Article reprinted from: Yohan Yun from Cointelegraph
The shift in cryptocurrency regulations is taking place around the world, and 2025 will see major changes in cryptocurrency regulation and legislation in the United States.
Paul Atkins, co-chairman of Token Alliance, has been nominated to succeed Gary Gensler as chairman of the U.S. Securities and Exchange Commission (SEC), marking a possible major shift in the way cryptocurrencies are regulated in the United States.
While Gensler’s tenure has laid the groundwork and provided case law for cryptocurrency regulation, his reliance on an enforcement-driven regulatory approach has also been controversial.
Across the Atlantic, the European Union implemented the world's first Markets in Crypto-Assets Regulation (MiCA) to regulate the cryptocurrency industry. While praised for its ambitions, MiCA's strict rules have also forced some companies to exit the region, sparking debate about the regulatory burden on digital markets. Meanwhile, Asia continues to incorporate cryptocurrencies into its legal system, with related cases gradually setting local precedents.
To delve deeper into the key legal developments in 2024 and forecast the future, we spoke to legal experts Catherine Smirnova and Yuriy Brisov from Digital & Analogue Partners in Europe, Joshua Chu from the Web3 Association in Hong Kong, and Charlyn Ho from the Rikka Group in the United States. The following content has been edited for clarity and brevity.
Magazine: How will U.S. cryptocurrency laws change under the new administration?
Brisov : The Biden administration has done a lot of work in establishing a legal framework for crypto assets. I believe these preparations will be helpful to the next administration.
Whether intentionally or not, the SEC has played a role in shaping current cryptocurrency regulation. Common law countries usually regulate based on case law. When enough case law has accumulated, we will enact relevant laws, and now is the time.
Today, both Republicans and Democrats agree that the U.S. needs cryptocurrency legislative reform. Currently, our cryptocurrency decisions are still based on the 1946 Orange Grove case in California, also known as the Howey case.
Ho : Gensler’s departure and Atkins’ nomination will bring about a sea change in how the cryptocurrency industry is regulated. When I say “regulation,” I don’t mean that we will have a comprehensive regulatory regime in the next year. In fact, I would venture a guess that Trump and Atkins may oppose the creation of new regulations and prefer to increase clarity on how the industry operates.
Gensler has been criticized for taking an overly aggressive approach, going beyond the SEC’s congressional mandate and exercising powers it does not constitutionally possess. Future changes could be to reduce this enforcement-driven approach to regulation in favor of a more proactive, business-friendly, and crypto-friendly approach.
Magazine: What changes might the SEC see with Atkins as chairman? How much influence will he have on existing legal matters?
Ho : Atkins has a very pro-business background by all accounts. He previously served as an SEC commissioner, so we can see from that how he approaches the position.
Gensler has set some precedents, though. A new chairman doesn't mean all previous legal work goes away. Let's say there are currently pending lawsuits - and there are many. If Atkins wants to change the SEC's position, he can't just announce it. They have to go through the legal process and provide a reasonable basis for changing their claims. If they are the plaintiff, they can just withdraw the lawsuit. But the chairman does not have complete discretion to completely change the ongoing matter.
Magazine: How should EU companies respond to the implementation of MiCA and other digital regulations?
Smirnova : This year, what I called the “Mario Draghi Report” stated that our digital policies were not living up to expectations and that many potential unicorns were migrating to the U.S. We had thought that having clear regulations from the outset would provide transparency, but in practice, companies saw it as a regulatory burden.
MiCA is certainly the first cryptocurrency regulation in the world to cover all areas, trying to make the market more transparent and clear for all participants. Now, we have stricter regulations that do not require additional actions by national jurisdictions.
Next year, we will see whether the EU can still maintain the cryptocurrency market, or whether the regulatory burden will force it out of the market. At the same time, we also look forward to more protection for digital consumers through the Digital Fairness Act. Currently, we see that the digital asset market is regulated by regulations that are not designed for it, such as the E-Commerce Directive, DMA, DSA and GDPR. The Digital Fairness Act proposal has been published by the European Commission for comments and is expected to come into force next year. This will put great pressure on EU digital businesses.
Magazine: What progress has been made in Hong Kong’s cryptocurrency court cases?
Chu : There are a number of legislative cases going through the courts in Hong Kong this year. This includes the first case against JPEX. We may see more progress in this fraud case.
We have also seen a number of cases brought against decentralized autonomous organizations (DAOs), as both private institutions and regulators struggle to deal with these new entities.
Magazine: What legal developments are crypto industry participants ignoring?
Smirnova : First, many technology companies left the EU after the Digital Markets Act and the Digital Services Act came into effect.
Secondly, the EU AI Act has been passed and affects all jurisdictions. Its impact is expected to be comparable to that of the GDPR. If you provide AI-related services in the EU, this act will apply to your business, regardless of the country in which you are registered.
Ho: I am very interested in the development of some AI agents and AI tokens. I think this is a major development in 2024. We will see more of this kind of innovation in the future, especially Coinbase's AI agent trading.
Another important event was the overturning of the “Chevron Doctrine.” The Supreme Court overturned this long-standing doctrine that requires courts to give deference to agency interpretations of rules.
For the crypto industry, this means that courts no longer have to abide by the SEC's interpretation of the rules. This could provide more freedom for the crypto industry.
