Three major drivers of the future of cryptocurrency in the U.S.

Five years ago, when we founded the Blockchain Association, it was an open question whether the digital asset industry could effectively use trade associations to argue its priorities before Congress and other federal regulators.

Rather than asking complex questions about market structure, taxation of non-fungible tokens (NFTs), or whether code is protected by the U.S. Constitution, some of the most enduring questions in Washington, D.C., were whether cryptocurrencies would still be around a few years from now. While those questions remain contentious, it’s clear that the staying power of cryptocurrencies is not.

As the Blockchain Association marks its fifth anniversary, it’s worth pausing to reflect on the past five years and look ahead to the challenges in the coming years that may determine the industry’s success in the debate in the U.S. Congress.

From President Donald Trump’s anti-Bitcoin tweets, to the market’s meteoric rise and stunning losses, to the Terra Blockchain and FTX debacles — all of which are regulated by an increasingly hostile SEC that seems intent on promoting cryptocurrency in the U.S. Offshore economies — The digital asset industry has experienced significant disruption moments over the past few years.

Yet, even during these dramatic moments, cryptocurrency adoption continues to grow. Multiple presidential campaigns have felt compelled to issue statements in support of the domestic digital asset industry. While the final report was less than friendly to cryptocurrencies, it is noteworthy that the Biden administration deemed the digital asset ecosystem important enough to issue an executive order directing the federal government to focus on the technology and recommend responsible regulation.

So what will happen to cryptocurrency in Washington over the next five years? Given the ups and downs of the film industry over the past five years, it seems foolish to make any reasonable predictions, but there are several areas where Congress, the White House and federal regulators are likely to focus.

Money laundering pain points

The first, and perhaps the biggest, long-term issue has to do with anti-money laundering (AML) efforts. While federal law enforcement agencies have become quite adept at tracking illegal transactions on blockchain networks, high-profile cases such as the ongoing action against Tornado Cash developers demonstrate the importance of this issue across government.

While some tech-driven solutions have recently been proposed to ameliorate law enforcement concerns while maintaining the pro-privacy protections of services like Tornado Cash, anti-money laundering concerns will likely continue to be a pain point for the federal government’s general acceptance of wider use of cryptocurrency.

Bills targeting cryptocurrencies, politicians supporting cryptocurrencies

The second question is the most likely path for the legislation to pass the House and Senate and become law. While cryptocurrency advocates were right to celebrate the milestone of multiple cryptocurrency-specific bills being voted out of their respective House committees last summer, the pressing question of the fate of these bills in the House and Senate must now be considered.

As the old saying goes: personnel is policy, and it’s important to work hard to encourage pro-crypto thinkers into government service.

Do the current elected officials in these chambers have enough in common to agree on new cryptocurrency regulation? Time will tell as we see this package of bills move to a vote in the full House (and possibly beyond), but this is a reminder that supporting pro-crypto candidates for office is the best long-term strategy, and we must change the way Congress thinks about this technology.

We’ve made great progress in building cryptocurrency advocates over the past few years, and we have a better understanding than ever before of how Congress as a whole views cryptocurrency, but there is still much work to be done.

Regulatory upheaval

Finally, we’ll address the knowns and unknowns of federal regulators as we approach a major election. Depending on the outcome of the 2024 presidential election, the regulatory landscape could change dramatically, bringing in new faces who may have more enlightened views on the development, use, and proliferation of digital assets.

Even if the White House doesn’t change hands, recent legal losses at some of these agencies, especially the SEC, could tip the scales and convince cryptocurrency opponents that a different approach is needed when trying to curb the domestic industry.

Continued court defeats could force staff at these agencies to leave, as they grow frustrated with being on the losing team again and again. Either way, as the old saying goes: personnel is policy, and it’s important to encourage pro-crypto thinkers into government service whenever possible.

Next 5 years

The past five years have not always been smooth sailing for the digital asset ecosystem, but it has galvanized a strong voice for the industry in Washington, D.C. At the Blockchain Association, we are proud to serve as the voice of the industry with an unwavering mission: to advance the future of crypto in America.

Over the next five years and beyond, we will continue to advocate for crypto in Washington on behalf of our members and the industry as a whole.