Crypto rising: Regulatory and policy implications

President Trump’s pro-crypto policies could spark renewed growth and innovation in the U.S. digital currency landscape.

The administration of President Donald Trump is making progress on a new economic policy agenda that could reignite growth and innovation in the U.S. digital currency landscape.

Top takeaways

• Advocates of digital money have been pushing hard to play a pivotal role in how the global economy works. Reaching this goal has proven difficult as we encountered failures of cryptocurrency platforms like FTX and Terra Luna (an algorithmic stablecoin that went bust), stricter regulations from governments around the world and a period of crypto winter.

• But a new sense of optimism is sweeping through the crypto world as President Trump promised to make America a leader in digital currency during his recent election campaign and has since begun fulfilling his early campaign promises and appointing crypto-friendly leaders across key federal agencies. Does this bode well for an era of unchecked risk-taking behavior or might it spell doom for the sunny outlook?

The good news is that the Trump administration and the Republican majority in both the House and Senate might provide much-needed clarity on the market structure of digital assets.

President Trump recently signed an executive order to strengthen America’s leadership in digital financial technology. This order establishes the position of the country’s first crypto and AI czar – filled by David Sacks – and calls for forming a presidential working group. This group will bring together key stakeholders from various government agencies and representatives from the private sector. It has been tasked with advising the president on what a well-crafted, pro-innovation policy should include to maintain U.S. leadership, enhance economic competitiveness and ensure national security in the face of rapidly advancing technologies.

Mr. Sacks immediately set to work on his new mandate. On the very day the bipartisan stablecoin bill known as the GENIUS Act was unveiled, he led a press conference alongside members of Congress, signaling the start of a new era in the industry.

The crypto market has reacted positively to these developments. Bitcoin’s price soared to unprecedented heights, exceeding $100,000 in December while the market capitalization of stablecoins (digital coins tied to real money or assets like the dollar and gold) exceeded $200 billion by January, up over 45 percent year-on-year.

Institutional adoption has also increased, fueled by the potential for legal and regulatory clarity. Last year, several leading Wall Street money managers began experimenting with digital versions of investment funds. This suggests that we might be entering a time when the broad adoption of cryptocurrencies could gain significant traction and popularity.

The implications for the global economy are significant as several countries in the East and Southeast are introducing their own regulations for crypto assets. For instance, Hong Kong, aiming to become a regional hub for digital assets, is implementing new rules for cryptocurrencies and stablecoins. Singapore offers straightforward laws and tax incentives, attracting companies like Binance. Brazil and several other countries are also getting involved, including the United Arab Emirates, which has quickly become a leading financial and technology hub across the Middle East.

The era in which cryptocurrency could operate outside of regulatory frameworks is over. While some regulations are overly complex, countries are now competing to attract crypto developers, investors and firms. However, if global rules for the cryptocurrency market are not harmonized, there is a considerable risk that the emerging “internet of value” could become fragmented and siloed, much like how an intranet or extranet pales in comparison to the internet. To achieve this alignment, leadership from the U.S. is crucial.

What is the internet of value?

The internet of value refers to a concept in which digital assets – such as money, stocks, intellectual property or even data – can be transferred over the internet with ease, speed and security. The goal is to facilitate peer-to-peer transactions that are instantaneous and cost-effective without needing to depend on intermediaries to verify or finalize the exchange. Technologies like blockchain and cryptocurrencies play crucial roles in this framework, enabling the digitization, tracking and securing of the transfer of value without centralized oversight.

However, America’s broader economic policies might complicate its ability to lead as international tensions escalate. Countries around the world are encountering the repercussions of the “America First” economic agenda, which has led to trade tensions between the U.S. and several other nations.

Moreover, at the federal level, the U.S. has unfinished business and a mix of state interests and regulations regarding cryptocurrencies. The country is entangled in a regulatory tug-of-war over cryptocurrency policies. A fragmented landscape of markets and banking overseers has left agencies either vying for control or stepping back entirely. The Securities and Exchange Commission, Commodity Futures Trading Commission and state-level regulators often pursue conflicting goals, creating confusion for crypto firms and investors.

This patchwork approach has real consequences. Banks open to servicing the crypto sector face a double jeopardy: Competitive pressures push them to innovate while compliance challenges force caution. The unresolved tension between state and federal authority – particularly in banking and payments – has also stalled critical stablecoin legislation more than any inherent risks in the crypto market. National