protection Bureau and the Securities and Exchange Commission – to update regulations for financial technology companies. They have 90 days to revise the rules and 180 days to put the changes into effect.
The proposal also asks the Federal Reserve to study, within four months, whether to allow banks and non-bank financial companies – including those involved in areas like cryptocurrency and instant payments – direct access to Federal Reserve payment systems.
The law broadly defines “fintech firms” to include almost all parts of the crypto industry – like exchanges, companies that hold crypto for others, stablecoin creators, payment processors using blockchain, and platforms for trading derivatives. It puts all of these under a single set of rules designed to simplify regulation. The definition specifically covers services related to digital assets and blockchain, in addition to traditional financial activities like lending, investing, and holding assets for customers.
Why the Reserve Bank Payment-Access Question Matters
The most important part of this proposal is Section 4, which asks the Federal Reserve to consider allowing banks and non-bank financial companies – including those involved in things like cryptocurrency and other new financial practices – direct access to payment systems. This would give them access to Reserve Bank accounts and payment services.
The directive instructs the Federal Reserve to report to the President within 120 days with its analysis, potential solutions, and advice. This report should cover whether the Fed has the legal power to allow direct access to its systems, how that access could be expanded safely, any legal barriers currently preventing it, and whether each of the 12 regional Federal Reserve Banks can independently approve or reject such access.
As a researcher, I’ve been looking into what the recent order refers to as “Reserve Bank payment accounts and payment services.” Essentially, this boils down to having master account access – a critical part of how payments work in the U.S. It allows financial institutions to hold reserves directly at the Federal Reserve, send and receive payments through systems like Fedwire and FedNow, and function as a full participant in the financial system, instead of relying on another bank to process their transactions.
Crypto companies, including banks like Custodia Bank in Wyoming, have long claimed that being blocked from directly accessing traditional financial services creates a significant obstacle. This forces them to use other banks as middlemen, which raises costs, creates delays, and increases the risk of dealing with those intermediaries. Custodia Bank is currently suing the Federal Reserve, a case that began in 2022, specifically over this issue.
It’s important to understand what this order *doesn’t* do. It doesn’t tell the Federal Reserve to grant access to anyone, nor does it mention any specific company. Instead of using the term “master account,” it broadly refers to “Reserve Bank payment accounts and payment services.” This wording gives the Fed considerable flexibility in how it interprets the order, and any real changes will hinge on what the Federal Reserve Board decides after its 120-day review.
The Leadership Transition That Will Decide the Answer
When this order is carried out is very important. The language used regarding the Federal Reserve specifically says “requested” instead of “directed” to emphasize the Fed’s independence. The 120-day review of the Federal Reserve, as outlined in the order, will be led by a new Board for the first time in eight years.
As a crypto investor, I’ve been keeping a close eye on the change at the Federal Reserve. Kevin Warsh was officially confirmed as the new Chair on May 13, 2026, taking over from Jerome Powell, whose term ended on May 15th. Powell actually served as interim chair for a couple of days until Warsh was sworn in. What’s really unusual is that Powell will *stay* on the Board of Governors until January 2028 – it’s the first time a former Fed chair has done that in almost 80 years. It’s definitely a unique situation and something I’m watching closely to see how it might impact the crypto market.
The Federal Reserve, under the leadership of Chair Warsh – a former board member who helped navigate the 2008 financial crisis – will independently decide how to handle this matter, including the timing and any resulting conclusions. The White House will not directly intervene in these decisions.
Regardless of how the Federal Reserve reacts, this order officially puts direct payment access for cryptocurrency companies on the federal government’s to-do list, and requires a decision by a specific date set by the President. This is a significant change from the past, where these issues were handled on a case-by-case basis through legal battles.
The CFTC Vacancy Problem
Following the recent progress on the CLARITY Act, the U.S. House Committee on Agriculture sent a letter on May 15th asking President Trump to appoint a complete group of CFTC Commissioners with members from both parties.
In a letter, Committee leaders Glenn Thompson (Republican, Pennsylvania) and Angie Craig (Democrat, Minnesota) stated that having a full five-member commission would be most beneficial for the public, financial markets, and the agency itself. They explained that this would lead to improved regulations, more stable rules, and greater consideration of different perspectives from those involved in the derivatives market.
The Commodity Futures Trading Commission, or CFTC, is normally run by a five-person team – typically with two Democrats, two Republicans, and a leader chosen by the President. Currently, however, only one member has been confirmed: Michael S. Selig, who became the agency’s 16th Chairman in December 2025 after Senate approval on December 18, 2025.
