Q&A: Amid Frenzy of Crypto Speculation, a Chance for a Compliance Reset

Steve, you’ve been in this industry since long before it started making national news headlines. How is the present discourse different than in previous stages of the digital assets hype cycle?

Obviously, the industry began to garner significant attention leading up to, during and in the fallout from the crypto winter of 2021-2022. Since that time, the industry has been a fixture in major news headlines for a variety of reasons, with an increasing amount of attention and speculation in parallel with the most recent election cycle. What we’re seeing now are the strongest signals to date that the U.S. government is going to introduce legislation and guidance. With this is a general expectation of increased market activity and adoption of digital assets products and services. 

We’ll discuss the legislative expectations, but first, can you explain the key takeaways from the Executive Order President Trump issued in January 2025?

The new EO rescinds President Biden’s former EO on  digital assets. One aspect that is adding to general industry optimism is that there will now be a consolidated task force or working group assigned to evaluate the space and determine guidance for regulation. The previous EO had the same intentions, but assigned tasks to numerous entities (some of which had differing stances on what should be done), whereas Trump’s EO assigns one dedicated group to make recommendations. It directs the working group to provide guidance within 180 days.

This EO also suggests that there will likely be one dedicated regulatory body set to oversee crypto, a contrast to the current environment, where numerous agencies have overseen it through regulation by enforcement (including CFTC, FTC and the Securities and Exchange Commission). If this is the end result of upcoming regulation, the industry will gain clarity around how to comply and which agency to answer to.

Generally, the current expectation is that these developments will lead to firmer conclusions about what the government should be doing in terms of leveraging digital assets and regulating them. 

What should companies expect in terms of potential impending digital assets legislation in the U.S.?

Many industry watchers believe, because of Trump’s implied pro-crypto stance, that impending regulation will not be restrictive and that the environment in the U.S. will warm to this emerging industry. 

However, just because the President’s party has congressional majority, that doesn’t mean there won’t be friction in the development of specific regulations. There are a number of strategic imperatives related to legislation, and some will be more difficult to get done than others. Addressing nuanced issues surrounding how cryptocurrency laws might conflict with other technology-related laws, as well as establishing several foundational definitions and rules for how cryptocurrency will be governed in the U.S., will be essential to effective regulation. U.S. lawmakers have work to do in determining roles, responsibilities and basic parameters. 

For example, establishing a designated authority for digital assets is an imperative that has yet to be solidified. Lawmakers must decide whether responsibility will fall under the SEC, the CFTC or another body. Issues around taxation and broker-dealer definitions for digital assets markets will also need to be defined and provided with a set of clear rules.

Stablecoins and stablecoin custody is another key area in the legislative landscape. Stablecoins currently seem to be gaining more traction in legislative discussions than other forms of cryptocurrency, largely because they can be easier to understand and valuate. With stablecoin regulation, there will be a lot of discussion and decision making needed around whether traditional banks will be allowed to participate in that ecosystem, and if so, whether that activity will be subject to current banking rules. This leaves a lot of uncertainty around what the role of banks will be in the stablecoin ecosystem and how that will impact other types of companies that may look to enter the market. 

In all regulatory decisions, the administration will also need to be mindful of other global regulatory restrictions that could impact U.S. markets and organizations. Global awareness and coordination will be integral for crypto and web3 to thrive. Likewise, the rest of world is closely watching developments in the U.S. 

Given the high expectations many have, coupled with the unknowns that remain, what is your advice to clients operating in this space or looking to make a move? 

Regulatory compliance and sound governance must be priorities. We’re working with clients to reinforce compliance best practices that are specifically tailored to the blockchain and digital assets industry. Even if future U.S. regulations are not restrictive, they will still provide a new set of rules for organizations to understand, operationalize and follow. Companies in the industry will need to distinguish the differences between guidance and mandates from the U.S. government, how to take action upon those within their organization and how to manage them alongside regulatory requirements in other jurisdictions where they operate. 

Implementation, testing and third-party validation of compliance controls will be paramount, and will require expert guidance. Knowing how to be compliant and how to prove it will be essential, even in a pro-crypto environment. 

For companies looking to make moves into this space, either through strategic partnerships or acquisitions, due diligence tailored to the nuances of digital assets will also be critical. This should include in-depth, expert-led evaluation of market position, technical and business operations, governance practices, leadership teams and security postures. 

Is there anything else you’re watching closely right now in this space?

If the current momentum around the industry carries crypto into the mainstream, there will be more risks for companies doing business in the space, regardless of what happens from a regulatory perspective. In any regime, there will still be risks, allegations of fraud, disputes and investigations that require readiness, governance and expertise. Often, more adoption leads to more litigation and allegations of misconduct. So, companies need to be prepared for a possible uptick in disputes and investigations, even if regulatory enforcement is light. 

The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.