Trump administration seeks fresh approach to crypto regulation; is 2025 the year for crypto?
- Members of Congress are forming a bicameral committee to develop a regulatory framework for crypto.
- The top priorities for the committee include the formation of stablecoin regulations and a look into the possibility of a Bitcoin reserve.
- Commissioner Hester Peirce, the newly appointed crypto task force head, listed upcoming changes to the SEC's regulatory oversight on crypto.
In a press conference on Tuesday, several government heads met to discuss the next steps in the journey for a better crypto environment in the US, which involves the creation of a bicameral committee and the establishment of stablecoin regulations for the industry.
Meanwhile, the Securities & Exchange Commission (SEC) has moved to cut down on the size of its crypto enforcement unit, following an outline for crypto regulations listed by its newly appointed head of crypto task force Hester Peirce.
Trump administration drives crypto regulatory support
AI and Crypto Czar David Sacks, Senate Banking Committee Chair Tim Scott, House Financial Services Committee Chair French Hill, with other members of Congress present at the digital asset press conference, announced the formation of a working group tasked with developing a regulatory framework for digital assets and stablecoins.
The group, which will include key members of the House and Senate committees, aims to establish clear guidelines for regulating digital assets.
The committee will also continue to build on the Financial Innovation and Technology for the 21st Century (FIT21) bill in fulfilling this task, with emphasis being placed on stablecoins.
According to Tim Scott, work on stablecoin regulation is already underway in the Senate. This follows the introduction of a new bill by Sen. Bill Hagerty, which centers on Guiding and Establishing National Innovation in US Stablecoins (GENIUS) and defines stablecoin oversight.
Senator Scott also mentioned that Republican and Democrat sponsors are working hand-in-hand to ensure the bills get passed within 100 days.
Likewise, Crypto Czar David Sacks stated that they will look into the possibility of a Bitcoin reserve, but they are holding back because certain members of the Presidential Working Group have yet to be announced.
Meanwhile, a recent report suggests that the SEC is preparing to downsize a specialized unit of over 50 lawyers and staff members that had been focused on enforcing crypto regulations.
The changes are part of the Trump administration's plans to cut down on the regulatory overhaul from the previous leadership, The New York Times first reported.
The move comes after the newly appointed head of the crypto task force, Hester Peirce, shared updates on the commission's intended approach to digital asset regulations.
This includes examining the security status of several tokens to point out grey areas outside of the agency's jurisdiction.
"If the Commission spots fraud that lies outside our jurisdiction, it can refer the matter to a sister regulator," Peirce said in a statement on the SEC website.
These actions by the Trump administration reflect a broader desire to make crypto regulations more effective in the US.
This stems from the president's push for the United States to become a leader in crypto, which has led to several moves already within his first few weeks in office.
President Trump has also signed two executive orders that could put the US ahead in crypto innovation, including forming a digital asset stockpile and creating a sovereign wealth fund, which will likely include Bitcoin.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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