The Crypto Industry Still Faces Regulatory Challenges in the US

The recent appointment of a US crypto czar and the announcement of comprehensive crypto legislation have led many to believe that the era of aggressive regulation is coming to an end. However, with the SEC and CFTC now having crypto-friendly chairmen, state regulators and Attorneys General are likely to fill the void and become more aggressive in their enforcement actions. For years, the SEC's approach to regulation stifled the growth of the crypto industry, prompting many to call for a comprehensive regulatory framework. The industry's efforts to support pro-crypto candidates have borne fruit, with Donald Trump becoming the first president to openly support the crypto industry. Since taking office, Trump has appointed a Crypto Czar and established a President's Working Group on Digital Asset Markets, and the interim SEC and CFTC Chairs have expressed their support for the industry. Nevertheless, state regulators are unlikely to scale back their enforcement actions, and many have already faced aggressive enforcement from regulators such as the New York Department of Financial Services. Other states, including California and Illinois, are following New York's lead and introducing their own regulations. While new federal legislation may limit the ability of state regulators to bring their own enforcement matters, it is unlikely to limit the ability of state Attorneys General to file lawsuits alleging fraud by crypto-related businesses. As a result, the crypto industry can still expect aggressive lawsuits and regulator activity in the years to come, albeit potentially at the state level rather than the federal level.