The majority of the crypto community has been calling for clearer regulation for years and is optimistic President Donald Trump's administration will strike the balance between regulatory oversight and innovation in upcoming legislation.
"People are definitely cheering for it. I honestly think that people would have cheered for almost anything," said Kevin Lehtinitty, CEO of Borderless.xyz. "A large issue in the crypto world, especially the past four years, hasn't been the particular regulation that's been applied to the crypto industry, it's been the explicit lack of any regulation. People would have cheered for any sort of clarity whether they agreed with it or not."
Mike Lempres, former Coinbase legal chief who previously served as chairman of Silvergate, agreed, noting the industry has been "artificially held back" over the last four years.
"Things have been paused and held. We haven't really had a clear path forward or even a discussion about how to get a clear path forward," Lempres said.
The Trump administration has brought optimism by showing a willingness to work with crypto companies on legislation, Lempres said.
"We're going to get a chance to actually get to the meat of how we can meet the goals of the regulators and the legislators in a way that works for the industry," Lempres said. "We just haven't even had that conversation yet. And crypto technology is different, so there should be an openness to getting to the same goals in a different way, and I think that's what's going to happen."
Kavita Gupta, founder and general partner of Delta Blockchain Fund, an early-stage venture capital fund focused on supporting blockchain technology, said, "There is definitely a lot of excitement" right now in the crypto world under the new administration.
"There is a feeling that we have been recognized in a more credible way," Gupta said. "We've been recognized by the White House as credible innovators. It's been a long journey, a very gratifying journey, but now we need to move on and actually deliver."
"It's been a month, so expecting too much is not fair," Gupta said. "But I think over the next 365 days, like within a year, we need to start delivering sector by sector."
New administration, new view on crypto
Days after taking office,
The same day, the new administration's
During the previous four years, many saw the federal government as unfairly harsh on cryptocurrencies, though the gripes were happening before former President Joe Biden took office. Biden vetoed a resolution passed by both chambers of Congress to
In 2022, Biden issued an executive order that instructed government agencies to study crypto and "take strong steps to reduce the risks that digital assets could pose." Around that time, the FDIC sent 24 pause letters to banks encouraging them to think twice before working with cryptocurrencies; a move people in the community refer to as "
First steps
Part of the reason for the delay in regulatory legislation on crypto has to do with its developing nature and fluidity. Cryptocurrencies and tokens do not always fall into established categories for securities and commodities. Take Ethereum as an example: It was originally launched as a way to better harness blockchain technology for smart contracts and decentralized finance applications. The Ethereum network later launched its own cryptocurrency, ether or ETH, which is accepted by some as a form of payment.
But many other things are built on Ethereum, and they can't all be characterized as securities, Lampres said. "If you tried to cram it all into a security box, you would end up killing it."
Lempres said at a minimum, the Commodity Futures Trading Commission and SEC (who have previously squabbled over whose domain crypto falls into) should devise guidance on what is considered a commodity, what is a security and what falls somewhere in between, and be open to amending it in the future as the technology evolves.
Nabil Manji, senior vice president and head of fintech growth and financial partnerships at Worldpay, agreed it would be a great starting point.
"There needs to be a clear asset classification, where it's relatively straightforward for firms in the sector to distinguish between things like securities, commodities or perhaps an even new asset class like digital assets," Manji said. The next step would be "delineating the regulatory jurisdiction of who has oversight of those different assets, and particularly digital assets themselves, if they do get carved out as a separate asset class."
Having a starting point to move forward from is essential, said Caitlin Long, founder and CEO of Custodia Bank, who has worked to establish cryptocurrency guidelines.
"The ideal is to give the guardrails to allow crypto companies to exist," Long said. "What we've been dealing with in the industry in the last few years is the hostile environment – that was so hostile coming out of Washington, D.C. that it really did challenge the existence of law-abiding crypto companies, including ourselves – and that's not what we want. We just want the ability to have the guardrails to do business lawfully."
Manji pointed to a recent interview SEC Commissioner Hester Peirce did where she emphasized that the SEC should have policies it can enforce through direct action and not need to turn to the courts as has been the case recently.
"How do you draw that fine balance of where the guardrails are not so tight that you then need to revert to the courts to enforce, because it's all gray outside, but keeping them broad enough that you can enable innovation, but still enforce directly if you need to?" Manji said.
"For years, all we've really wanted is clarity and a reasonable regime," Lempres said. "It doesn't need to be perfect. Perfect would be good, but pretty good would be better than what we've got now."
Stablecoins
Trump's executive order calls on the crypto working group to submit a report to him with legislative proposals and regulatory recommendations within 180 days of the order's signing. Sacks was on Capitol Hill a day after the signing of the EO to deliver a press conference announcing the Guiding and Establishing National Innovation for U.S. Stablecoins, or GENIUS, Act and the creation of a joint working group between the two chambers dedicated to crypto legislation.
