Regulators Step Back as Crypto Industry Gains Leverage

A new U.S. legislative proposal seeks to involve private-sector firms in the seizure of cryptocurrency assets, reflecting shifting approaches to crypto enforcement and compliance. The move follows recent developments in federal and state-level regulations that have sought to clarify the roles of government agencies and private entities in the oversight of digital assets.

The U.S. Department of Justice (DOJ) has announced a strategic pivot, emphasizing that the mere act of developing software for decentralized crypto platforms will no longer be considered a criminal offense if done without malicious intent [2]. Acting Assistant Attorney General Matthew Galeotti of the DOJ’s criminal division stated that the department is moving away from prosecuting developers solely for failing to register as money transmitters [2]. This aligns with broader policy shifts under the Trump administration, which has disbanded specialized crypto enforcement teams and adopted a more accommodating stance toward the industry [2].

This shift in enforcement strategy is part of a larger legislative effort to refine the regulatory landscape for cryptocurrency in the U.S. The recently enacted GENIUS Act has established clear rules for the issuance of stablecoins, requiring full reserve backing, monthly audits, and anti-money laundering (AML) compliance [1]. The law mandates that only approved entities—whether domestic or foreign—can issue stablecoins pegged to the U.S. dollar [1]. Additionally, the Commodity Futures Trading Commission (CFTC) has been formally designated to regulate decentralized digital commodities, while the Securities and Exchange Commission (SEC) continues to oversee digital assets classified as securities [1].

Meanwhile, a separate but significant regulatory development is underway regarding central bank digital currencies (CBDCs). The House has passed the Anti-CBDC Surveillance State Act, which seeks to block the Federal Reserve from issuing a CBDC for public use without congressional approval [1]. A similar bill, the NO CBDC Act, has been introduced in the Senate [1]. These legislative efforts reflect growing concerns over government overreach and the potential implications of a state-controlled digital currency system [1].

The evolving regulatory environment has sparked calls for recalibration from major financial industry groups. A coalition of finance organizations, including the Global Financial Markets Association and the International Swaps and Derivatives Association, has urged the Basel Committee on Banking Supervision to reconsider proposed standards for crypto risk management [5]. They argue that the existing rules, finalized in 2022, are too restrictive and would make it economically unfeasible for banks to engage in crypto-related activities [5]. The group is advocating for a temporary pause in the implementation of the rules, which are set to take effect in January 2026 [5].

Internationally, the U.S. approach to crypto regulation contrasts sharply with that of countries like Brazil and China. Brazil has taken a structured and consultative route, implementing VASP licensing and stablecoin oversight through phased public consultations [3]. By contrast, the U.S. is increasingly relying on industry self-regulation and market forces [3]. These divergent strategies have created complex compliance challenges for multinational firms operating across multiple jurisdictions [3].

The regulatory changes and enforcement strategies are expected to have significant implications for cross-border payments and international trade. As the U.S. continues to refine its approach, businesses must adapt to an environment where compliance requirements can change rapidly, particularly in light of ongoing legislative and enforcement shifts [4]. Companies operating in the crypto sector must remain vigilant in monitoring both domestic and international regulatory developments to ensure continued compliance and operational stability.

Source: [1] Cryptocurrency Regulation: A Guide to U.S. & Global Policies (https://www.britannica.com/money/cryptocurrency-regulation) [2] US DOJ to back off money transmitter cases in shift backed by crypto (https://www.reuters.com/sustainability/boards-policy-regulation/us-doj-back-off-money-transmitter-cases-shift-backed-by-crypto-2025-08-21/) [3] Crypto Regulation in the US and Brazil (https://www.forensicrisk.com/news-and-insights/contrasting-crypto-regulation-a-look-at-the-us-and-brazil) [4] Is Crypto Legal in USA? Regulations & Compliance in 2025 (https://www.lightspark.com/knowledge/is-crypto-legal-in-usa) [5] Finance industry bodies call for changes to crypto rules for banks (https://www.reuters.com/legal/government/finance-industry-bodies-call-changes-crypto-rules-banks-2025-08-19/)