This week marked a pivotal moment in the ever-evolving landscape of cryptocurrency regulation in the United States. With lawmakers and regulatory bodies releasing new frameworks, reversing previous approvals, and wrapping up long-standing investigations, it’s clear that a significant shift is underway. One message is loud and clear: the U.S. is stepping on the accelerator to redefine how it oversees digital assets, with Congress and federal agencies driving this transformation.
Among the most noteworthy changes is the recently passed GENIUS Act, which takes definitive steps to prevent the dominance of Big Tech and Wall Street in the burgeoning world of stablecoins. This legislation, often dubbed the “Libra clause,” directly references Meta’s previously unsuccessful attempt to launch a global cryptocurrency and mirrors the regulators’ intent to sidestep similar centralization of power in future digital finance systems.
🚫 A provision in GENIUS Act aims to curb the influence of tech conglomerates and major financial institutions in the US stablecoin market.#GENIUS #Stablecoins https://t.co/IE7FZdWjXw— Cryptonews.com (@cryptonews) July 21, 2025
The GENIUS Act mandates that any non-bank entity wishing to issue a dollar-pegged stablecoin must create a distinct, independent legal entity devoted to this function. Furthermore, this entity would need to undergo rigorous antitrust scrutiny and obtain clearance from a Treasury-led oversight committee, which holds the authority to veto. Banks, too, face restrictions; they can only issue stablecoins through separate subsidiaries that are barred from engaging in leverage, lending, or any other activities that could introduce broader financial risks.
Dante Disparte, Chief Strategy Officer at Circle, described this regulatory environment as even more restrictive than the deposit-token models currently being explored by major financial institutions, such as JPMorgan. By enforcing these measures, U.S. regulators are signaling a strong commitment to ensuring that the missteps of history, such as the emergence of “too big to fail” financial institutions, do not repeat themselves in the stablecoin arena. This sets the groundwork for a reimagined approach to managing fiat-backed digital assets in the future.
In tandem with the GENIUS Act, the Senate Banking Committee has rolled out a fresh initiative aimed at clarifying the classification and regulation of digital assets. The new draft bill, the Responsible Financial Innovation Act of 2025, is co-sponsored by notable senators including Tim Scott, Cynthia Lummis, and Bernie Moreno, among others. This essential legislation strives to eliminate the longstanding confusion plaguing the crypto sector by providing clearer guidelines regarding whether tokens will be classified as commodities or securities.
🔍 Senate Banking Chair @SenatorTimScott, @CynthiaMLummis, @SenatorHagerty, @BernieMoreno release a draft on crypto market structure—seeking feedback on 35+ topics.#CryptoMarket #CryptoPolicy https://t.co/XUh532lA9j— Cryptonews.com (@cryptonews) July 22, 2025
This measure builds upon previous legislative efforts, including the bipartisan Lummis-Gillibrand proposal and aspects of the House-passed CLARITY Act. By establishing consistent definitions and delineating the roles of regulatory bodies such as the SEC and the CFTC, the Responsible Financial Innovation Act aims to provide the certainty that digital asset firms have been yearning for. It embodies a growing, bipartisan recognition that while regulation is necessary, it should not stifle innovation or progress within the crypto space.
On another front, the U.S. Department of Justice recently made headlines by closing its investigation into Jesse Powell, the founder of Kraken. This legal saga began with a highly publicized raid on his home back in 2023 and involved a series of allegations related to cyberstalking and unauthorized access to sensitive information stemming from a management dispute at a nonprofit Powell had co-founded.
🔍 The Department of Justice has dropped its probe into Kraken founder Jesse Powell, a new report from Fortune alleges. https://t.co/NmCr5ZbobH— Cryptonews.com (@cryptonews) July 22, 2025
Throughout the investigation, Powell maintained his innocence, and as the DOJ has now returned the seized equipment and dropped all charges, this closure reaffirms his statements. The Kraken founder had also filed a civil suit against board members of the nonprofit, claiming reputational harm from the baseless allegations. This outcome lifts a significant legal burden from Powell and is a rare instance of federal authorities retreating from a high-profile crypto investigation.
In perhaps the most startling twist of the week, the SEC granted—and then swiftly revoked—its approval for the Bitwise 10 Crypto Index ETF, leaving investors in a whirlwind of uncertainty. This ETF was engineered to offer exposure to a diversified portfolio of cryptocurrencies, including heavyweights like Bitcoin, Ethereum, and XRP, boasting a focus on coins that had already received regulatory green lights.
📌 SEC Hits Pause on Bitwise ETF Offering Broad Crypto Exposure The US Securities and Exchange Commission approved and then immediately paused the conversion of Bitwise’s crypto index fund into an exchange-traded fund, leaving it in limbo pending a review. The SEC’s Division of… https://t.co/IE7FZdWjXw— Cryptonews.com (@cryptonews) July 25, 2025
The SEC’s abrupt decision came despite its initial assessment implying that the fund met investor protection and anti-fraud standards under the Exchange Act. This notable reversal has raised eyebrows, especially considering that over 70 crypto-related ETF applications from major firms like Grayscale and VanEck are still awaiting decisions. It highlights potential internal disputes within the SEC that may be undercutting the consistency and clarity of crypto asset regulatory approvals.
In conclusion, this week’s flurry of updates underscores the rapidly changing landscape of cryptocurrency regulation in the U.S. As Congress begins to lay down frameworks with laws like the GENIUS Act and the Responsible Financial Innovation Act, federal bodies continue to project mixed signals. The future of crypto regulation in the U.S. remains uncertain yet brimming with possibilities, leaving industry stakeholders and enthusiasts at the edge of their seats. Will these developments pave the way for a more defined and stable regulatory environment, or will the unpredictable nature of governance continue to reign? Only time will tell.
For more insights into the ever-changing world of cryptocurrency, stay tuned to our latest updates and analyses!