By Hannah Lang
Aug 18 (Reuters) - As sweeping U.S. crypto legislation stalls, President Donald Trump's regulators are set to fill the void, but efforts to write favorable rules for the digital asset industry will be contentious and could be overturned by future administrations.
Deep-pocketed crypto companies have spent hundreds of millions of dollars over several years campaigning for legislation they say will put them on solid legal ground, but that effort is now stalled, with little time for lawmakers
to reach a deal before the new Congress next year.
That impasse has put the onus on Trump's crypto-friendly regulators, particularly the Securities and Exchange Commission and the Commodity Futures Trading Commission, to give the industry the regulatory clarity it has long argued it lacks.
The SEC has been working in parallel on a rule to exempt certain token offerings from securities rules, which the agency is expected to advance in coming weeks. The CFTC, meanwhile, will discuss crypto regulation, among other issues, at an industry gathering this week, its website says.
"The agencies ... seemingly are ready to act, given that Congress has been unwilling or unable to do so," said Miller Whitehouse-Levine, CEO of the Solana Policy Institute, which advocates for policies to advance digital asset technology.
FEARS OF REGULATORY REVERSAL
Still, only Congress can create a lasting framework, industry experts say. The Clarity Act aims to define which tokens qualify as securities versus commodities, and which agencies have oversight of the sector. Without legislation, regulations will be vulnerable to the shifting political climate and court challenges, creating lingering hazards for the crypto industry, said executives and analysts.
The Trump administration's own extensive rollback of dozens of SEC and consumer watchdog policies introduced under former Democratic President Joe Biden has underscored that risk.
Some executives even fear that a future administration could install crypto hawks like former SEC Chair Gary Gensler, who under Biden sued dozens of crypto companies, alleging their tokens amounted to securities and that the companies should have registered with the agency.
Josh Riezman, chief legal and strategy officer at crypto trading firm GSR, said he expected the SEC and CFTC to swiftly push through ambitious rules, which will be helpful to the industry in the short term.
"But then the next administration, depending on how that shakes out, we can be looking very much like a potentially Gensler 2.0 type scenario," he added.
Gensler, who said that the prevalence of fraud within the crypto sector necessitated tough enforcement, did not respond to an email seeking comment.
A CFTC spokesperson said the Clarity Act is crucial to ensuring American competitiveness, and that Congress should take this opportunity to set "durable" rules.
"If that doesn’t happen, the CFTC stands ready to protect America’s leadership in financial markets and ensure we remain the crypto capital of the world," the spokesperson said.
DEMOCRATS SUPPORT RULES BUT WANT TOUGH SAFEGUARDS
Trump, who courted crypto cash on the campaign trail and whose family has profited from its own token, has prioritized crypto reform in his second administration. His CFTC and SEC appointees swiftly reversed Biden-era crypto policies, voicing support for the industry and pulling enforcement actions.
SEC Chair Paul Atkins has laid out sweeping plans to overhaul capital markets rules to accommodate cryptocurrencies, while CFTC Chair Michael Selig this year approved perpetual bitcoin futures, highly leveraged derivatives products. Industry executives expect the CFTC will allow more perpetual futures for additional assets.
While many Democrats support creating a regulatory framework for cryptocurrencies, they generally favor tougher safeguards against money laundering, fraud and conflicts of interest than Republican lawmakers.
That could become an early obstacle for the SEC and CFTC rulemakings, with polls indicating Democrats could regain control of the House of Representatives in the November midterm elections, giving them greater power to scrutinize the agencies.
INDUSTRY CHALLENGES MOUNT
Traditional Wall Street firms that strongly oppose some SEC and CFTC crypto policies could also throw sand in the gears.
The CME Group, for example, sued the CFTC in June over its decision to approve perpetual crypto futures, while the Securities Industry and Financial Markets Association, a major Wall Street group, has urged the SEC to consider restrictions on its plan to allow blockchain-based stock trading, Reuters and other media have reported.
Litigation could tie up new crypto rules in court long enough for a future administration to delay, rewrite or abandon them, much as Trump's regulators have done with several Biden-era financial regulations that were challenged by industry.
Even with these expected obstacles, however, many crypto executives say something is better than nothing at all.
"The agencies moving forward just shows this recognition of, we can't just stand by and not do anything," said Summer Mersinger, CEO of the Blockchain Association, who was a Republican CFTC commissioner from 2022 to 2025.
"That's going to be really helpful and we applaud their work," she said. "But we need something permanent."
(Reporting by Hannah Lang in New York; Editing by Michelle Price and Matthew Lewis)
