If U.S. laws finally define how federal regulators can touch digital assets, cryptocurrencies will be easier to manage, track and transact, and more investors will likely get involved, potentially increasing the value of each token. But there is still a long way to go before that is true, and the work to get the laws passed by Congress is at a crossroads.
Crypto enthusiasts have long considered themselves avant-garde investors, eager to challenge the system and invest in something outside the mainstream. But what the participants are currently working on is bringing crypto more into the establishment. The distinctions between digital assets and traditional finance would become much narrower and, in some cases, disappear altogether.
Crypto platforms such as Coinbase and Kraken are reportedly registered with federal regulators, who will insist that companies follow strict rules when managing your assets. Stablecoin issuances such as Circle and Tether are expected to follow their own strict regulations, similar to banking standards.
In the case of a sweeping new law, your crypto assets will likely be much more protected against financial disasters, although they will be tracked and managed much more closely, and you will be more likely to get help from the government in case of disputes with companies. If you are part of the smaller group that keeps its own guard and uses platforms without human management, your sector of the crypto industry would be subject to more rules intended to repel criminals.
And if you’re used to getting a return on your crypto holdings, say through a program like Coinbase’s USDC Rewards, there’s some uncertainty about what they might look like in the future, depending on how trading goes.
So where do we stand with this potential law?
Dizzying Senate
If you follow the ins and outs of how the U.S. government wants to deal with crypto, you’ve seen a dizzying array of Senate headlines recently. This piece of legislation carries the fate of crypto activity, but it comes at a point in the legislative process that tends to ebb and flow like the tides. A committee’s efforts come close to action, then fall apart. Efforts by another committee are intensifying to take the lead.
Congress has two houses, the Senate and the House of Representatives, and the House has already passed its own Digital Asset Market Clarity Act with overwhelming support. But the House hasn’t been the biggest problem for crypto. The Senate is usually the bottleneck. And in this case, the crypto bill goes to two committees who must approve it before it can become US law.
Many interested parties have a wide range of preferences for this bill, including political parties, the White House, the crypto industry, and Wall Street banks, who see both benefits and dangerous threats in the sector. To a regular crypto investor, many of these issues may not seem very important, but the results have the ability to destroy or enrich various companies or projects, so the intensity is high among lobbyists and involved in the trenches.
Ultimately, the law could be rejected again. This happened with the Financial Innovation and Technology for the 21st Century Act (FIT21) effort in the previous session of Congress. It was the predecessor of today’s bill. But the Clarity Act went further than FIT21, and it is still possible that a series of agreements and compromises could be reached to get there.
Do
The checklist looks like this:
- Have the bill reviewed and advanced by both the Senate Banking Committee (Securities/SEC focus) and the Agriculture Committee (Commodities/CFTC focus).
- Crush together a unified version that will be voted on by the entire Senate.
- Get Senate approval (which requires at least seven Democrats, possibly more if Republicans don’t vote for it unanimously).
- Return to the House to get a final vote of approval (which should be a minor hurdle).
- Visit President Donald Trump’s office for a signature.
The crypto industry has been waiting a long time for these dominoes to fall. But crossing out the last item — a White House signature — won’t mean the end of the process for the investor. Before all these new rules can begin to turn digital assets into a new node in the U.S. financial system, a number of federal agencies need to review what Congress sends them.
There is a process of writing regulations that can take months or even years. If you conduct your crypto business on an exchange like most investors, you will likely start seeing companies comply with the expected rules before they are even completed and officially put in place.
As an example, the GENIUS Act regulating stablecoins was signed into law by Trump last July. The Treasury Department and its various agencies have begun releasing proposed regulations but are still awaiting public comment. None of these proposals have yet been finalized.
In the meantime, while everyone who owns cryptocurrencies waits to see what happens with the US rules, there probably won’t be much drama for most investors. Federal regulators such as the Securities and Exchange Commission have stopped going after crypto companies and are trying to concoct friendly treatment in the absence of congressional legislation.
It is therefore likely that the situation will last a little longer, whether the bill is adopted or not, without fireworks for most people. In fact, crypto investors’ biggest concern might be how to properly file tax returns on their digital asset gains. But that’s another story (and one that promises to lead to yet another congressional battle later).
