U.S. shifts to supportive regulatory stance on crypto

The crypto industry is experiencing significant changes. The White House is now showing strong support for the sector. After years of facing a tough regulatory environment, the industry is finally seeing a shift. With the departure of SEC chief Gary Gensler, many in the crypto world feel things are looking up. The SEC has begun to ease its approach and will hold public discussions on regulating crypto assets. This change follows a period during the Trump administration when there were fewer restrictions on crypto companies. However, despite the regulatory shifts, bitcoin prices remain low, sitting over 20% below their January peak. Eswar Prasad, a professor at Cornell University, recently discussed the state of the crypto industry. He noted that while the technology behind crypto, such as blockchain, is impressive, it doesn't automatically mean it is the best solution for every problem. Many believe blockchain can address various financial inefficiencies, but its effectiveness in changing financial markets is not clear. Prasad expressed skepticism about whether current crypto technologies solve all financial issues. He highlighted that bitcoin has shifted from being a means of exchange to a speculative investment. He acknowledged that decentralized finance and stablecoins are gaining traction, particularly due to the ongoing issues in traditional financial systems. The Trump administration’s support for crypto includes acknowledging both legitimate companies and more controversial aspects like meme coins. This broad acceptance raises questions about the true legitimacy of the sector. Recently, there was disappointment when the administration announced it would not use taxpayer money to purchase bitcoin for a planned strategic reserve. Prasad believes this reserve lacks real strategic value. Unlike commodities that have intrinsic value, he argues that bitcoin is speculative, with its worth based solely on scarcity. The prospect of a government reserve could harm crypto prices if the government sells off its holdings, as this could destabilize the market further. Overall, while many crypto supporters are hopeful about increased government engagement, concerns remain about how these changes will play out in the long run.