The recent elections suggest a potential watershed moment for the blockchain and digital asset industry in the United States. The 119th Congress may prove to be the most supportive legislative body in the history of US digital assets, with several new members in both the House and Senate showing a keen interest in advancing blockchain technology. This has been reported by various leading publications, including The Wall Street Journal.
- Ending Lawfare: One of the primary concerns for the nascent digital asset industry is the practice of ‘lawfare.’ This refers to the use of legal systems to impede the evolution of industries deemed unfavorable by pushing through onerous enforcement actions and rules. As such, a concerted effort needs to be undertaken by the incoming administration to curtail these tactics. A proposed executive order might place enforcement actions on hold while regulatory agencies reevaluate their position on digital assets, following recent court decisions covered in cases like Loper Bright v. Raimondo, SEC v. Ripple Labs Inc., and others.
- Clarifying Stablecoin Regulation: Stablecoins, which are digital assets backed by fiat currencies or liquid assets, are increasingly being recognized for their utility in facilitating efficient cross-border exchanges and payments. The US has an opportunity to galvanize its position in this sector through clear regulatory guidance. The removal of outdated obstacles, such as the Staff Accounting Bulletin 121, could empower financial institutions to safely engage in stablecoin transactions.
- Ensuring Equal Access: Ensuring equal access to banking services for digital asset companies remains a critical component of integrating digital assets into the financial landscape. Presently, certain banking agencies have utilized safety and soundness justifications to deny services to legitimate digital asset businesses. The federal government must update its guidance to ensure equal access, echoing sentiments expressed in agency bulletins like OCC Bulletin 2023-1.
The digital asset industry has matured significantly, and with a new political alignment, there is an opportunity for both legislative and executive branches to effect substantive change to boost the industry. As Jason Allegrante noted, the new administration’s strategy should focus on a blend of policy clarity and fair access to create a sustainable ecosystem for digital assets. This perspective is further elaborated in his commentary available at Bloomberg Law.