U.S. crypto industry faces regulatory changes and skepticism

The crypto industry is experiencing major changes as the U.S. government shows more support than ever. After a tumultuous beginning to the year, events have shifted under the Trump administration. With the departure of the former SEC chief Gary Gensler, the industry's advocates are now in key positions within the government. The SEC has recently paused several enforcement actions against crypto firms. Furthermore, starting Friday, it will hold public discussions about regulating crypto assets. During Trump’s administration, there’s less restriction for crypto companies, allowing them to innovate and sell products more freely. However, the trade policies under the White House have created uncertainty in financial markets. As a result, Bitcoin prices remain over 20% below their January peak. While many in the crypto industry welcome government involvement, some serious investors are questioning the attention given to less reputable crypto aspects, like meme coins. Eswar Prasad, a professor at Cornell University, offers a practical perspective on the situation. He notes that the crypto summit was a significant moment for the industry, showing its desire for legitimacy through government engagement. While he acknowledges blockchain as impressive technology, he is skeptical about whether it can solve existing financial system issues. Prasad also points out that Bitcoin is not performing as a reliable medium of exchange but rather as a speculative asset. He highlights that while blockchain has advantages, other technologies could achieve similar results without using it. Decentralized finance is gaining traction, especially with stablecoins, which are digital tokens tied to stable assets. They can help navigate the challenges of traditional finance and may benefit from a more favorable regulatory landscape. Prasad emphasizes that the administration’s endorsement of crypto also acknowledges some less reputable aspects, which could undermine its legitimacy. He finds it unusual that the government might create a strategic reserve of cryptocurrency, likening it to commodities like oil and gold that have inherent value. Prasad warns that acquiring cryptocurrencies with taxpayer money could lead to losses if the market dips. Overall, he is cautious about the implications of the administration's plans for the future of crypto in the economy.