Cryptocurrency regulation is a rapidly evolving landscape with regulators, legislators, and the public weighing a variety of approaches. As use of digital assets by investors, companies and even some central banks grows, regulatory focus is intensifying. Key issues include chartering, licensing, consumer and investor protections, fraud and financial crimes risks, and data security.
A broad range of laws have been proposed at the federal and state level. Some states have sought to promote crypto through favorable regulations exempting them from state securities and money transmission statutes while others aim to leverage investment in this new asset class to stimulate local economies and improve public services. The federal government has passed the GENIUS Act, a bill to create a new class of crypto assets, called stablecoins, that would be pegged to traditional currencies and backed by cash or highly liquid assets. The bill includes requirements for full reserve backing, monthly audits, anti-money laundering compliance, and disclosure rules to promote market trust.
Other proposals, such as the CLARITY Act, aim to define how digital assets are treated under securities and commodities law. This would make it easier for investors to purchase and hold such assets through conventional brokers and in their bank accounts without the fear that their holdings could be confiscated by a capricious government, as has happened with some decentralized cryptos. But regulating digital assets down this path will likely eliminate many of the unique selling points of these technologies, such as anonymity and a promise of democratized ownership of economic infrastructure.