"I look forward to working with each of you in creating a golden age in digital assets," Sacks said, noting crypto was a "week one priority" for the administration and affirming the first focus will be on stablecoins.
There has been debate over whether legislators should first tackle defining and regulating stablecoins or establishing a market structure for cryptocurrency exchange, but people in the industry are happy that the gears are turning.
"You gotta pick one and start to move forward," Lempres said. "We had a false start with stablecoins in the Biden administration where there was a presidential working group that indicated that stablecoins could be issued safely and soundly by an insured depository institution. That was three years ago or so, and after that, the regulators kind of squelched that so insured depository institutions were not able to issue stablecoins. That's as good a place to start as any. We've got a lot to address. You've got to get started somewhere."
In total there are three main bills under consideration in Congress regarding regulating cryptocurrencies.
"The fact that you have bipartisan bills emerging pretty consistently, and that throughout the three of them there are some red threads, that starts to tell us a little bit about where progress has been made from a negotiating vantage point, and what are the critical equities that actually need to be navigated in order to get us stablecoin legislation," said Dante Disparte, chief strategy officer and head of global policy and operation at Circle.
The GENIUS Act introduced by Sen. Bill Hagerty (R-Tenn.) would create licenses for stablecoins pegged to a monetary unit and designate oversight based on size: state regulators oversee stablecoins with a less than $10 billion market cap; larger coins are regulated on the federal level. The bill also outlines guidelines for law enforcement and safety measures like setting reserve requirements.
Circle has long pushed for regulation in the U.S. for cryptocurrencies. According to the company, it has the only stablecoin in compliance with the European Union Crypto-Assets regulation. Disparte hailed the GENIUS bill as "a really good package" that "addresses some of the historically very stubborn negotiating issues that had nothing to do with crypto and had more to do with states rights, federal preemption and bank, nonbank issues."
"Frankly, if you think about this as this broad evolution of U.S. stablecoin policy, it all begins with the President's Working Group on Financial Markets saying, 'Gosh, these stablecoin instruments are problematic. We think only insured depository institutions should be allowed to offer them,'" Disparte said. "That was years ago. To have evolved from that original set of recommendations to a world where you take the GENIUS Act, for example, you protect bank and nonbank issuers, you allow for scaled operators like Circle and presumably others, to have an [Office of the Comptroller of the Currency] pathway at the federal level, all stablecoin issuers would have to comply with [Bank Secrecy Act], [anti-money laundering] and [combatting the financing of terrorism] rules, sets a really critical standard for this new market and states rights are also protected."
Lehtiniitty, the CEO of Borderless.xyz, agreed with Disparte's assessment, praising the dual state and local structure.
"The bill itself is actually quite well written," Lehtiniitty said. "This double regulatory framework of state and federal is, I think, incredibly important, and people seem to be very excited about it because it does allow for these large impact stable coins to be really tightly regulated, and it still allows for startups to try to innovate and build new products in the space."
The GENIUS Act also addresses the thorny issue of defining stablecoins as a digital asset, rather than a security or a commodity.
"It actually categorizes stablecoins very specifically as digital assets that are fixed in value relative to a fiat currency," he said. "It doesn't even say that it has to be U.S. dollar stablecoins." The bill also says stablecoins can be used primarily for payments or to settle transactions, "which is what currency is intended for. Currency is not used as a meme coin to speculate. I don't put a bunch of dollars under my mattress and hope that they magically become $100."
Long said, from her reading, "the deal's already been cut."
"If you look at the Republican versions of the stablecoin bill, they're not that different," Long said. "They already know what's coming on the stablecoin bill."
A seat at the table
Some crypto leaders believe they should have a bigger voice in digital asset regulation.
"What they should be doing, in my opinion, is talking to a lot of builders who have actually built in the space and also investors who have invested in the space," Gupta said. "Put them at the same table and ask what are their problems and their pet peeves in the space? And then invite someone from a traditional trading security markets background who has that historical knowledge of evolution of those products, and ask: What has gone wrong? What has really worked?"
Already some have found solace in having members of the crypto community like David Sacks lead the charge.
"That's somebody who understands the technology, understands the industry and is trying to find a responsible way forward," Lempres said, referring to Sacks. "And I think that's part of the reason for the optimism, that it's not a politician."
Will Martino, co-founder and president of Kadena, said the easiest way to understand crypto is to work with it, which makes the president's crypto forays understandable.
"One of the best ways to learn about crypto, and to get educated and get experience with it, is literally to invest in it and work with it," Martino said. "Trump launching a meme coin during his inauguration – as I have said before in other interviews – is crazy, but it's also a great way to get experience and how to think about crypto."
Disparte said all signs were pointing toward tangible change.
"With this crypto executive order, with the crypto czar David Sacks, with not one but three legislative packages on the table and a potentially short timeline to advance them, at long last, the United States – which has been the beneficiary of dollar stablecoins anyway – can win this so-called 'digital currency space race' because of our national policy, as opposed to in spite of it," Disparte said.
Joey Pizzolato contributed to this story.