After Acting Chairman Caroline Pham left to work for the crypto payment company MoonPay, Michael Selig became the only remaining commissioner at the agency, which normally has five members and now has four open positions.
The Committee’s letter clearly explains the reason for the current rush: the CFTC is preparing for a much larger workload. The letter points out that Congress and the White House are collaborating on new laws that would give the CFTC oversight of spot digital commodity transactions, which would require a substantial rule-making process.
As a crypto investor, I’m keeping a close eye on something called the CLARITY Act. Basically, it would give the CFTC – that’s the Commodity Futures Trading Commission – a lot more power over the current spot market for digital assets. This isn’t just a small change; they’d essentially be in charge and have to create a whole new set of rules for exchanges, companies that hold crypto for others, and anyone who buys or sells digital assets. It’s a big deal that could really shape how the market operates.
The letter was intentionally sent shortly after the Senate Banking Committee reviewed the CLARITY Act, with a date of May 15, 2026. It’s significant that the letter is bipartisan. Considering how often cryptocurrency regulation divides Democrats and Republicans in Washington, the fact that both the Republican chair and the leading Democrat on a key House committee signed it together is noteworthy. This shows that concern over the CFTC being understaffed is something both parties agree on.
Coinbase’s “Jobs Not Done” Eight-Point Framework
As a researcher, I’ve found that a single post really encapsulates how institutions and corporations reacted to the surge in regulations last May. It perfectly captures the overall response.
On May 25th, Brian Armstrong, the CEO of Coinbase, shared an eight-point list on X (formerly Twitter) outlining areas where cryptocurrency still needs to improve. The post quickly gained over 189,000 views.
These eight key features aim to revolutionize finance by allowing people to trade real-world assets around the clock, anywhere in the world. They include modern payment methods, AI tools for managing risk and providing financial advice, regulations that encourage innovation, wider access through secure, self-managed wallets, lower costs for raising capital, and a stable, inflation-resistant form of money.
He concluded by saying that their work isn’t finished until these solutions work for everyone. Achieving this will take significant advancements in technology and changes to existing policies.
This framework isn’t just a statement of ideals; it’s also a clear attempt to influence policy. The wording in section 5 – advocating for flexible, risk-based regulations that promote innovation and competition – directly reflects the ongoing debate between the cryptocurrency industry and the SEC. In fact, it closely mirrors the language used in President Trump’s executive order from May 19th.
This announcement came just four days after Coinbase revealed they’d significantly improved how quickly they handle compliance issues – a 90% reduction – by using AI to redesign their processes. It also followed a month where Coinbase publicly supported the CLARITY Act, after initially changing their stance on it twice. Considering all of this, the announcement signals Coinbase’s long-term commitment – over the next decade – to building systems that align with both the CLARITY Act and a previous executive order from the Trump administration.
The Hodlnaut Charge: Post-Terra Accountability Goes Operational
The surge in cryptocurrency regulations in May 2026 wasn’t limited to the US. In Singapore, on May 26th, authorities charged 36-year-old Zhu Juntao, the former CEO of the failed crypto platform Hodlnaut, with fraud.
According to the statement of facts, the accusations against Hodlnaut concern what the company told its users during the critical period of the Terra/LUNA crisis. It’s alleged that after the sudden collapse of TerraUSD (UST) in early May 2022, Zhu directed Hodlnaut employees to make false claims in the company’s Telegram chat and in emails to users between May and July 2022. These claims reportedly stated that Hodlnaut had no direct investment in UST and hadn’t lost money due to its collapse.
Hodlnaut seems to have significantly misrepresented its financial situation to users. Court filings in Singapore revealed a $193 million loss in August 2022. The platform also had $13.1 million of user funds stuck on the failed FTX exchange and served over 30,000 users globally before shutting down in August 2022.
The criminal case is different from regulatory actions – it’s a police investigation under the Penal Code, not a licensing issue handled by the Monetary Authority of Singapore. However, the message is clear: Singapore will prosecute senior executives in court for actions believed to have harmed everyday crypto investors during a market downturn, even if those actions happened years ago.
The recent action against Hodlnaut is part of a larger wave of legal and financial fallout following the collapse of Terra in May 2022. Several companies are still dealing with consequences from that event. Coinbase is currently facing lawsuits related to its decision to halt trading of Wrapped LUNA in 2022. Binance’s early investment in Terra – $3 million in 2018 – reportedly grew to $1.6 billion by April 2021, as revealed in CZ’s memoir and reported by The Crypto Times, though Binance didn’t sell any of its holdings. The company has since faced legal challenges related to UST. Meanwhile, the legal battles involving TerraForm Labs co-founder Do Kwon are still ongoing in U.S. courts.
