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US voters showed clear and strong support for cryptocurrency

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After years of regulatory uncertainty and a flurry of enforcement actions, US voters have delivered a resounding message: the time has come for a new approach to crypto regulation. This sentiment has been echoed across both executive and legislative branches, with over 292 candidates who openly support crypto elected to the legislature. This wave of pro-crypto leadership has ignited cautious optimism within the industry, bolstered by a post-election surge in institutional and retail adoption.

If the incoming administration fulfils its pre-election promises, the US could position itself again as a global hub for crypto innovation. However, the path forward is not without challenges. The European Union’s Markets in Crypto-Assets Regulation, set to take effect on December 30, will introduce a comprehensive regulatory framework, potentially outpacing the US in offering clarity to crypto businesses. To maintain its leadership, the US must seize this moment to craft a regulatory framework that strikes a delicate balance: one that fosters innovation while safeguarding consumers and investors. This will require moving beyond the reactive, enforcement-first strategies of the past and embracing a more proactive, principles-based approach.

The turning point

Since 2017, the US Securities and Exchange Commission has largely relied on enforcement actions to address perceived regulatory gaps in the crypto industry. This approach, while well-intentioned, has contributed to significant uncertainty. In 2023 alone, the SEC initiated 46 enforcement actions—a 53% increase from the previous year—further highlighting the inadequacy of applying legacy financial regulations to this rapidly evolving space.

Recent proposals, such as granting the Federal Reserve authority over stablecoin issuers as ‘depository institutions,’ demonstrate the tension between traditional regulatory frameworks and crypto’s unique characteristics. Stablecoins like Tether (USDT) and USDC (USDC) thrive on their flexibility and global reach, attributes that don’t neatly align with the requirements of traditional banking regulations.

Fortunately, the outcome of the recent elections suggests a shift in public sentiment. Voters are signalling a preference for regulatory clarity and more constructive dialogue between lawmakers and the crypto industry.

Momentum for change

One of the most notable shifts occurred in Ohio, where incumbent Democrat Sherrod Brown, known for his critical stance on crypto, was unseated by Republican Bernie Moreno. Backed by industry heavyweights like Coinbase, Ripple Labs, and Andreessen Horowitz, Moreno’s campaign underscored the growing influence of the crypto sector in shaping political outcomes.

With SEC Chair

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