The regulatory environment regarding cryptocurrencies in the USA is significantly changing due to recent leadership appointments and some policy changes introduced by the administration of President Donald Trump. These changes are expected to promenade along with market behaviour and participation of institutions in the future.
The signing of the executive order “Strengthening American Leadership in Digital Financial Technology” was one such entry point into regulatory policy changes. Further, this order lays particular emphasis not only on incorporating the blockchain technologies and stablecoins into the mainstream financial system, but also directly forbids the development of Central Bank Digital Currencies (CBDCs) within the U.S. For this reason, it clarifies the administration’s preference for decentralized digital assets instead of state-controlled digital currencies.
In a related policy launch, the government went ahead to change top leadership by appointing Paul Atkins as new Chair of the Securities and Exchange Commission (SEC). Atkins ascended to lead the coalition that replaced Gary Gensler whose tenure was looked upon, in the eyes of most, as largely punitive, in terms of enforcement towards the cryptocurrency industry that was seen as restricting. This shift in leadership is believed to incite a much more relaxed regulatory stance, opening up avenues for innovation and public acceptance for digital assets.
That notwithstanding, several challenges still remain. The shard remains on regulations at the federal level, leaving many states to impose individual regulatory requirements on businesses which, among others, meet legality requirements for cryptocurrency operated in other states. The fragmentation in regulation significantly points to the importance of cohesive laws that may clarify and consistently apply to industry players.
However, the same fast policy shifts in the U.S affect the rest of the world. European regulators express concerns that the U.S. aggressive promotion of a crypto-friendly environment might attract companies away from Europe’s more stringent regulatory frameworks, thereby causing a migration of talent and capital into the U.S.
In the end, the United States would find itself at a crossroads on the future of cryptocurrency regulation. Current policies and appointments in the administration of the country seem to build on the trend of ushering in innovations for the integration of digital assets within the mainstream financial system. As with all change, however, a critical balancing act for moving forward will be between encouraging technological advances and ensuring strong consumer protections as the regulatory framework continues to develop.
