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The outcome of the 2024 U.S. elections, which saw Republicans taking control of the White House, Senate, and Congress, could significantly reshape the regulatory landscape for cryptocurrency in the country, according to S&P analysts.
According to a recent S&P Global report shared with crypto.news, this political shift may transition the U.S. approach to crypto regulation from enforcement-led measures to a more predictable rule-making framework.
The U.S. has trailed other major markets in advancing regulatory clarity for digital assets. Regions like Europe have introduced structured frameworks for stablecoins and other crypto activities.
Stablecoins, a type of cryptocurrency tied to fiat currencies like the U.S. dollar, are essential for enabling blockchain-based payments beyond crypto markets.
In the U.S., however, companies risk enforcement actions over unclear definitions of securities, leading to fines and legal disputes. The lack of clarity also affects staking — a process where investors lock their crypto assets to earn rewards. While some firms have stopped offering staking services due to regulatory pressure, others are challenging these restrictions in court.
“Crypto companies in the U.S. risk fines and enforcement actions relating to the listing of unregistered securities. This is due to the absence of regulatory clarity on which crypto assets are securities,” wrote the analysts.
Upcoming legislation
The analysts from S&P indicated in their note that regulatory changes regarding stablecoins and crypto asset custody may be expected in early 2025.
Additionally, custody services for crypto assets face significant challenges due to existing regulations like the SEC’s Special Accounting Bulletin – SAB 121. This regulation mandates that entities holding crypto assets on behalf of clients must report these assets as liabilities, making crypto custody expensive for U.S. banks.
Although a proposed repeal of SAB 121 was vetoed earlier this year, the new administration might reconsider this issue, potentially paving the way for greater market participation.
Bitcoin reserve?
One of the more ambitious proposals comes from Senator Cynthia Lummis, who suggests the Federal Reserve should acquire 1 million Bitcoin (BTC) over the next five years — roughly 5% of Bitcoin’s total supply. Proponents argue this could protect against currency debasement and manage national debt, while critics question the feasibility and implications of such a move.
Even if the bill doesn’t pass, the analysts believe the narrative around Bitcoin is shifting, with increased attention on its role in traditional financial markets. These discussions could encourage other nations to consider similar measures, further influencing Bitcoin’s global adoption, per the note.
Global coordination – it’s time for the US to catch up
Beyond domestic concerns, S&P notes that the U.S.’s lack of involvement in global regulatory coordination has hindered blockchain innovation in financial markets. Greater participation by the U.S. could help scale existing blockchain use cases, both domestically and internationally.
“We believe the stronger involvement of the U.S. may allow already well-tested use cases to scale commercially, both domestically and globally,” the analysts wrote.
As the U.S. enters a period of potential regulatory transformation, market participants await the next steps from lawmakers. According to S&P, developments in the regulatory framework could bring much-needed clarity and open new doors for innovation and growth in the digital asset space.