Crypto Lobby Eyes New Legislation Following Trump’s Election Win

Following Donald Trump’s presidential victory and the establishment of a Republican majority in Congress, the crypto industry is gearing up for a legislative shift that could reshape U.S. crypto regulations. According to Decrypt, crypto advocates are now reconsidering support for the Financial Innovation and Technology for the 21st Century Act (FIT21), a bill previously designed to define crypto regulations and set roles for the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).

With renewed influence in Congress, crypto insiders are eyeing alternative legislation that could better align with the industry’s interests, particularly under a pro-crypto administration. The push for new legislation reflects the sector’s desire for clearer, more favorable regulations that address emerging technologies, stablecoins, and decentralized finance (DeFi) with fewer compromises.

Why the Crypto Industry is Reconsidering FIT21

The Financial Innovation and Technology for the 21st Century Act (FIT21) was initially introduced with bipartisan support to clarify the roles of the SEC and CFTC in regulating digital assets. However, industry leaders now feel that FIT21 falls short in several areas:

1. Limited Protections for Key Assets: FIT21 does not fully address protections for assets like stablecoins and DAO (decentralized autonomous organization) tokens, which are integral to the evolving crypto ecosystem. The industry is seeking legislation that offers more comprehensive protections and regulatory clarity.
2. Shift Toward Pro-Crypto Legislation: With a Republican-led Congress, the crypto lobby sees an opportunity to pursue legislation that aligns more closely with its interests. Industry insiders are hoping for a regulatory framework that supports innovation without restrictive measures that could stifle growth.
3. Need for a Tailored Regulatory Framework: FIT21’s compromises were seen as necessary under a more divided Congress, but the new political landscape provides a chance to develop more favorable legislation. Many in the industry believe a framework that balances consumer protection with innovation will foster a healthier environment for growth.

As a result, the crypto lobby is preparing to push for alternatives that prioritize industry-friendly policies, potentially allowing the sector to flourish under Trump’s administration.

Industry Concerns with FIT21 and the Push for Improved Legislation

The FIT21 Act has faced criticism from within the crypto community, despite its initial bipartisan support. Some key concerns include:

• Lack of Support for Stablecoins: Stablecoins play a crucial role in the crypto market, facilitating transactions and serving as a bridge to fiat currencies. Critics argue that FIT21 fails to adequately protect stablecoin users or provide clear guidelines for their issuance and regulation.
• Unclear Framework for DAOs: Decentralized autonomous organizations (DAOs) represent a growing segment of the crypto sector. FIT21’s limited approach to DAOs has left many industry leaders seeking a more detailed framework that would allow DAOs to operate with clearer legal standing.
• Ambiguous Role of Regulatory Bodies: While FIT21 attempted to define the roles of the SEC and CFTC, there remains uncertainty over how these agencies will oversee various digital assets, particularly with respect to securities and commodities.

With these concerns in mind, the crypto lobby is pushing for legislation that reflects the unique characteristics of the industry, with a focus on fostering innovation while protecting investors.

Opportunities and Challenges for the Crypto Industry’s Legislative Goals

With increased influence in Congress and Trump’s pro-crypto stance, the industry has a unique opportunity to shape favorable policies. However, achieving these goals requires navigating both internal and external challenges:

1. Unified Industry Approach: The crypto sector is composed of diverse factions, including centralized exchanges, DeFi platforms, and blockchain development groups. Each has different regulatory priorities, making it difficult to present a unified stance on policy issues. A lack of cohesion could undermine legislative efforts if different segments of the industry advocate for conflicting goals.
2. Building Consensus with Lawmakers: While Trump’s administration and a Republican Congress offer a favorable environment, the crypto lobby must still work to gain consensus among lawmakers. This process will involve balancing innovation with consumer protection to avoid backlash from legislators concerned about riskier assets or potential fraud.
3. Addressing Consumer Protections and Transparency: One of the main critiques of FIT21 was its perceived lack of consumer protections. New legislation may need to include more transparent guidelines on consumer rights, disclosures, and protections to gain broader support.
4. Securing Favorable Tax Policies: Tax treatment of digital assets remains a complex issue. The crypto industry is likely to push for tax policies that support long-term growth, such as more favorable capital gains treatment for crypto holdings or exemptions for certain types of transactions.

Potential Legislative Priorities for the Crypto Sector

If the industry moves forward with new legislation, several key priorities are expected to guide its proposals:

• Clear Regulatory Framework for Stablecoins: Stablecoins are essential for liquidity and stability in the crypto market. The industry will likely advocate for a regulatory framework that enables stablecoin issuers to operate with clear guidelines while ensuring investor protection.
• Legal Clarity for DAOs: As DAOs gain popularity, clear legal standing for these organizations will be a priority. The industry may push for a framework that allows DAOs to operate as recognized entities under U.S. law, which would encourage further growth in decentralized governance.
• Defined Roles for Regulatory Agencies: While FIT21 attempted to assign roles to the SEC and CFTC, further refinement is needed. The crypto lobby may seek legislation that explicitly delineates the oversight of securities, commodities, and other digital assets, allowing each agency to act within clearly defined boundaries.
• Incentives for Blockchain Innovation: The crypto industry may also push for incentives that encourage blockchain research and development, such as tax credits or grants for blockchain-based projects. These incentives could foster growth in the sector while ensuring that the U.S. remains competitive in the global digital economy.

Conclusion

With Trump’s election win and a Republican-controlled Congress, the crypto lobby is positioned to influence new legislation that could reshape the regulatory landscape. While the Financial Innovation and Technology for the 21st Century Act (FIT21) was initially supported, the industry now seeks alternatives that address its specific needs, including protections for stablecoins, DAOs, and other assets central to the crypto ecosystem.

This shift highlights the crypto industry’s desire for a regulatory framework that balances innovation with consumer protection, allowing digital assets to grow in a supportive environment. However, to achieve these legislative goals, the industry must overcome internal divisions and work collaboratively to ensure a unified approach.

For more updates on crypto legislation and the impact of political changes, explore our latest news covering regulatory trends, policy developments, and insights into the future of digital assets in the U.S.