The American dream
22 Jan 2025
As an influx of change is readying to take the crypto industry by storm, Clelia Frondaroli explores the current regulatory regime in the US and what the future may bring
Image: techtonic/stock.adobe.com
With the arrival of 20 January 2025, a sense of déjà vu filled the air. Donald Trump returns once more to the White House, making it difficult to believe eight long years have passed since 2016.
Yet, despite all the similarities, at least one thing has changed: the astronomical, albeit volatile, rise of cryptocurrencies. Although still at the cusp of their boom in 2016, digital assets have now infiltrated a large portion of the financial industry, where the sector has experienced more gains, losses, and innovations than ever anticipated.
With innovation comes regulation, and under President Biden, the chair of the US Securities and Exchange Commission (SEC), Gary Gensler, has been at the frontline of the crypto firing squad for his regulation policies. So much so that, in the run-up to the inauguration, Trump had threatened repeatedly to dismiss him, despite the legal inability to do so.
However, as Gensler (willingly) leaves his post with a heartfelt message of thanks to President Biden, it is time to ask some questions about what the future holds for cryptocurrencies and the regulations and legislations it is governed by in the US.
The war (on crypto) is over
In Gensler’s short but eventful four-year reign as chair of the SEC, his regulation-by-enforcement strategy has managed to garner him a fair number of critics in the crypto sector.
Likened to an albatross of the digital asset industry, in the words of Michael Johnson, chief compliance officer at Zumo: “[Gensler] has been painted as something of a nemesis for crypto firms, with many accusing him of pursuing an unfair vendetta against the nascent industry and halting developments.”
Officially appointed in 2021, Gensler, it appears, has continuously been at odds with the crypto community. Criticisms stem from Gensler’s insistence that digital assets should be categorised as securities and therefore governed and enforced under the same federal securities laws as bonds and stocks.
This decision to not create crypto-specific regulatory policies has proved to be deeply unpopular, leaving Gensler to field accusations that his policies have “needlessly created an environment of uncertainty and ambiguity for investors,” as put by Simon Forster, global co-head of Digital Assets at TP ICAP.
“There were also question marks over his knowledge of the industry,” continues Johnson, “when he stated that Bitcoin and other cryptocurrencies are unlikely to ever become widely accepted forms of currency. But this reiterates what those working in the industry already understand — the main value of crypto assets is linked to their utility as an investment vehicle and not as a replacement for the world’s fiat currencies”.
Yet, despite being plagued by lawsuits, federal court appeals, and claims of being staunchly anti-crypto, this has done little to stop Gensler’s enforcement action against major US crypto companies, including Consensys, Coinbase, and Kraken. In the official statement released by the SEC, “18 per cent of the SEC’s tips, complaints, and referrals were crypto-related, despite the crypto markets comprising less than one per cent of the US capital markets. Court after court rejected all arguments that the SEC cannot enforce the law when securities are being offered — whatever their form”.
So is Gensler really the villain or the hero of this story? If you ask the investors, whose assets were protected under the solid foundation of established securities laws, Gensler may well be the white knight of investor protection. In the words of the chairman himself: “The SEC has met our mission and enforced the law without fear or favour.”
However, as he departs and with many ‘crypto warriors’ breathing a sigh of relief that his reign is over, will crypto regulations in the US really fare much better under a new successor?
Johnson thinks so. He says: “The hope now is that his replacement will help to foster an appropriate regulatory regime in the US.”
Ascension to the throne
However, who may this replacement be? Although president-elect Donald Trump famously attacked crypto-assets on X (formerly Twitter) in 2019, stating, “I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” he appears to have, albeit not uncharacteristically, changed tack during his latest presidential campaign.
Now a reformed crypto advocate who seeks to create a strategic Bitcoin reserve once in power, under Trump’s crypto-loving gaze, Johnson glimpses a better future for the industry: “Industry players — both in the US and on the global stage — anticipate a change in direction and a more pro-crypto stance.”
Part of this change in direction arises from Trump’s nomination of Paul Atkins to replace Gensler as SEC chair. For Forster, the nomination of Atkins (a former SEC commissioner and co-chair of the cryptocurrency lobbying group, the Token Alliance) signals a positive future. He says: “With [Atkins’] nomination we expect to see a more pragmatic and constructive approach to crypto regulation that the market has been looking for, which will unlock capital and innovation in the US. This will very likely shape regulation globally.”
