The recent US election result, which saw Republicans taking control of the White House, Senate, and Congress, is expected to have a significant impact on the regulatory landscape for cryptocurrency in the country. According to S&P analysts, this political shift may transition the US approach to crypto regulation from enforcement-led measures to a more predictable rule-making framework.
This is a welcome change for the crypto industry, which has long been plagued by regulatory uncertainty in the US. The lack of clarity has led to fines and legal disputes, with companies risking enforcement actions over unclear definitions of securities. This has also affected staking, a process where investors lock their crypto assets to earn rewards, with some firms stopping offering staking services due to regulatory pressure.
The S&P analysts believe that regulatory changes regarding stablecoins and crypto asset custody may be expected in early 2025. This could include a repeal of the SEC’s Special Accounting Bulletin – SAB 121, which has made crypto custody expensive for US banks. Additionally, Senator Cynthia Lummis has proposed that the Federal Reserve acquire 1 million Bitcoin over the next five years, which could protect against currency debasement and manage national debt.
While this proposal may not pass, the narrative around Bitcoin is shifting, with increased attention on its role in traditional financial markets. This could encourage other nations to consider similar measures, further influencing Bitcoin’s global adoption. The S&P analysts also believe that the US’s lack of involvement in global regulatory coordination has hindered blockchain innovation in financial markets, and that greater participation by the US could help scale existing blockchain use cases.
Predictions:
Based on the analysis, we can make the following predictions:
1. The US will transition to a more predictable rule-making framework for crypto regulation, providing clarity and certainty for the industry.
2. Regulatory changes regarding stablecoins and crypto asset custody will be expected in early 2025, potentially including a repeal of SAB 121.
3. The narrative around Bitcoin will continue to shift, with increased attention on its role in traditional financial markets, and potentially leading to similar measures being considered by other nations.
4. The US will increase its participation in global regulatory coordination, helping to scale existing blockchain use cases and promote innovation and growth in the digital asset space.
Conclusion:
The US election result is a turning point for crypto regulation, with the potential for significant changes in the coming year. The S&P analysts’ predictions provide a positive outlook for the industry, with increased clarity and certainty on the horizon. As the regulatory landscape continues to evolve, it will be important to monitor developments and adjust strategies accordingly.
