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Crypto Regulation Weekly: GENIUS Act Challenges Big Tech and SECs Surprising ETF Reversal

Crypto Regulation Weekly: GENIUS Act Challenges Big Tech and SECs Surprising ETF Reversal

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This past week, the landscape of cryptocurrency regulations in the United States abruptly shifted, as lawmakers and federal agencies unveiled new frameworks, halted approvals, and wrapped up long-standing investigations. The developing narrative is clear: the U.S. is rapidly accelerating its efforts to shape the next chapter of digital asset oversight, with both Congress and federal authorities taking an active role in this transformation.

Let’s dive into the pivotal moments of this week, starting with the introduction of the GENIUS Act and its implications for the future of stablecoins.

đź“Ś **Why This Matters**: The regulatory environment for cryptocurrencies has long been murky, creating uncertainty for businesses and investors alike. This week’s changes signal a decisive move towards clearer guidelines, which could fundamentally reshape how digital assets function within the U.S. economy.

The recently enacted GENIUS Act has raised eyebrows and set off a wave of discussions, especially with its provisions targeting the influence of major tech companies and financial institutions in the rapidly growing stablecoin market. Often referred to as the “Libra clause,” this regulation was triggered by the fallout from Meta’s ill-fated attempt to launch a global currency.

This legislation mandates that any non-bank organization looking to launch a dollar-backed stablecoin must create a completely separate legal entity to oversee this operation. As part of this process, the newly established entity will face rigorous antitrust scrutiny and will need to gain the green light from a Treasury-led oversight committee, which wields veto power.

Banks also find themselves under the watchful eye of regulators; they must issue stablecoins through distinct subsidiaries that are barred from engaging in any high-risk activities, including leverage or lending. This regulatory landscape is proving to be stricter than what some major players, like JPMorgan, have been exploring in their deposit-token models.

As Circle’s Chief Strategy Officer, Dante Disparte, pointed out, this creates a cautious environment aimed at preventing a repeat of past financial debacles caused by too-big-to-fail institutions. It hints at a larger effort to rehash how the U.S. approaches fiat-backed digital assets, setting the stage for a rethinking of the entire financial infrastructure.

🔥 **Expert Opinions**: Industry leaders are weighing in on these developments. Disparte’s comments suggest that we are moving towards an era where regulatory scrutiny could be both a blessing and a curse—allowing for stability but potentially stifling innovation.

In tandem with the genesis of the GENIUS Act, the Senate Banking Committee has laid out a draft bill known as the Responsible Financial Innovation Act of 2025. This initiative aims to clarify the often puzzling classifications of digital assets, determining when tokens should be treated as commodities or securities.

This legislation, co-sponsored by a bipartisan group of senators, builds upon previous initiatives and aims to bring coherence to the regulatory landscape. By defining clear responsibilities for the SEC and the CFTC, it seeks to provide digital asset firms with the predictability they’ve been clamoring for, all while balancing the need for innovation with necessary regulatory measures.

🚀 **Future Outlook**: If this bill sees the light of day, it could revolutionize how digital assets are launched, traded, and reported within the U.S. market—ushering in a new era of clarity and efficiency.

Meanwhile, in a dramatic conclusion to a years-long saga, the U.S. Department of Justice has reportedly ended its investigation into Kraken founder Jesse Powell. This inquiry, which kicked off with a raid on Powell’s home in 2023, stemmed from a management dispute tied to the Verge Center for the Arts, a nonprofit Powell helped establish.

The investigation had included serious allegations such as cyberstalking, but Powell consistently denied any wrongdoing. With the DOJ’s closure of the case, they returned the seized devices and effectively affirmed Powell’s claims, lifting a significant burden from his shoulders. This resolution allows Powell to focus on his ventures without the cloud of legal accusations looming overhead.

In a rather unexpected twist, the SEC caused shockwaves in the investment community by granting and then retracting approval for Bitwise’s 10 Crypto Index ETF all within the same day. Designed to track a diversified array of cryptocurrencies—such as Bitcoin and Ethereum—the ETF was initially viewed as a major step forward for crypto market exposure.

This sudden about-face—the SEC’s Assistant Secretary cited a requirement for further review under Rule 431—was shocking, especially since the SEC had previously indicated that the fund met standards for investor protection. With over 70 crypto-related ETF applications pending, many are left wondering about the consistency and clarity of the SEC’s decision-making processes.

As we watch this landscape evolve, it’s clear that the regulatory future of crypto in the U.S. is as dynamic as the technology itself. While legislative measures like the GENIUS Act and the Responsible Financial Innovation Act aim to bring order, the actions of federal agencies signal ongoing instability and uncertainty. As investors and industry leaders navigate this landscape, staying informed and engaged has never been more crucial. What do you think these changes mean for the future of cryptocurrency in the U.S.? Let us know your thoughts!

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