Johnson agrees. He suggests that Atkins will be expected to “bring in a more structured regulatory framework in the US,” highlighting that, in his current role at Patomak Partners, he has continually advocated for the SEC to issue clearer guidance. Jim Toes, Security Traders Association president and CEO, similarly gushes: “Atkins understands the need for balance — ensuring investor protections while enabling capital markets to flourish. [This] will strengthen both the SEC and the US economy.”
All this goes to show that Atkins undoubtedly has his fans. However, will this be enough to convince everyone that putting a crypto-enthusiast at the helm of the SEC is the best decision? Or, as Senator Elizabeth Warren describes it to Politico: “A Wall Street lobbyist whose main contribution during the last financial crisis was to protest fines against the giant corporations that defrauded investors” may, in fact, have implications for investor protection.
Some, like Forster, also intend to take the news of the nominee with a pinch of salt.
He considers: “When Gary Gensler was appointed as SEC chairman in 2021, it was seen as positive for the industry, and we know how that unfolded. Whilst we don’t believe this will materialise in a similar manner, until someone is in the new role, it’s very difficult to know how effectively they will be able to enact change.”
Constructing a crypto capital
Yet, enacting change is exactly what Trump envisions for the future of US crypto policies. Addressing the Bitcoin 2024 conference in July, the then-presidential candidate ensured the world understood his stance on the matter when he claimed to make the United States “the crypto capital of the world”.
Johnson appears eager about this narrative, where “a crypto-friendly US president certainly supports the bullish crypto story”.
However, he reserves his judgements on the validity of Trump’s “crypto capital” claims, considering that “the US is starting from behind in comparison to other jurisdictions that have taken an early lead in this area. The UAE is also rapidly emerging as a significant crypto hub, thanks to the Emirati leadership’s proactive approach.”
Forster also reserves some scepticism, even if his outlook is more wholly positive. “If the new administration can deliver on a fraction of its ambition,” he says, “we believe the US will become one of the leaders in crypto and digital assets”. But can they deliver any of their promised rhetoric? After all, four years is not long to create a Bitcoin reserve, a crypto presidential advisory council, and a solely US-based crypto mining industry (among other things). Although Forster cites an “enormous appetite” for Bitcoin and Ether ETFs in the US, only time will tell whether the administration has bitten off more than they can chew.
And indeed, in the days following the inauguration, Trump has been true to his word. Having launched his own crypto token (a so-called ‘memecoin’ branded with $TRUMP) on the Friday prior to his arrival in the Oval Office, Trump has decided to bypass any ethical or moral concerns that may be important for a president to consider, especially one with already questionable ties in the crypto industry. His citizens do not appear fazed either, having snapped up the coin, driving up the price from under US$10 at its launch to a peak of US$73 on Sunday.
In the coming days, months, and years of the presidency, then, every day might spell a new wave of change for crypto policies, where it will be interesting to see just how far Trump intends to take these crypto claims.
Fortune-telling the future
So as the US crypto industry is readying to be hit by an Atkin-shaped whirlwind of new regulations and legislations, where does this leave the rest of the world?
Taking a moment to reflect, Johnson envisions “the world’s regulators seek to better balance their objectives of consumer protection and market integrity, allowing room for innovation to thrive”. He continues: “Regulation usually lags behind innovation —but innovation also attracts scrutiny.”
This scrutiny, he highlights, will hone in on sustainability, where “we’ve seen significant advancements in Europe relating to crypto and sustainability, such as mandatory sustainability disclosures for crypto-asset service providers under the Markets in Crypto-Assets regulation.” He also notes an enthusiasm emerging from US providers on combining climate reporting with digital assets, making his intention clear: “Increased regulatory scrutiny should be taken as a positive sign that our industry is maturing.”
Back on the topic of sustainability and climate disclosures, Johnson says perhaps what others are thinking: “We hope the Trump administration won’t stifle progress here.”
As for the UK, the Financial Conduct Authority (FCA) has already laid out a detailed roadmap to create a regulatory regime for digital assets by 2026. The future, then, may look bright for crypto both in the US and globally, where increased transparency, improved frameworks, and new legislation will help shape and drive regulations.
