A number of recent legislative and enforcement actions against cryptocurrencies and their stakeholders have provided valuable insight into how the US crypto landscape may evolve in the future. The U.S. government’s approach to crypto regulation will determine whether the industry will thrive or fall into uncertainty.
US regulatory landscape for cryptocurrencies
cryptocoin.comAs you follow, the USA is on the way of regulation for cryptocurrencies. It is likely to have a major impact on the future of the industry. The first important distinction to consider when analyzing the current state of the crypto regulatory environment in the US is the difference between the government’s legislative and enforcement approaches. It’s like comparing what the government says to what it does in practice. This is important. Because the difference between the two approaches provides valuable insight into the real intentions of the government regarding the industry and asset class.
On the legislative front, there has been a significant increase in bills related to cryptocurrencies over the past year. For example, Senators Cynthia Lummis and Kirsten Gillibrand have the Responsible Financial Innovation Act. Also, Representative Josh Gottheimer’s 2022 Stablecoin Innovation and Protection Act has been revealed. If these laws pass as proposed, the crypto regulatory and industry landscape will see significant changes that most industry stakeholders view positively.
Perhaps most importantly, the Commodity Futures Trading Commission will take precedence over the Securities and Exchange Commission (SEC) in becoming the asset class’s primary regulator by gaining jurisdiction over the cryptocurrency spot and derivatives markets. Until recently, industry stakeholders were fed up with the SEC’s aggressive “regulation by executive” approach. Therefore, this was considered a very welcome change.
There is another big change to watch for if these bills pass. This will be the introduction of stricter rules for stablecoins. It is possible that this could lead to an implicit ban of unsupported, algorithmic or “internally collateralized” stablecoins and 100% reserve requirements for stablecoin issuers. Stablecoin issuers will need to have bank charters that are very difficult to obtain or register directly with the Fed. However, it will significantly reduce the deep risks in the crypto market. On the other hand, it could also centralize the on-chain economy if the space becomes too dependent on regulated stablecoin providers.
How does the Biden Administration plan to deal with cryptocurrencies?
However, perhaps the most important development on the legislative front is the involvement of the White House. In this context, it makes extensive preparations to regulate the digital asset space. The framework was released on September 16 after President Biden signed an executive order on ‘Ensuring the Responsible Development of Digital Assets’ in March. It includes opinions and recommendations from the SEC, the Department of the Treasury, and many other government agencies on how to regulate crypto assets.
The framework provides the clearest overview to date of how the Biden Administration plans to tackle crypto, including plans to accelerate enforcement action against illegal practices, steer users away from crypto, and push toward government-issued and controlled centralized payment solutions like FedNow and CBDCs. provides. It seeks to leverage the country’s position in international organizations to amend the Bank Secrecy Act to explicitly apply to digital assets and encourage greater cross-border collaboration on crypto regulation and enforcement.
If management begins to implement their plans, the US crypto industry will begin to look more like fintech than the grassroots movement trying to create an alternative financial system it has come up with. It is possible that overly stringent regulatory requirements in the industry are driving stakeholders to more crypto-friendly jurisdictions. This is also likely to lead to the migration of Web3 capability. Ultimately, it is possible that America will bow down on the global crypto scene.
Editing via app for cryptocurrencies
On the enforcement front, there are several critical cases that will reshape the crypto landscape depending on their consequences. The most well-known of these cases is the SEC v. the SEC filed against the Ripple Blockchain company. Ripple case. Judging by the recent developments, it will likely be a huge win for both Ripple and the crypto industry. Because there is a search for a solution outside the court. It’s possible for the SEC to lose the case or settle out of court. In this case, it will become much harder for him to follow other crypto companies with the same accusations. This, in turn, will give crypto issuers and exchanges much-needed breathing room.
There are other cases that highlight the SEC’s “regulation by practice” approach. The agency is trying to establish its dominance over the industry by making broad claims that will have serious implications for the asset class. So, SEC v. Ian Whale argues in his case that Ethereum transactions should be considered “happening” in the US. Because, he says, there are more Ethereum nodes in the US than in any other country. For this reason, the SEC notes that Ethereum should come under its jurisdiction. What if the court accepts this argument? It is possible that the SEC will attempt to establish jurisdiction over all Ethereum transactions involving tokens it considers securities, regardless of the location of the transaction counterparties.
Look ahead
It’s possible that the US crypto landscape will be completely different a few years from now, depending on whether the recently proposed crypto regulations are enacted and how enforcement cases go. The optimistic view is that both the SEC and the CFTC lose all the cases that would push the industry down. In addition, MPs pass more favorable legislative proposals that bring clarity. If that’s the case, it’s possible for the US to become the world’s leading crypto-friendly jurisdiction. Thus, he is likely to support the entire global industry with it.
On the other hand, the worst case scenario is that it takes too long for legislators to pass proper crypto regulations. Also, the SEC and CFTC are slowly regulating the space through enforcement. This will hinder the remarkable growth of the US crypto industry. In addition, it will severely hinder any technological innovation resulting from this. Given the enormous political and economic international influence of the US, such a scenario would also be a negative sign for the global crypto industry.
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