US Crypto Regulatory Landscape Shift

US 2024 Election Outcome May Reshape Crypto Regulatory Landscape

The outcome of the 2024 U.S. elections, with Republicans taking control of the White House, Senate, and Congress, could significantly impact the regulatory landscape for cryptocurrency in the country. According to S&P analysts, this shift may transition the U.S. approach to crypto regulation from enforcement-led measures to a more predictable rule-making framework.

Current Regulatory Challenges

The U.S. has lagged behind other major markets in providing regulatory clarity for digital assets. In contrast, regions like Europe have introduced structured frameworks for stablecoins and other crypto activities. Stablecoins, a type of cryptocurrency tied to fiat currencies like the U.S. dollar, are essential for enabling blockchain-based payments beyond crypto markets.

In the U.S., companies risk enforcement actions over unclear definitions of securities, leading to fines and legal disputes. The lack of clarity also affects staking — a process where investors lock their crypto assets to earn rewards. Some firms have stopped offering staking services due to regulatory pressure, while others are challenging these restrictions in court.

Crypto companies in the U.S. risk fines and enforcement actions relating to the listing of unregistered securities. This is due to the absence of regulatory clarity on which crypto assets are securities.

Upcoming Legislation and Regulatory Changes

Analysts from S&P indicate that regulatory changes regarding stablecoins and crypto asset custody may be expected in early 2025. Additionally, custody services for crypto assets face significant challenges due to existing regulations like the SEC’s Special Accounting Bulletin – SAB 121.

While a proposed repeal of SAB 121 was vetoed earlier this year, the new administration might reconsider this issue, potentially paving the way for greater market participation.

Bitcoin Reserve Proposal

One of the more ambitious proposals comes from Senator Cynthia Lummis, who suggests the Federal Reserve should acquire 1 million Bitcoin over the next five years — roughly 5% of Bitcoin’s total supply. Proponents argue this could protect against currency debasement and manage national debt, while critics question the feasibility and implications of such a move.

Global Coordination and Regulatory Transformation

Beyond domestic concerns, S&P notes that the U.S.’s lack of involvement in global regulatory coordination has hindered blockchain innovation in financial markets. Greater participation by the U.S. could help scale existing blockchain use cases, both domestically and internationally.

We believe the stronger involvement of the U.S. may allow already well-tested use cases to scale commercially, both domestically and globally.

As the U.S. enters a period of potential regulatory transformation, market participants await the next steps from lawmakers. According to S&P, developments in the regulatory framework could bring much-needed clarity and open new doors for innovation and growth in the digital asset space.

For more news on cryptocurrency and finance, visit Global Crypto News.