And maybe, just maybe, 2025 will bring the formation of this new US crypto capital that the new president has been teasing us with.
Or, as most things go, maybe not.
Yet, despite all the similarities, at least one thing has changed: the astronomical, albeit volatile, rise of cryptocurrencies. Although still at the cusp of their boom in 2016, digital assets have now infiltrated a large portion of the financial industry, where the sector has experienced more gains, losses, and innovations than ever anticipated.
With innovation comes regulation, and under President Biden, the chair of the US Securities and Exchange Commission (SEC), Gary Gensler, has been at the frontline of the crypto firing squad for his regulation policies. So much so that, in the run-up to the inauguration, Trump had threatened repeatedly to dismiss him, despite the legal inability to do so.
However, as Gensler (willingly) leaves his post with a heartfelt message of thanks to President Biden, it is time to ask some questions about what the future holds for cryptocurrencies and the regulations and legislations it is governed by in the US.
The war (on crypto) is over
In Gensler’s short but eventful four-year reign as chair of the SEC, his regulation-by-enforcement strategy has managed to garner him a fair number of critics in the crypto sector.
Likened to an albatross of the digital asset industry, in the words of Michael Johnson, chief compliance officer at Zumo: “[Gensler] has been painted as something of a nemesis for crypto firms, with many accusing him of pursuing an unfair vendetta against the nascent industry and halting developments.”
Officially appointed in 2021, Gensler, it appears, has continuously been at odds with the crypto community. Criticisms stem from Gensler’s insistence that digital assets should be categorised as securities and therefore governed and enforced under the same federal securities laws as bonds and stocks.
This decision to not create crypto-specific regulatory policies has proved to be deeply unpopular, leaving Gensler to field accusations that his policies have “needlessly created an environment of uncertainty and ambiguity for investors,” as put by Simon Forster, global co-head of Digital Assets at TP ICAP.
“There were also question marks over his knowledge of the industry,” continues Johnson, “when he stated that Bitcoin and other cryptocurrencies are unlikely to ever become widely accepted forms of currency. But this reiterates what those working in the industry already understand — the main value of crypto assets is linked to their utility as an investment vehicle and not as a replacement for the world’s fiat currencies”.
Yet, despite being plagued by lawsuits, federal court appeals, and claims of being staunchly anti-crypto, this has done little to stop Gensler’s enforcement action against major US crypto companies, including Consensys, Coinbase, and Kraken. In the official statement released by the SEC, “18 per cent of the SEC’s tips, complaints, and referrals were crypto-related, despite the crypto markets comprising less than one per cent of the US capital markets. Court after court rejected all arguments that the SEC cannot enforce the law when securities are being offered — whatever their form”.
So is Gensler really the villain or the hero of this story? If you ask the investors, whose assets were protected under the solid foundation of established securities laws, Gensler may well be the white knight of investor protection. In the words of the chairman himself: “The SEC has met our mission and enforced the law without fear or favour.”
However, as he departs and with many ‘crypto warriors’ breathing a sigh of relief that his reign is over, will crypto regulations in the US really fare much better under a new successor?
Johnson thinks so. He says: “The hope now is that his replacement will help to foster an appropriate regulatory regime in the US.”
Ascension to the throne
However, who may this replacement be? Although president-elect Donald Trump famously attacked crypto-assets on X (formerly Twitter) in 2019, stating, “I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” he appears to have, albeit not uncharacteristically, changed tack during his latest presidential campaign.
Now a reformed crypto advocate who seeks to create a strategic Bitcoin reserve once in power, under Trump’s crypto-loving gaze, Johnson glimpses a better future for the industry: “Industry players — both in the US and on the global stage — anticipate a change in direction and a more pro-crypto stance.”
Part of this change in direction arises from Trump’s nomination of Paul Atkins to replace Gensler as SEC chair. For Forster, the nomination of Atkins (a former SEC commissioner and co-chair of the cryptocurrency lobbying group, the Token Alliance) signals a positive future. He says: “With [Atkins’] nomination we expect to see a more pragmatic and constructive approach to crypto regulation that the market has been looking for, which will unlock capital and innovation in the US. This will very likely shape regulation globally.”
