Is effective crypto regulation finally coming?

Paul Atkins is the new chairman of the SEC. He previously led a crypto industry group. Caroline Crenshaw, the remaining Democratic commissioner, disagrees with him. She criticizes the SEC's new "crypto-friendly" stance.

Crenshaw believes this approach will harm enforcement actions against firms. The SEC and CFTC have conflicting views on cryptocurrency regulation. The SEC sees cryptocurrencies as securities, while the CFTC views them as commodities.

This disagreement has stalled regulatory progress in the U.S. However, changes may be coming soon. President Donald Trump has shifted his stance on cryptocurrency. Four years ago, he called Bitcoin “a scam.” Now, he and his wife have launched their own memecoins.

Although $MELANIA's value dropped, Trump's $TRUMP venture is thriving. He even hosted a dinner for top buyers of his coin. Trump’s support for crypto aims to improve relations with Silicon Valley.

He also issued an executive order against a central bank digital currency. Many see this as a move to protect private digital currencies. In Congress, there is growing agreement on needing a legal framework for cryptocurrency.

The GENIUS Act is gaining traction in the Senate despite opposition from Senator Elizabeth Warren. The House may need more convincing to support it. If passed, stablecoins could receive clear rules on transparency and asset backing.

Standard Chartered predicts that U.S. stablecoin market could grow significantly by 2028. It estimates growth from $240 billion to $2 trillion if legislation passes. Most investments would likely go into U.S. Treasuries.

While the GENIUS Act addresses stablecoins, uncertainty remains for other digital assets. Bitcoin's price has risen amid hopes Congress will favor lighter regulation from the CFTC.

Last year’s bill failed but political dynamics have changed since then. Other countries are also facing similar regulatory challenges in crypto markets.

The EU has developed its own framework called MiCA (Markets in Crypto-Assets Regulation). This was adopted in 2023 but won’t be fully implemented until late 2024.

MiCA’s rules require stablecoins to be backed by solid assets and at least 30% held in EU banks. This requirement poses challenges for Tether and Circle cryptocurrencies.

Entities seeking authorization under MiCA must apply through local regulators first. If they grow large enough, they may face EU-level oversight later on.

Could MiCA provide insights for U.S lawmakers? Treasury Secretary Scott Bessent insists he won't outsource regulation internationally but borrowing ideas isn’t outsourcing.

Regulating stablecoins is just one part of the challenge ahead due to unbacked cryptocurrencies' unique issues too. The EU’s MiCA framework addresses these concerns effectively.

Congress seems divided on how to proceed with Bitcoin regulations or addressing corruption linked to financial interests like Trump’s own dealings.

Instead of pursuing divisive bills, committees should consider visiting EU offices in Brussels for insights into their regulatory approaches.