Digital Gold Rush: How Digital Assets Are Going Mainstream and Shaking Up Washington

The big picture: Digital assets are transforming the financial landscape. Digital assets, which may come in the form of a cryptocurrency, are increasingly seen as payments and investment opportunities that are reshaping the future of investing into a digital gold rush. Yet, the regulatory framework has not kept pace with the innovation. With one in four Americans owning digital assets, the demand for clear and coordinated policies is louder than ever.

Driving the news: President Trump recently signed an Executive Order:“Strengthening American Leadership in Digital Financial Technology” creating the Presidential Taskforce Group on Digital Assets and calling on policymakers to provide regulatory clarity.

Why it matters: The current patchwork of regulations breeds uncertainty, stifles innovation, and discourages financial institutions and other companies from embracing digital assets and other use cases for distributed ledger technology. A cohesive regulatory framework is crucial to protect consumers, stimulate innovation, fuel economic growth, and ensure the United States maintains its leadership in the digital economy.

Our view: The regulatory ambiguity is stifling the potential of digital securities and blockchain technology for U.S.-listed companies and their ecosystem – customers, suppliers, distributors, and employees. By the numbers:

• 39%: Year-over-year increase in on-chain projects announced by Fortune 100 companies, hitting a record high in Q1 2024.
• 56%: Fortune 500 executives report their companies are actively working on-chain projects.

Between the lines: From the biggest legacy brands to small businesses, stablecoins to tokenized T-bills, trusted names and products in finance are embracing blockchain technology and crypto, driving innovation and providing on-ramps for widespread adoption.

SEC or CFTC? The new acting leadership of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) are already at work to provide the clarity sought by businesses. The SEC formed a new Crypto Task Force seeking public input. And, the CFTC is launching public roundtables.

A Quick Win: The SEC’s repeal of SAB 121 removes a barrier that deterred banks from providing digital asset custody services. With SAB 121 in the rearview mirror, banks have more flexibility to custody digital assets for their clients.

Bottom Line: The rise of digital assets is reshaping the financial world, but innovation and growth might not be realized without clear and coordinated regulations. The Presidential Taskforce Group on Digital Assets marks a pivotal step towards regulatory clarity, ensuring that innovation and growth in the digital asset space can thrive, echoing the fervor of a new digital gold rush.