July. A month often associated with fireworks, freedom and… well, perhaps a regulatory shackle for crypto in the U.S. We hear that the GENIUS Act will arrive soon, followed by the CLARITY Act, offering regulatory certainty and legal clarity. But are they? Are we as a nation and a field sleepwalking into a system that unequivocally protects the powerful? This system discourages ingenuity and is vitally important to the developing world.
Who Benefits? Whose Voices Silenced?
The GENIUS Act, which is primarily concerned with stablecoins, seems less “genius” and more “gatekeeper.” Only regulated entities – imagine post-insurance federally insured banks and other regulated nonbanks – are allowed to issue stablecoins. Sounds safe, right? Let's connect some dots. This all but excludes smaller entrants. It hampers the inventors developing prototypes in their basements and the looking entrepreneurs building solutions to send remittances home in countries suffering from hyperinflation. It guarantees the victory of traditional finance, the same system that crypto was created to unseat.
Think about remittances. Whether it is a family in the Global South seeking credit to build a home, every basis point can matter. In its most idealistic sense, crypto provided a solution to avoid these excessive fees. Here we are, with these regulations, are we unintentionally duplicating the same system, only with a crypto twist? Are we going to let the upside of crypto just accrue to a small number of wallets? In the meantime, the unbanked and underbanked are getting further left behind.
It could provide much-needed guidance. The devil, as always, is in the details. Will it actually spur real world innovation, or will it just add a bureaucratic obstacle course that only the most well-heeled firms can clear.
Wall Street Wins, Main Street Loses?
Here's the unexpected connection: remember the 2008 financial crisis? We saved the banks, and what did we achieve? More of the same. In the process, are we preparing for a repeat of that situation with crypto? Regulations that are so stringent, so complex, that only the legacy players can comply, effectively creating a crypto oligarchy.
This would be crypto-benign from the perspective of the Trump administration. I see it as short-sighted. Supporting new stablecoin regulation without understanding the broader implications is akin to treating a symptom while the disease still runs rampant.
What happens when innovation is stifled? It moves elsewhere. It finds a more welcoming environment. The U.S. risks ceding its competitive advantage. This technology truly has the power to change our entire global financial system for the better.
Forgotten People In The Global South
The story has traditionally been told through the perspective of the institutional investor and the advanced trader. Or the single mother in Venezuela trying to use crypto to get food to her family. Or the entrepreneur in Nigeria using Bitcoin because his currency has no value left? These are the true killer applications, the true use cases that show how this technology can be transformative and what crypto can do. This is really a question of how we define safety. Are we actually protecting them with these regulations, or are we unintentionally isolating them from a critical lifeline?
House investigation into banking bias is a bright spot! Second, the OCC has repealed Interpretive Letter 1179. This decision has a chilling effect on banks providing crypto services and underscores the fear pervading the industry. Fear of the unknown, fear of change, fear of egos being bruised.
The SEC's "Frankenstein patchwork" enforcement strategy? It's not just inefficient. It's dangerous. It erodes public trust, creates regulatory uncertainty, stifles innovation, and drives talent and capital overseas. The CLARITY Act can go a long way toward addressing this. This requires implementation in true spirit of enabling innovation, not just accommodating existing use.
We need clarity, yes. But we need vision. This vision understands that crypto has amazing, positive potential. It is an incredible tool for individual empowerment, advancement of financial inclusion and economic growth, particularly in developing countries. Something more than a vision dedicated to advancing the interests of Wall Street.
Let’s make sure that July doesn’t go down as the month that the U.S. actually choked the golden goose to death. Together, let’s advocate for regulations that are intelligent and pragmatic. These regulations must work for the many, not the few. Otherwise, this “power grab” will boomerang spectacularly, making us all poorer in the long run. The question now is, are we bold enough to demand these key questions be asked before it’s too late.
