Let Freedom Reign
Crypto's tipping point?
A Senate Stablecoin Breakthrough
US passes stablecoin legislation. The kicker is that issuers with more than $50 billion outstanding would be regulated by the FDIC. But stablecoin issuers are not banks. They do not take deposits. There is no implicit guarantee for stablecoins. FDIC regulation may confuse the consumer.
Regulation is a signal, too.
‘What do you know? Congress is stepping up to do at least one job. The Senate this week passed a bill, 68-30, to establish a regulatory framework for crypto stablecoins. With one big caveat, this is a good development.
‘Stablecoins are a form of digital currency pegged to another fiat currency or asset like gold and are designed to hold a constant value. If you buy $1 of a stablecoin, you are supposed to be able to redeem it for $1 in hard currency. They are also supposed to be backed by safe and liquid assets like Treasurys and bank deposits similar to government money-market funds.’
Eichengreen says the coming stablecoin mania will resemble banking 150 years ago when every Tom, Dick, and Harry bank issued their own currency.
‘If Donald Trump and his allies have their way in Congress, America could soon see a resurgence of other features of that turbulent century, when bank failures, personal bankruptcies and financial instability also occurred regularly.
‘What would unleash this chaos is a piece of legislation known as the Genius Act. In its efforts to give crypto a patina of governmental authority and legitimacy, the Genius Act would give hundreds — perhaps even thousands — of American companies the ability to issue their own currencies. Imagine Walmart issuing a Walmartcoin, and Amazon doing the same with an Amazoncoin, enabling them to bypass the banking system and credit card networks.
‘The Trump administration argues that the Genius Act would take our country to a modern future. But what they seem to forget is that America had a similar banking system more than 150 years ago, and it unleashed chaos and financial ruin. Lawmakers should think twice before passing this piece of legislation.’
Regulatory confusion hinders euro stablecoins, says DRW founder
The EU continues to regulate itself into a pleasant irrelevance in the 21st century. Stablecoins will weirdly increase the use of the US dollar in Europe, perhaps.
‘Conflicting interpretations of European digital assets legislation are hindering the development of euro-denominated stablecoins, according to Don Wilson, chief executive of DRW Holdings. As a result, Wilson said European capital will continue flowing into US dollar stablecoins, which typically invest in US Treasuries, and away from European government bonds.’
‘Policy procrastination’ leaves UK trailing EU, US in crypto regulation: Experts
Regulatory certainty in crypto will be a competitive advantage for the United States.
‘The UK’s unclear regulatory stance on digital assets is drawing sharp criticism from market participants, with some citing “policy procrastination” as a key reason the country is falling behind both the European Union and the US in the race to define digital finance.
‘In a Friday blog post, John Orchard, chairman, and Lewis McLellan, editor of the Digital Monetary Institute at the Official Monetary and Financial Institutions Forum (OMFIF), an independent think tank, argued that the UK has wasted its early-mover advantage in distributed ledger finance.
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‘The post, titled “The UK keeps missing the boat on DLT finance,” said that the UK, once expected to set a post-Brexit gold standard for crypto regulation, continues to “talk un-specifically about regulation in the future.”
‘“As it stands, there is a date conspicuously missing for the ‘Regime go-live’ portion of the Financial Conduct Authority’s ‘Crypto Roadmap,’ though it suggests some time after 2026,” Orchard and McLellan wrote.’
SEC Regulation in a Non-Regulatory Environment
It’s amazing what a difference the man on top can make. Gensler saw the rules as his personal cudgel. Atkins is unwilling to exploit them for personal (political) benefit.
‘New Chair Atkins has advocated for greater transparency and efficiency in rulemaking and enforcement. Under his leadership, onerous new rulemaking should decrease dramatically, helpful guidance on existing rules should emerge and new ideas could be solicited through industry roundtables. Amendments to existing rules may even open new possibilities for fund managers and other investment advisers (including, per recent announcements, facilitating capital formation). On the enforcement front, investigations may proceed more efficiently, resolve faster, and focus more on substantive violations. Settlements may also align more closely with the SEC’s penalty guidelines, calibrated to elements of the penalty statute.’
Senate Passes Cryptocurrency Bill, Handing Industry a Victory
Regulatory certainty for the win.
‘The legislation’s success reflects the dramatic shift that has taken place in Washington as Republicans have consolidated a governing trifecta.
‘While the Biden administration cracked down on digital assets, Mr. Trump has pulled back sharply on such regulations, signaling a more permissive stance that aligns with the cryptocurrency industry’s goals.’
Wall Street’s calling it the most 'genius' piece of regulation since Dodd-Frank
This is about leadership on the global stage.
‘Allman believes the GENIUS Act makes a strong statement, similar to its impact on traditional financial institutions for decades, that the U.S. is ready to define the guidelines for the road ahead in digital assets.‘
A Pivotal Case Shaping Cryptocurrency Regulation
Consistent guidance and a sensible regulatory framework (i.e., one that a reasonable person can make sense of) should be things we expect. That doesn’t mean we get them.
‘In July 2023, Judge Analisa Torres of the U.S, District Court for the Southern District of New York ruled that XRP, as a digital token, did not satisfy the Howey definition of an investment contract. Programmatic sales to retail investors were deemed non-securities transactions, but institutional sales by Ripple were deemed violations of registration requirements—a split decision. This ruling curtailed the SEC’s broader “digital asset security” framework, influencing subsequent cases against other crypto entities. Data from Cornerstone Research from 2024 indicate a 30 percent drop in SEC cryptocurrency enforcement actions post-Ripple, suggesting a recalibration of regulatory litigation strategy.
‘The Ripple decision exposed inconsistencies in prior SEC guidance. A 2018 speech by then-Director of the SEC Division of Corporation Finance William Hinman declared cryptocurrency platform Ethereum’s token Ether a non-security due to its decentralized structure—a logic observers argued could also apply to XRP. Discovery in Ripple revealed internal SEC dissent over Hinman’s remarks. As a result of Hinman’s ties to a law firm linked to Ethereum, his speech raised questions about his impartiality. An investigation by the SEC’s Office of Inspector General into these claimed conflicts recently concluded that Hinman “followed applicable ethics rules” in delivering the speech, but the episode still highlights potential vulnerabilities in the SEC’s decision-making.’
Isn’t this just 100% reserve banking ?