US Crypto Regulation Reverses in 90 Days: From Enforcement to Market-Building
In under 90 days the US crypto regulatory stance shifted sharply from aggressive enforcement under former SEC Chair Gary Gensler to a market-friendly, rule-setting approach under new Chair Paul Atkins and concurrent congressional action. Gensler’s SEC initiated a peak of 46 enforcement actions in 2023, treating most tokens (except Bitcoin) as securities and suing major platforms including Coinbase, Binance, Kraken and Ripple. After Donald Trump’s inauguration and Atkins’ appointment, the SEC withdrew major suits against Coinbase, Binance, Kraken and others with prejudice, effectively ending the Gensler-era litigation campaign. Concurrently, Congress is advancing the CLARITY Act to classify digital assets between SEC and CFTC jurisdiction; the bill has strong odds of passage soon but remains contested over provisions on tokenized equity, DeFi and yield-bearing stablecoins. The White House has convened three stablecoin meetings urging banks to engage; current Senate drafts would ban paying interest to stablecoin holders “just for holding” while permitting activity-linked rewards (trading rebates, LP incentives, staking rewards). Key figures: Gary Gensler (former SEC Chair), Paul Atkins (current SEC Chair), Brian Armstrong (Coinbase CEO), Brad Garlinghouse (Ripple CEO). Implications: the shift reduces legal tail risk for US exchanges, opens paths for tokenized securities via SEC “innovation exemptions,” and focuses legislative debate on stablecoin issuance and permissible yields. Traders should watch CLARITY Act developments, stablecoin yield rules, and regulatory signals from the SEC and White House—these will affect liquidity flows, US listing attractiveness, and stablecoin-driven capital allocation.
Bullish
The regulatory reversal reduces immediate legal tail risk for major US exchanges and crypto firms, which is bullish for market confidence and capital inflows. Withdrawals of high-profile SEC lawsuits (Coinbase, Binance, Kraken, Ripple) and prospects for the CLARITY Act and SEC innovation exemptions signal clearer legal pathways for tokenized securities and compliant products. Stablecoin legislation that permits activity-related rewards while limiting deposit-like interest reduces the threat to banks while preserving crypto utility—this compromise encourages banks to participate and could increase onshore liquidity. Historically, similar regulatory relaxations (e.g., US approval of Bitcoin ETFs) led to renewed institutional inflows and price appreciation. Short-term: markets may rally on reduced regulatory uncertainty and relisting/US-market-focused flows; watch for volatility around legislative votes or any sudden enforcement statements. Long-term: clearer rules support product development (tokenized securities, compliant stablecoins) and onshore capital return, strengthening market infrastructure and liquidity. Remaining risk: political cycle-driven reversals—future administrations could re-tighten rules, creating regime risk that may cap valuations or cause periodic sell-offs. Traders should monitor CLARITY Act text, SEC guidance on innovation exemptions, stablecoin bill language, and on-chain stablecoin flows as proximal indicators of market momentum.