US Developments in August
- James Ross
- Aug 30
- 4 min read
1. Executive Summary
In 2025, the United States underwent a paradigm shift in its approach to digital assets, transitioning from a posture of regulatory ambiguity and enforcement-driven policy to the implementation of a comprehensive, pro-innovation legal framework. Coordinated actions by a new Presidential administration, key Congressional committees, and federal financial regulators are creating a durable structure for the digital asset ecosystem. This report synthesises recent policy documents, legislative proposals, and regulatory directives to analyse the architecture of this new regime and its material implications for market participants.
The core objective of this national strategy is to supplant legal uncertainty with legislative clarity, thereby fostering domestic innovation and integrating digital assets into the established financial system. Key pillars of this framework include the bifurcation of regulatory jurisdiction, the authorisation of banking institutions to engage with digital assets, the creation of a federal charter for stablecoin issuers, and the modernisation of rules governing novel financial technologies. A sophisticated focus on systemic risk mitigation, cybersecurity, and international regulatory harmonisation balances this pro-growth agenda.
2. Executive and Legislative Mandates
The strategic foundation for this policy evolution is the President's Working Group on Digital Asset Markets report. This document articulates a multi-faceted agenda designed to position the U.S. as the global centre for digital finance through several core tenets:
Jurisdictional Clarity: Formally granting the Commodity Futures Trading Commission (CFTC) primary regulatory authority over spot markets for non-security digital assets (digital commodities), while the Securities and Exchange Commission (SEC) retains its traditional oversight of digital assets that meet the definition of a security.
Banking and Digital Asset Integration: Rescinding policies that created supervisory friction for banks servicing the digital asset industry and providing clear guidance for federally chartered institutions to offer custody, manage stablecoin reserves, and provide other financial services.
Federal Framework for Stablecoins: Championing privately issued, fiat-backed stablecoins as critical payment system infrastructure. This is codified in the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which establishes a federal licensing and supervisory regime.
Prohibition of a Central Bank Digital Currency (CBDC): Explicitly forgoing the development of a U.S. CBDC to prioritise private sector solutions and mitigate privacy concerns.
Support for Decentralised Technologies: Affirming the right to self-custody and establishing "possession or control" of user assets as the key determinant for regulating Decentralised Finance (DeFi) protocols as financial intermediaries.
This executive vision is being rapidly translated into law. The Digital Asset Market Clarity (CLARITY) Act, advanced by the House Financial Services and Agriculture Committees, aims to codify the jurisdictional split between the SEC and CFTC, providing a clear legal standard for the entire market. Bipartisan passage in the House has created significant momentum for Senate action.
3. Regulatory Implementation and Market Structure Modernisation
In a coordinated initiative known as "Project Crypto," the SEC and CFTC are leveraging existing statutory authority to implement the administration's mandate without waiting for the whole legislative process.
Commodity Futures Trading Commission (CFTC): Acting Chairman Caroline Pham has launched a "crypto sprint," announcing the CFTC's intent to permit the trading of spot digital commodity contracts on CFTC-registered Designated Contract Markets (DCMs). This action establishes an immediate, federally regulated, and supervised venue for the institutional trading of assets like Bitcoin and Ethereum, thereby significantly enhancing market integrity and investor protection.
Securities and Exchange Commission (SEC): Under new leadership, the SEC has fundamentally altered its regulatory posture. The Commission has undertaken several market-enhancing actions:
Approval of In-Kind ETP Creations: Reversing the restrictive "in-cash only" creation/redemption model for spot crypto Exchange-Traded Products (ETPs). The in-kind model enables Authorised Participants (APs) to exchange the underlying crypto asset directly for ETP shares, thereby reducing operational costs, minimising tracking error, and enhancing market efficiency.
Expansion of Derivative Products: Authorising the listing of options on spot Bitcoin ETPs and approving multi-asset ETPs. This enables the development of sophisticated hedging, risk management, and investment strategies within a regulated product wrapper.
Pathway for New Asset ETPs: Formally soliciting public comment on ETPs for other large-capitalisation digital assets, signalling a straightforward, merit-neutral process for expanding the universe of investable products.
Activity-Based Guidance: Issuing a staff statement on liquid staking that provides a potential safe harbour for services structured in a purely "ministerial" capacity, where the provider does not exercise entrepreneurial or managerial efforts under the Howey test. This represents a shift toward nuanced, activity-based regulation.
4. International Harmonisation and Systemic Risk Management
The domestic pro-innovation agenda is being pursued in concert with robust international engagement to manage cross-border risks. A recent Regulators Roundtable convened by CFTC Commissioner Kristin Johnson identified key areas for global supervisory convergence:
Third-Party and Concentration Risk: A growing international consensus favours direct regulatory oversight of critical third-party technology vendors, with the European Union's Digital Operational Resilience Act (DORA) emerging as a potential global template.
Cybersecurity and Operational Resilience: Regulators are moving to mandate proactive, auditable operational resilience frameworks for all systemically important financial institutions, shifting focus from reactive recovery to preemptive defence.
Supervisory Technology (SupTech): The proliferation of AI-driven financial crime necessitates corresponding investment by regulatory bodies in advanced AI-powered market surveillance tools to ensure adequate oversight.
5. Strategic Implications for Market Participants
This new regulatory paradigm creates a fundamentally altered operating environment, presenting both significant opportunities and new compliance obligations.
For digital asset firms, the framework provides a clear path to transition from legally ambiguous operating models to becoming fully regulated entities, such as CFTC-registered DCMs or SEC-registered broker-dealers/Alternative Trading Systems (ATS). This will facilitate onshore operations and product expansion.
For banking institutions, the removal of regulatory barriers creates a clear mandate to develop digital asset strategies. Banks can now pursue opportunities in custody, asset tokenisation (RWAs), and payment systems, backed by legal and supervisory certainty.
For Stablecoin Issuers: The GENIUS Act provides a durable charter for operating as a federally regulated payment provider, positioning stablecoins as a core component of the U.S. financial system and an instrument of dollar competitiveness.
For DeFi Developers: The focus on "control" provides a more predictable legal environment for developing non-custodial protocols, potentially insulating truly decentralised software from being misclassified as an unlicensed money services business or securities exchange.
For Institutional Investors: The combination of legislative clarity, regulated product availability (ETPs, options), and banking integration has materially de-risked the asset class, creating a foundation for more significant and diversified capital allocation into U.S.-domiciled digital asset markets.
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