As federal regulators circle the crypto industry with increasingly aggressive proposals, CEOs of major cryptocurrency ventures are fighting back against what they see as an overreaching stablecoin crackdown.
Samuel Bankman-Fried, FTX’s chief executive, acknowledged the need for some regulation but drew a hard line at the extent of the proposals. Industry bigwigs insist existing stablecoins are already essential for market liquidity. They’re not happy.
Crypto leaders fuming as regulators encroach on stablecoin territory, drawing battle lines over market essentials.
The regulatory picture? Total chaos. SEC and CFTC are locked in a bureaucratic turf war over whether these digital assets are securities or commodities.
Gary Gensler at the SEC thinks many stablecoins look suspiciously like money market funds. Meanwhile, the CFTC has planted its flag by declaring Bitcoin and friends as commodities. Some poor products might end up regulated twice. Lucky them.
Congress isn’t sitting idle. The STABLE and GENIUS Acts (seriously, who names these things?) aim to create new frameworks for stablecoin oversight. The discussion draft introduced on February 6 establishes important regulatory guidelines for dollar-denominated payment stablecoins.
Critics—more than 20 organizations—call the legislation a “crypto industry wish list” with gaping holes in consumer protection. They’re especially worried about letting tech giants create private currencies. Facebook with its own money? What could possibly go wrong?
The stablecoin market continues its meteoric rise regardless. USDC trails only Tether, which somehow remains king despite its controversial history. These tokens have become the backbone of crypto trading. Stablecoins provide users a vital safe haven during extreme cryptocurrency market volatility.
The regulatory atmosphere shifted considerably under Trump, with crypto-friendly officials assuming key positions. Donald Trump specifically referenced the Operation Chokepoint 2.0 during the Bitcoin 2024 event. David Sacks became America’s first “Crypto Czar,” whatever that means.
Federal agencies seem to be backing off their “regulation by enforcement” approach. States aren’t waiting around. New York already secured a $37 million settlement from a crypto lender. California and Illinois are flexing their regulatory muscles too.
Internationally, concerns mount about non-US stablecoin issuers being locked out of Treasury markets. Circle, USDC’s parent, is pushing for American-led stablecoin legislation.
Global approaches vary wildly. Coordinated international rules? Don’t hold your breath.
