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President Signs Landmark Crypto Legislation
The President has officially enacted the Genius Act, representing the first significant U.S. law aimed at regulating stablecoins within the cryptocurrency space.
The United States is accelerating its efforts in crafting cryptocurrency regulations. However, the true measure of success lies in its ability to shape the global standards for digital assets.
Being the first to act carries significant weight. As major countries embrace digital currencies, leading economic powers, such as the European Union or China, could establish their regulatory frameworks ahead of others. This would allow them to set industry benchmarks and export their regulations internationally.
American firms could then face a complex web of conflicting regulations that clash with the principles of free markets and data protection. Surveillance-focused central bank digital currency (CBDC) models, like the one being pushed by China, could become dominant in crucial regions. There’s a risk of repeating the Big Tech scenario, where European regulators, rather than the U.S., established many of the rules, leading to threats of tariffs from the previous administration.
The European Union has already enacted MiCA, a regulatory framework for digital assets focusing on transparency, disclosure, and oversight of electronic tokens. Across Asia, nations like Singapore, Hong Kong, and South Korea are developing refined policies to attract investment, skilled professionals, and innovation. Singapore’s Monetary Authority has established a regulatory structure through licensing stablecoin issuers, developing fintech and tokenization centers, and implementing sandbox environments such as APIX. Hong Kong is pushing forward with Policy Statement 2.0, which standardizes licensing for digital asset platforms and stablecoin issuers while expanding tokenized bonds and real-world assets. South Korea is also moving toward allowing spot crypto ETFs and stablecoins pegged to the won under new market regulations.
China has adopted a different approach, prohibiting cryptocurrency transactions and mining for retail users across the nation. At the same time they tightly control digital finance through its CBDC, known as the digital yuan. Globally, Beijing is incorporating this system into its international trade and is encouraging the usage of the digital yuan for paying for goods and services.
The progress seen in other countries is the result of regulatory frameworks that have provided their industries with a consistent economic environment that fosters growth. While other nations advanced, the U.S. created an uneven playing field in digital assets by granting selective approvals that favored large financial institutions over smaller, innovative blockchain firms. Now, major financial players like JPMorgan, Interactive Brokers and others are leveraging a government and Congress that are becoming more favorable towards crypto, incorporating digital assets into their offerings to meet growing client needs.
The few blockchain firms that possess regulatory clarity are thriving, as regulatory certainty fuels growth. Grayscale, Ripple, and Circle have all grown their U.S. operations after gaining regulatory clarity, highlighting how predictable frameworks can attract investment and drive innovation. Ripple specifically benefited from a five-year legal battle with the Securities and Exchange Commission, where a federal judge determined that the XRP token sold on public exchanges did not constitute a security. The SEC ultimately withdrew its appeal on August 7, giving Ripple and XRP clear legal standing. Extending similar federal clarity across the board would strengthen the competitive advantage of all U.S. crypto companies and attract new customers, investment, and innovation.
The recent White House crypto report, which suggests strengthening the Commodity Futures Trading Commission’s powers, facilitating stablecoin infrastructure, and clarifying tax treatment, provides a solid starting point. Proposed legislation like the GENIUS Act, recently signed into law, and the CLARITY Act, which has been approved by the House and awaits Senate deliberation, could codify U.S. positions on stablecoins, custody, and tokenization. This would empower businesses to invest confidently domestically and compete effectively internationally, but only if Washington establishes the correct rules.
However, failing to lead will have significant consequences.
Regulation should not be viewed as a limitation but as a vital piece of infrastructure. When the U.S. leads in financial regulation, it fosters trust, enhances liquidity, and establishes a framework that supports growth. American-style regulation has the potential to be clear, fair, innovation-driven, and fundamentally based on market-tested principles.
The U.S. has a remarkable opportunity to maintain its global dominance in finance within this evolving digital currency landscape. With a substantial talent pool, cutting-edge technology, a reliable financial system, a stable currency, and an expanding economy, America is best positioned to take the lead.
What’s needed is widespread political consensus to act before the rules are determined elsewhere. If the U.S. isn’t defining the standards, we risk becoming followers in a system we once had the capacity to guide.
Danielle Zanzalari serves as an assistant professor of Economics at Seton Hall University and formerly held the role of financial economist at the Federal Reserve Bank of Boston. Her research and writings frequently focus on bank regulation, financial markets, cryptocurrency, and public finance.