A plethora of regulatory and legislative actions against the crypto domain and its biggest stakeholders are shedding light on the future of crypto in the US. The crypto industry in the US is at a crucial turning point. The government’s approach to digital assets will decide the fate of the industry and whether it will flourish or fail.
Current State of Crypto Regulations in the US
The digital asset industry in the US will soon face regulation, and it will have major implications for the future of many cryptocurrencies. For starters, it’s important to make a distinction between the government’s legislation and what it enforces. The difference between both gives insight into the government’s true intentions regarding the crypto industry.
Potential Crypto Bills That Could Come Into Effect
If we look at legislation, there has been a rise in the number of proposals for cryptocurrency-related bills. Some examples of these include the Digital Commodities Consumer Protection Act of 2022, Stablecoin TRUST Act of 2022, Stablecoin Innovation and Protection Act of 2022, and the Responsible Financial Innovation Act. If these bills get the all-clear from the House, Senate, and President, the country’s crypto regulations could see major changes, which according to many investors, would be mostly positive.
The most significant change would be the Commodity Futures and Trading Commission superseding the Securities and Exchange Commission as the asset class’s primary regulatory authority. For many industry stakeholders, such a change was welcomed, considering how the SEC has had a harsh approach concerning digital assets.
Industry Could See Stricter Rules for Issuing Stablecoins
With the passing of these bills, the industry could see more stringent regulation for the issuing of stablecoins. It will prohibit the creation of endogenously collateralized or algorithmic stablecoins, as well as the 100 percent reserve requirements for stablecoin holders. It would also alleviate the depeg risk in the crypto market. On the other hand, overdependence on regulated stablecoin providers could end up centralizing the on-chain economy.
Aside from these proposed bills, the most crucial legislative development is the White House’s regulatory framework for the digital asset industry. In March, President Biden signed off an executive order for Ensuring Responsible Development of Digital Assets. A few months later, the framework was published in mid-September. It touches upon recommendations on regulating digital assets by the Treasury Department, SEC, and other government agencies.
The framework gives crypto stakeholders clear insight into how the current administration intends to deal with the asset class. This includes upcoming actions against illegal practices and pushing crypto users towards centralized, government-issued currencies like CBDCs. The government also plans to amend the Bank Secrecy Act so that it applies specifically to digital assets. If the Biden administration implements these plans, the country’s crypto industry will look similar to fintech instead of an alternative financial system.