Johnson agrees. He suggests that Atkins will be expected to “bring in a more structured regulatory framework in the US,” highlighting that, in his current role at Patomak Partners, he has continually advocated for the SEC to issue clearer guidance. Jim Toes, Security Traders Association president and CEO, similarly gushes: “Atkins understands the need for balance — ensuring investor protections while enabling capital markets to flourish. [This] will strengthen both the SEC and the US economy.”
All this goes to show that Atkins undoubtedly has his fans. However, will this be enough to convince everyone that putting a crypto-enthusiast at the helm of the SEC is the best decision? Or, as Senator Elizabeth Warren describes it to Politico: “A Wall Street lobbyist whose main contribution during the last financial crisis was to protest fines against the giant corporations that defrauded investors” may, in fact, have implications for investor protection.
Some, like Forster, also intend to take the news of the nominee with a pinch of salt.
He considers: “When Gary Gensler was appointed as SEC chairman in 2021, it was seen as positive for the industry, and we know how that unfolded. Whilst we don’t believe this will materialise in a similar manner, until someone is in the new role, it’s very difficult to know how effectively they will be able to enact change.”
Constructing a crypto capital
Yet, enacting change is exactly what Trump envisions for the future of US crypto policies. Addressing the Bitcoin 2024 conference in July, the then-presidential candidate ensured the world understood his stance on the matter when he claimed to make the United States “the crypto capital of the world”.
Johnson appears eager about this narrative, where “a crypto-friendly US president certainly supports the bullish crypto story”.
However, he reserves his judgements on the validity of Trump’s “crypto capital” claims, considering that “the US is starting from behind in comparison to other jurisdictions that have taken an early lead in this area. The UAE is also rapidly emerging as a significant crypto hub, thanks to the Emirati leadership’s proactive approach.”
Forster also reserves some scepticism, even if his outlook is more wholly positive. “If the new administration can deliver on a fraction of its ambition,” he says, “we believe the US will become one of the leaders in crypto and digital assets”. But can they deliver any of their promised rhetoric? After all, four years is not long to create a Bitcoin reserve, a crypto presidential advisory council, and a solely US-based crypto mining industry (among other things). Although Forster cites an “enormous appetite” for Bitcoin and Ether ETFs in the US, only time will tell whether the administration has bitten off more than they can chew.
And indeed, in the days following the inauguration, Trump has been true to his word. Having launched his own crypto token (a so-called ‘memecoin’ branded with $TRUMP) on the Friday prior to his arrival in the Oval Office, Trump has decided to bypass any ethical or moral concerns that may be important for a president to consider, especially one with already questionable ties in the crypto industry. His citizens do not appear fazed either, having snapped up the coin, driving up the price from under US$10 at its launch to a peak of US$73 on Sunday.
In the coming days, months, and years of the presidency, then, every day might spell a new wave of change for crypto policies, where it will be interesting to see just how far Trump intends to take these crypto claims.
Fortune-telling the future
So as the US crypto industry is readying to be hit by an Atkin-shaped whirlwind of new regulations and legislations, where does this leave the rest of the world?
Taking a moment to reflect, Johnson envisions “the world’s regulators seek to better balance their objectives of consumer protection and market integrity, allowing room for innovation to thrive”. He continues: “Regulation usually lags behind innovation —but innovation also attracts scrutiny.”
This scrutiny, he highlights, will hone in on sustainability, where “we’ve seen significant advancements in Europe relating to crypto and sustainability, such as mandatory sustainability disclosures for crypto-asset service providers under the Markets in Crypto-Assets regulation.” He also notes an enthusiasm emerging from US providers on combining climate reporting with digital assets, making his intention clear: “Increased regulatory scrutiny should be taken as a positive sign that our industry is maturing.”
Back on the topic of sustainability and climate disclosures, Johnson says perhaps what others are thinking: “We hope the Trump administration won’t stifle progress here.”
As for the UK, the Financial Conduct Authority (FCA) has already laid out a detailed roadmap to create a regulatory regime for digital assets by 2026. The future, then, may look bright for crypto both in the US and globally, where increased transparency, improved frameworks, and new legislation will help shape and drive regulations.
And maybe, just maybe, 2025 will bring the formation of this new US crypto capital that the new president has been teasing us with.
Or, as most things go, maybe not.
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