Navigating the Future of Digital Asset Regulation in the United States: A Call to Action for 2024
In 2023, the digital asset markets saw a significant shift from the chaos of the previous year. Aggressive regulatory action and positive market developments marked the year, with the recent settlement between United States regulators and Binance, the world’s largest cryptocurrency exchange, leading the way towards improved trust, transparency, and accountability in the market.
While most global financial centers have introduced clear regulations for the crypto industry, the United States risks falling behind if new rules are not established in 2024. Policymakers have three potential paths to manage risks and opportunities in the crypto market: regulation, legislation, and designation.
Two years ago, US President Joe Biden took a step towards regulatory clarity with his ‘Executive Order on Ensuring Responsible Development of Digital Assets.’ However, legislative progress has stalled, leaving the US lagging behind other countries in regulating the sector, despite the fact that most digital assets are priced in dollars.
US-led bodies like the Financial Stability Board and the Financial Stability Oversight Council have been at the forefront of global efforts to regulate the crypto market. Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell have called for legislation to regulate dollar-denominated stablecoins.
Congress must empower federal regulatory agencies to set rules for the market, including exploring central bank digital currencies and establishing regulations for digital wallets. The absence of a US regulatory framework for stablecoins poses a threat to American interests, potentially allowing illicit actors to exploit trust in the dollar.
The stablecoin bill advanced by the House Financial Services Committee in July 2023 has gained momentum and could be America’s last chance to maintain its dominance in digital asset markets. As the European Union’s regulatory framework for crypto assets looms, US policymakers must act decisively to ensure regulatory clarity and American leadership in the crypto market.
In a year marked by global regulatory harmonization efforts, the US must prioritize advancing its digital asset policy to prevent a transatlantic rift in regulation. With the stakes high and the presidential election campaign looming, the US must seize the opportunity to shape the future of the digital asset market and maintain its position as a rule-maker rather than a rule-taker.
