U.S. Regulators Redefine Crypto's Future Amid Privacy and Power Struggles

In a major shift toward clarifying the regulatory landscape for digital assets, the United States has enacted the GENIUS Act and advanced the CLARITY Act in 2025, signaling a new era for crypto policy. These legislative efforts, supported by bipartisan majorities in the House and Senate, aim to establish a federal framework for stablecoins, define the regulatory roles of the SEC and CFTC, and prevent the development of a central bank digital currency (CBDC) without congressional approval. The developments reflect the Trump administration’s broader objective of positioning the U.S. as a global leader in digital finance, aligning with but also diverging from the EU’s comprehensive Markets in Crypto-Assets Regulation (MiCA) regime.

The GENIUS Act, signed into law by President Trump on July 18, 2025, marks the first comprehensive federal regulation of payment stablecoins. It mandates that stablecoins be fully backed by high-quality liquid assets such as U.S. dollars or short-term Treasuries, with monthly reserve disclosures verified by independent auditors. Only federally insured depository institutions or state-chartered trust companies meeting specific criteria are permitted to issue these stablecoins. The law also prohibits interest-bearing stablecoins and denies automatic access to Federal Reserve accounts, preserving the Fed’s discretion. To ensure compliance and oversight, a new Stablecoin Certification Review Committee has been established, tasked with vetting issuers and coordinating with state and federal regulators. The law preempts some state licensing requirements while preserving consumer protection laws at the state level.

Simultaneously, the CLARITY Act, which passed the House with bipartisan support, seeks to clarify the jurisdictional split between the SEC and CFTC over digital assets. The bill defines categories of digital assets and outlines a registration framework for digital commodity exchanges. It imposes new obligations on intermediaries, including segregation of customer assets, AML compliance, and KYC requirements. The CLARITY Act is seen as a direct response to past market failures, such as the collapse of FTX, and aims to create a safer, more transparent market structure. It is currently pending in the Senate, where a Republican-led discussion draft has emerged, proposing additional safeguards such as self-certification of asset status and updated custody rules for crypto-specific technology.

In parallel, the Anti-CBDC Surveillance State Act, passed by the House on a largely party-line vote, prohibits the Federal Reserve from developing a central bank digital currency without congressional approval. This bill reflects strong opposition to a CBDC from privacy advocates and lawmakers concerned about government overreach. Critics, however, warn that the restriction could hinder U.S. innovation in digital currency and weaken its global financial leadership.

The Senate’s proposed discussion draft builds on the CLARITY Act, emphasizing securities law modernization and joint rulemaking between the SEC and CFTC. It also permits issuers to self-certify that a digital asset is not a security, with the SEC retaining authority to challenge these designations within 60 days. Notably, the draft aligns with the White House’s July 2025 digital asset policy report, which emphasizes market clarity, privacy, and innovation. The report also reaffirms the administration’s stance against a retail CBDC, favoring a market-driven approach.

Despite these regulatory strides, U.S. tax policy for digital assets remains outdated. During a July 16 House hearing, stakeholders highlighted the need for modernized tax rules, including de minimis exemptions for small transactions and clearer treatment of staking, mining, and token swaps. Lawmakers and industry representatives agreed that the current system fosters legal uncertainty and drives innovation overseas. The SEC’s recent approval of in-kind creation and redemption processes for crypto ETFs has helped reduce transaction inefficiencies for institutional investors, but broader tax reform remains a key priority.

The legislative changes are reshaping the role of financial institutions, fintech firms, and traditional businesses in the crypto ecosystem. With greater clarity on stablecoin and market structure rules, banks and regulated entities are now more likely to issue, hold, or partner with stablecoin providers under defined federal and state frameworks. This shift could accelerate the adoption of stablecoin-based payments, custody solutions, and cross-border transactions. However, businesses must also navigate new compliance requirements, including AML/KYC programs, registration obligations, and regulatory reporting.

Looking ahead, the U.S. is poised to play a pivotal role in the global evolution of digital finance. The GENIUS and CLARITY Acts mark a decisive step toward regulatory clarity, but open questions remain regarding executive branch coordination, investor protections, and comprehensive tax reform. As the crypto market matures, stakeholders can expect ongoing refinement of these policies, with the potential for significant impacts on financial innovation, market structure, and global monetary dynamics.