The accusation against Hodlnaut is very specific. It doesn’t concern broader issues like the company’s overall strategy, financial reporting, or risk management. Instead, it centers on a direct claim: that the CEO instructed employees to mislead users by sharing false information. This allegedly happened through official channels – the company’s Telegram group and emails – between May and July 2022, and specifically concerned their exposure to and losses from UST.
This level of detail is important from a legal standpoint. To prove fraud through false statements in Singapore, you need to show that a false claim was made, the person making it knew or should have known it was false, and that it caused the other party to take action. The police’s description of events carefully addresses each of these required elements.
How the case against Zhu unfolds will be carefully observed by other Asian countries involved in cryptocurrency – like Hong Kong, South Korea, and Japan – as they’ve also been developing rules to protect consumers after the collapses of Terra and FTX.
How May 2026 Reshapes H2 2026
New regulations coming in May 2026 have significantly changed expectations for crypto policy in the U.S. and worldwide during the second half of that year.
The CLARITY Act is now more likely to become law. The most difficult step – approval by the Senate Banking Committee – has been completed. While the bill still needs to be combined with other Senate text, pass a full Senate vote (requiring support from both parties), and potentially be revised in a conference with the House, the goal of White House approval by July 4th is now possible, though still challenging. However, it’s still not expected that the CLARITY Act will result in actual, enforceable rules until 2027.
From my perspective, the biggest hurdle to getting the CLARITY Act fully up and running isn’t the legislation itself anymore – it’s the lack of commissioners at the CFTC. Even if the CLARITY Act passes, the CFTC simply can’t write all the necessary rules with only one confirmed commissioner. Right now, the recent bipartisan letter from the House Agriculture Committee is key – it’s putting pressure on the administration to address this issue. Whether we see CFTC rulemaking start in 2026, or get delayed until 2027, really depends on how that pressure plays out.
Finally, major companies in the crypto world have made their positions clear. Actions by Coinbase, Strategy, SpaceX, and Block demonstrate a unified vision: they see crypto becoming part of the existing financial system, rather than a separate, alternative one. They believe crypto will function as a foundational element *within* traditional finance.
Finally, after the 2022 crypto market crashes, we’re seeing legal charges filed against individuals and companies, moving beyond just fines and regulatory actions. The recent case against Hodlnaut in Singapore is likely just the beginning. The systems for holding those responsible accountable – through lawsuits, penalties, and criminal charges – are becoming more established, spanning multiple countries, and are increasingly focused on holding senior leaders personally responsible.
What Comes Next
As a researcher, I believe the next few months – the remainder of Q2 and all of Q3 2026 – will be critical. They’ll reveal whether the positive regulatory steps we saw in May will lead to real, long-term changes, or if they’ll get stuck in debates within the Senate and at the Federal Reserve.
The key milestones to watch:
- Senate floor vote on the CLARITY Act, with the White House targeting July 4 passage. Whether the bipartisan coalition that survived the markup ante-room holds on the floor depends on how the unresolved Section 1960 / Blockchain Regulatory Certainty Act developer-protection question is resolved.
- The Federal Reserve’s 120-day response to the May 19 EO, with September 16, 2026 as the de facto deadline. Whether Chair Warsh concludes that existing law permits direct payment-account access for crypto firms will determine the trajectory of state-chartered crypto banks for years to come.
- CFTC commissioner nominations, which will determine whether the agency that would administer the CLARITY Act actually has the institutional capacity to write the rules. The House Agriculture Committee’s letter is now public pressure; whether the administration responds depends on White House priorities through the summer.
- The 90-day fintech regulator review, which lands on August 17, 2026. Whether the CFPB, SEC, NCUA, CFTC, FDIC, and OCC actually identify and streamline meaningful rules — or whether the review produces only modest cosmetic changes — will indicate the depth of the administration’s commitment to the EO’s stated framework.
- Subsequent post-Terra criminal charges, with the Hodlnaut prosecution serving as a template. Other regional crypto-lender failures — Celsius, BlockFi, Vauld, Zipmex — may face analogous proceedings.
Senator Lummis’s statement on May 17th – “Let’s get the Clarity Act to the President!” – celebrated a success while also signaling a shift in focus. She suggested the real challenge was still ahead.
After a long period of uncertainty, there’s now a clear schedule for how the U.S. government will approach crypto regulation. What happens next – whether this leads to real, lasting changes or just more delays – will depend on decisions made by politicians and regulators over the next four months.
What May 2026 established is that the machinery, finally, exists to make those decisions matter.
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2026-05-30 19:37