Regulators and Banks Clash Over Crypto’s Future in U.S.

Banking trade groups in the U.S. are advocating for a recalibration of the increasingly stringent regulatory framework for cryptocurrencies, emphasizing the need for policies that balance innovation with risk mitigation. Recent legislative developments, such as the passage of the GENIUS Act, have introduced new rules for the issuance of payment stablecoins, requiring full reserve backing and robust compliance with anti–money laundering (AML) protocols. However, these policies have faced criticism and calls for revision from key industry stakeholders, including the American Banking Association and the Bank Policy Institute, which argue that the rules impose undue burdens on banks and financial institutions [1].

The CLARITY Act, currently under Senate consideration, aims to provide clarity on how digital assets are treated under federal securities and commodities laws. It is designed to reduce regulatory overlap and enhance transparency for businesses and investors by clearly defining the classification of tokens. The act, which passed the House in 2025, could redefine the roles of agencies such as the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) in overseeing the crypto market. The CFTC would gain primary jurisdiction over decentralized digital commodities, while the SEC would retain oversight over assets classified as securities [1].

In parallel, the Anti-CBDC Surveillance State Act has passed the House and is awaiting Senate action. This bill seeks to prevent the Federal Reserve from issuing a central bank digital currency (CBDC) for public use without congressional approval. The legislation reflects broader concerns about government overreach and the potential for surveillance in digital currency systems. The U.S. approach contrasts with initiatives in countries like China, where the government has already begun testing its digital yuan [1].

The banking industry is also monitoring developments in Europe, where the Markets in Crypto-Assets (MiCA) regulation has established a comprehensive framework for crypto assets and service providers. MiCA provides a passporting system, allowing firms authorized in one EU member state to operate across the entire region. The framework emphasizes investor protection, financial stability, and cross-border regulatory consistency. In contrast, the U.S. regulatory landscape remains fragmented, with federal agencies and state regulators playing overlapping roles in overseeing digital assets [2].

The regulatory environment for cryptocurrencies has significant implications for financial institutions and FinTech firms, particularly as they navigate compliance with evolving rules. For example, the GENIUS Act mandates that stablecoin issuers maintain full reserve backing, submit to monthly audits, and comply with AML requirements. These obligations increase the cost of doing business and may limit market access for smaller firms or startups. Additionally, the act restricts the distribution of foreign stablecoins in the U.S. unless they meet specific compliance standards, which could stifle cross-border innovation and competition [1].

Experts and industry stakeholders are also concerned about the potential chilling effect of overly stringent regulations on innovation. While regulatory clarity is essential for consumer protection and market integrity, excessive red tape can slow the development of new technologies and business models. The challenge for policymakers is to strike a balance that fosters innovation while ensuring that risks such as financial instability, fraud, and money laundering are adequately addressed [3].

The future of cryptocurrency regulation in the U.S. will likely depend on the outcome of pending legislation and the ability of lawmakers to coordinate with regulators and industry stakeholders. As the fall agenda in Washington moves forward, key policy frameworks such as the CLARITY Act and the GENIUS Act will remain under scrutiny, with potential revisions influenced by feedback from banking associations and other financial sector representatives. The evolving regulatory landscape will shape how cryptocurrencies fit into the broader financial system, influencing everything from consumer adoption to institutional participation [1].

Source: [1] Washington's Fall Agenda Puts Crypto, Banking Rules in the Crosshairs (https://www.pymnts.com/news/regulation/2025/washingtons-fall-agenda-puts-crypto-banking-rules-in-the-crosshairs/) [2] MiCA vs. GENIUS Act: How Crypto Laws Differ in Europe and the US (https://www.ccn.com/education/crypto/mica-vs-genius-act-how-crypto-laws-differ-in-europe-and-the-us/) [3] Cryptocurrency Regulation: A Guide to U.S. & Global Policies (https://www.britannica.com/money/cryptocurrency-regulation)