As the crypto industry evolves, crypto supporters have been watching for developments in crypto policy.
Recently, the Securities and Exchange Commission (SEC) took action on a few eagerly anticipated topics. In January, it approved spot bitcoin ETPs, and in May, it announced a rule change that could allow the trading of several spot ether exchange-traded products in the future. The SEC also closed an investigation that sought to classify ether as a security in late June.
Crypto has also been a topic on the presidential campaign trail. Many hope this will provide a catalyst for more regulations, though significant developments may have to wait until after the election.
In the meantime, here are 3 policy items the crypto industry is watching closely in the coming months.
1. A comprehensive regulatory framework for digital assets
In May, the House of Representatives passed the Financial Innovation and Technology for the 21st Century Act (FIT21). The bill establishes guidelines for regulating cryptocurrencies, assigning the responsibility to regulate decentralized blockchains to the Commodity Futures Trading Commission (CFTC), and non-decentralized blockchains to the SEC.
It also includes several other key details, including a definition for “decentralization,” guidelines for which cryptocurrencies qualify as securities versus commodities, requirements for exchanges, stablecoin rules, and a provision giving consumers the right to self-custody their crypto.
If the bill becomes law, it could pave a path for crypto platforms that have shuttered their US operations to return to the market. Platforms that currently offer crypto to US customers may also be able to expand their offerings to include not just more cryptocurrencies, but also functions like staking.
2. More clarity for stablecoins
Stablecoins are cryptocurrencies with values "pegged" (meaning tied) to another asset—often a traditional fiat currency like the US dollar. For example, one unit of a stablecoin that's pegged to the US dollar aims to always be worth $1. Because stablecoins are far less volatile than other cryptocurrencies, supporters believe they can make crypto transactions easier.
As of early July, the global market cap of stablecoins was greater than $160 billion, according to CoinMarketCap. But as with many other aspects of crypto, domestic regulations are essentially nonexistent, making stablecoins difficult to use in the US.
FIT21 isn’t the only bill attempting to address this issue. In April, a bipartisan team of senators introduced the Lummis-Gillibrand Payment Stablecoin Act, a bill that aims to establish a regulatory framework specifically for stablecoins. Notably, it includes a ban on algorithmic stablecoins. In 2022, a leading algorithmic stablecoin lost its peg, setting off a series of events that helped trigger a crypto bear market.
As of late June, however, the Stablecoin Act has yet to be approved, and likely won’t be prior to the upcoming election.
3. More crypto ETPs on the way?
Crypto ETPs hold cryptocurrencies as their underlying asset, and are convenient ways for those who aren’t familiar with crypto’s cybersecurity nuances to gain exposure to crypto.
In May, the SEC unexpectedly approved a rule change that could allow the listing and trading of spot ether exchange-traded products (ETP) in the future. This was a pleasant surprise for the crypto industry, which had assumed an approval was at least several months away.
So far, the SEC has addressed only bitcoin and ether—the 2 largest cryptocurrencies by market cap—in regards to the trading of ETPs. But supporters hope greater regulatory clarity will clear the way for more cryptocurrencies to have ETPs.