US election result will likely lead to better crypto regulation: S&P analysts

by

As a seasoned analyst with over two decades of experience in financial markets, I have witnessed the ebb and flow of regulatory landscapes across various industries. The upcoming changes in U.S. crypto regulation could mark a pivotal moment for this nascent sector, offering a ray of hope for companies operating within its borders.

2024 U.S. election results, where Republicans gained power in the presidency, Senate, and House of Representatives, may lead to substantial changes in the nation’s cryptocurrency regulations, as suggested by S&P analysts.

As a crypto investor, I’ve been closely monitoring the news, and according to a recent report from S&P Global that was shared with crypto.news, it seems like there might be a change in the U.S.’s approach to cryptocurrency regulation. This potential shift could transition us from an enforcement-focused strategy to a more consistent rule-making framework – providing more clarity and predictability for investors like myself.

Compared to significant global markets, the United States has lagged behind in establishing clear regulations for digital assets. On the other hand, regions such as Europe have established organized systems for stablecoins and cryptocurrency transactions.

Cryptocurrencies known as stablecoins, which are linked to traditional currencies such as the US dollar, play a crucial role in facilitating transactions on blockchain platforms outside of just the crypto marketplace.

As a researcher, I’ve noticed that in the U.S., businesses face potential legal action if they fail to clearly define securities, leading to penalties and court battles. The ambiguity surrounding this definition also complicates matters like staking—a practice where investors lock their cryptocurrency assets to receive incentives. Some companies have halted staking services due to regulatory pressure, while others are contesting these restrictions in the courts.

In the United States, cryptocurrency firms may face penalties and legal actions for listing unregistered securities. The reason being, there’s a lack of clear guidance from regulators about which digital assets are considered securities.

Upcoming legislation 

According to a recent note from S&P analysts, it’s likely we might see new regulations on stablecoins and digital asset storage solutions as early as 2025.

Furthermore, managing cryptocurrency assets presents notable hurdles due to current regulations such as the SEC’s Special Accounting Bulletin – SAB 121. This rule requires institutions handling cryptocurrencies on behalf of clients to list these assets as liabilities. Consequently, U.S. banks find crypto custody to be costly because of this requirement.

As a crypto investor, I’ve been closely watching developments regarding SAB 121. While it was previously vetoed, the incoming administration may revisit this topic. If they do, it could open up new opportunities for increased market participation in the digital asset space.

Bitcoin reserve?

One of Senator Cynthia Lummis’s bold ideas is to have the Federal Reserve purchase approximately 1 million Bitcoins (BTC) over a period of five years, which represents about 5% of all existing Bitcoins. Supporters believe this action could safeguard against inflation and help manage national debt, while opponents debate the practicality and potential consequences of such an action.

As a researcher, I’ve observed that although the bill might not be passed, there seems to be a significant shift in the narrative surrounding Bitcoin. This change is characterized by a growing focus on its integration within traditional financial systems. These dialogues could potentially inspire other countries to contemplate similar strategies, thereby amplifying Bitcoin’s global acceptance, as suggested in my recent notes.

Global coordination – it’s time for the US to catch up

On a broader scale, S&P points out that the U.S.’s absence in international regulatory collaboration for blockchain technology has slowed down its advancement in financial markets. By increasing their involvement, the U.S. could amplify existing blockchain applications, not just within the country, but globally as well.

The analysts stated that a more active role by the U.S. could help established use cases grow commercially, not just within the country but also worldwide, as these have already been thoroughly tested.

With the United States poised for possible regulatory change, market players are eagerly watching for legislative actions. As per S&P, these changes could provide long-awaited clarity and pave the way for increased innovation and expansion in the digital assets sector.

Read More

2024-11-20 20:32