Regulators Race to Define Crypto’s Future Amid Rising Global Pressure

The U.S. government is actively shaping the regulatory landscape for cryptocurrencies, with a focus on stablecoins and broader digital asset oversight, as recent legislative developments and industry responses highlight both progress and challenges. The enactment of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act in July 2025 marked a significant step toward a federal framework for stablecoin issuance, imposing requirements such as full reserve backing, monthly audits, and anti-money laundering compliance. The law also restricts nonfinancial companies from issuing stablecoins, aiming to prevent conflicts of interest and reduce systemic risk. The Treasury Department has now issued a Request for Comment under the GENIUS Act, seeking public feedback on innovative tools such as artificial intelligence, blockchain monitoring, and digital identity verification for detecting illicit activities involving digital assets [1].

Industry stakeholders, however, are calling for amendments to the GENIUS Act, citing concerns about regulatory loopholes and unintended consequences. A coalition of banking associations has urged Congress to extend the prohibition on interest payments on stablecoins to include affiliated entities such as exchanges and brokers, warning that such arrangements could divert deposits from traditional banks and weaken credit creation. The associations also recommended the repeal of a provision allowing out-of-state-chartered institutions to operate across state lines without host state approval, arguing that this undermines the dual banking system and state-level oversight. Additionally, they advocated for stricter restrictions on private nonfinancial companies issuing stablecoins, emphasizing the risks of economic concentration and regulatory arbitrage [3].

At the same time, broader legislative efforts are underway to clarify the status of digital assets under U.S. law. The CLARITY Act, which has passed the House and is pending in the Senate, seeks to define how digital assets are treated under federal securities and commodities laws, aiming to reduce regulatory overlap and enhance transparency. Separately, the Anti-CBDC Surveillance State Act, also passed by the House and in Senate consideration, aims to prevent the Federal Reserve from issuing a central bank digital currency (CBDC) for public use without congressional approval. A similar measure, the NO CBDC Act, has been introduced in the Senate. These efforts reflect a broader debate over the appropriate role of government in digital currency innovation, with the U.S. approach emphasizing private-sector-led development while maintaining oversight through agencies such as the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) [5].

Industry experts warn that the window of opportunity for the U.S. to establish a favorable regulatory environment is narrowing. At the Wyoming Blockchain Symposium, speakers emphasized the urgency of legislative action, noting that the European Union’s Markets in Crypto-Assets (MiCA) framework and regulatory developments in other regions could outpace U.S. efforts. The narrow congressional majority currently held by Republicans adds further uncertainty, with industry advocates expressing concern that a potential shift in political power during the 2026 midterm elections could stall progress or lead to a more hostile regulatory environment. Given the high stakes, market participants are advised to monitor legislative developments closely and ensure alignment with evolving policy objectives [4].

As the U.S. continues to refine its approach to digital assets, the interplay between federal and state regulatory roles remains a key issue. While the GENIUS Act represents a step toward national coordination, states continue to play a significant role in licensing and consumer protection, particularly through money transmitter laws. This evolving landscape underscores the importance of regulatory clarity in determining the future trajectory of the crypto industry, with potential implications for financial innovation, consumer access, and the global competitiveness of U.S. markets [5].

Source: [1] Treasury Issues Request for Comment Related to the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act (https://home.treasury.gov/news/press-releases/sb0228) [2] Banking Associations Push to Close GENIUS Act Loopholes (https://www.regulationtomorrow.com/us/banking-associations-push-to-close-genius-act-loopholes/) [3] Trade Groups Urge Congress to Address GENIUS Act ... (https://www.consumerfinanceandfintechblog.com/2025/08/trade-groups-urge-congress-to-address-genius-act-loopholes/) [4] US must pass regulations or risk losing crypto race (https://cointelegraph.com/news/us-pass-regulations-risk-losing-crypto-race) [5] Cryptocurrency Regulation: A Guide to U.S. & Global Policies (https://www.britannica.com/money/cryptocurrency-regulation)