2025 Crypto Policy Outlook

A crypto-friendly White House

Trump entered his second term as the only president to ever issue blockchain-enabled non-fungible tokens (NFTs). Trump and First Lady Melania Trump also announced branded digital coins the weekend before Trump returned to the Oval Office, deepening already close ties to the crypto industry, which donated millions to his campaign.

The executive order supporting the growth and use of digital assets also created an interdepartmental working group with a six-month deadline to form recommendations for regulatory and legislative proposals. The working group, chaired by venture capitalist and Special Advisor for AI and Crypto, David Sacks, was also tasked with examining the value of a national digital asset stockpile using cryptocurrencies seized by law enforcement.

On March 6, Trump signed an executive order to establish a Strategic Bitcoin Reserve and U.S. Digital Asset Stockpile, “to serve as a secure account for orderly and strategic management of the United States’ other digital asset holdings.” Both the reserve and stockpile will be composed of previously seized bitcoin and digital assets. The Commerce and Treasury secretaries are directed to develop strategies to manage them in budget-neutral ways. The order does not direct the acquisition of any assets but seeks to consolidate government holdings under the Treasury Department. It also acknowledges that legislation may be needed to fully authorize the actions outlined in the order. 

Legislative momentum

Stablecoin legislation could be the first to move forward, as there was significant bipartisan support for a framework for stablecoin-specific regulation, the STABLE Act, during the last Congress. House Financial Services Committee Chair French Hill, R-Ark., released a revised version of the bill in February, and an alternate version called the GENIUS Act was introduced in the Senate. The bills would create a regulatory framework for stablecoins, and a version of this legislation has an easier path to passing than other regulatory bills. Stablecoins have gained traction for cross-border payments, crypto trading, transfers between digital asset exchanges, and as a store of value for countries where access to the U.S. dollar may be limited.

Currently, stablecoins fall under state regulations, as payment processing is regulated at the state level. This increases barriers to entry and compliance costs for companies. Industry advocates hope that stablecoin legislation will streamline oversight and regulation, though many state regulators and financial regulatory hawks may need to be convinced.

The STABLE and GENIUS Acts define a payment stablecoin as a digital token pegged to a fixed monetary value, as opposed to the algorithmic stablecoins that collapsed in 2022. Reserves backing the stablecoin must be segregated from other corporate assets — a reaction to the commingling of assets that occurred prior to the FTX collapse. The stablecoin legislation also will define who may issue stablecoins (including nonbank entities and federal and state-chartered banks) and it requires proof of reserves to be verified on a monthly basis. Nonbanks could receive streamlined regulation through the Office of the Comptroller of the Currency (OCC), a federal bank regulator, though that could be a friction point in negotiations. State regulators previously went to court over an OCC effort to create a special charter for nonbank fintech companies that would’ve allowed a similar bypass of state-by-state registration.

Digital asset legislation will require bipartisan consensus to become law, as the Senate requires 60 votes to advance most legislation, and Republicans control only 52 seats. Legislators will also want to balance industry priorities with consumer protection.

Market structure is another area for legislation to address, but it is widely seen as a more complicated topic than stablecoins. The legislative push largely revolves around defining when a cryptocurrency or token that does not have a fixed value should be regulated by the SEC as a security or regulated by the CFTC as a commodity. Bitcoin, by far the largest cryptocurrency by market capitalization, is regulated by the CFTC as a commodity, though the regulator primarily oversees futures and derivatives and has limited direct power over spot markets. During the last Congress, months of negotiation led to the drafting of the Financial Innovation and Technology Act, making it the current template for legislation. However, the SEC’s Crypto Task Force and the president’s crypto working group might play a role in informing this legislation. Congress may also repeal a rule treating decentralized finance entities as brokers for tax purposes, as the Senate passed a resolution to do this on March 4.

Companies prepare for growth 

A lighter regulatory touch and specific crypto legislation could drive cryptocurrency adoption and sector growth. Companies in this sector will need to ensure their risk management, products and strategies are scalable.

• Risk management: Companies need to ensure that they are compliant with guidelines from the Office of Foreign Assets Control (OFAC) within the U.S. Department of the Treasury. Since OFAC enforces economic and trade sanctions based on U.S. foreign policy and national security, these restrictions will likely remain a focus for regulators in the new administration. Regulators will also continue to focus on issues like potential fraud and market manipulation, so companies working with digital assets should ensure that their internal controls align with regulatory expectations. Internal controls should contemplate operational risks, maintain cybersecurity for the systems involving digital assets, and demonstrate measures that can quickly identify security threats.
• Products: With the recent issuance of Staff Accounting Bulletin (SAB) No. 122, the SEC already reversed its Staff Accounting Bulletin No. 121 (SAB 121) that required public companies and regulated banks to record customer assets on their balance sheets. With the reversal of SAB 121, banks, brokerage firms and other companies looking to custody assets on behalf of customers are starting to pursue more opportunities to provide these services. Accordingly, we may see companies prioritizing the innovation and expansion of digital asset offerings.
• Planning: Digital asset companies should engage with regulators proactively to help inform rulemaking and maintain an awareness of developments that will guide product planning. Growth in decentralized finance platforms, like automated market makers, could have significant impacts and require novel interpretations for companies dealing with know-your-customer requirements. Companies in the digital assets sector should be watching for these developments, ready to adapt their strategies. Companies also need to incorporate legal and tax considerations.