Pantera Partner: Three Heavy Hits from Washington's "Crypto Week", Is American Encryption Hegemony Secured?

The advancement of the three bills fundamentally injects certainty into the encryption industry and gives the United States an initiative in the global encryption competition.

Written by: Paul Veradittakit, Partner at Pantera Capital

Compiled by: Saoirse, Foresight News

Summary

• The "GENIUS Act" has been signed into law, establishing a unified standard for the issuance and reserves of stablecoins.
• The CLARITY Act passed by the House of Representatives clarifies the regulatory scope of the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) over digital assets, and establishes the pathway for the transition from SEC regulation to CFTC regulation.
• The "Anti-CBDC Act" included in the "National Defense Authorization Act" (NDAA) prohibits the Federal Reserve from issuing a centralized digital dollar without congressional approval and advocates for decentralized solutions.

Brandon Smirnovskiy Photo / AFP Provided

Event Review

Last week, the United States made historic progress in cryptocurrency policy. During what was called "Cryptocurrency Week" in Congress, lawmakers pushed several landmark bills. On July 19, President Trump signed the GENIUS Act, officially making it law. This news immediately boosted market sentiment, pushing the total market capitalization of cryptocurrencies to surpass $4 trillion for the first time, while stablecoin issuance also reached a new high of $261 billion. The bill sets a unified standard for stablecoins, prompting financial giants like JPMorgan Chase, Bank of America, PayPal, and Stripe to announce pilot programs. The clarity of cryptocurrency regulation has reduced uncertainty in the industry, allowing institutional investors to deploy previously idle funds, large banks to enter the stablecoin market compliantly, and users to conduct transactions more privately. This bill firmly positions cryptocurrency as a core pillar of the next generation of the financial internet, while also propelling the United States towards the status of "global cryptocurrency capital."

After months of debate, the "CLARITY Act" has passed the House of Representatives with bipartisan support and is now being rapidly submitted for review by the Senate. The bill clarifies the regulatory division of responsibilities for digital assets between the SEC and the CFTC. Additionally, the "Anti-CBDC Act" has also made significant progress, being included in the "National Defense Authorization Act," prohibiting the Federal Reserve from issuing a centralized digital dollar without explicit approval from Congress.

The cryptocurrency industry is currently in an exciting moment! Next, we will provide a detailed analysis of the "GENIUS Act", "CLARITY Act", and "Anti-CBDC Act", as well as the important significance of these developments for the industry.

"GENIUS Act"

On May 19, the Senate passed the termination debate procedure of the "GENIUS Act" with a vote of 66 in favor and 32 against. On July 17, the U.S. Congress submitted the bill to President Trump’s desk, and on July 19, the President signed it, making it officially effective.

What is the "GENIUS Act"?

The "GENIUS Act" clarifies who is eligible to issue payment stablecoins and lists qualified instruments that can be used as reserve assets for stablecoins. This act fundamentally changes the market's perception of stablecoins, transforming them from mere trading objects into institutional-grade payment channels. Stablecoins enable banks and fintech companies to deploy them as true "programmable dollars," achieving instant settlement and round-the-clock clearing. We believe this will unlock value across the entire value chain from machine payments to cross-border trade, while ensuring that global dollar liquidity is always under the supervision of U.S. regulators, ultimately leading to deeper market liquidity, lower settlement friction, and a more solid position of the dollar in global markets.

• Compliant issuers include three categories: (1) federally regulated banks; (2) non-bank stablecoin issuers licensed by the Office of the Comptroller of the Currency (OCC); (3) state-chartered issuers, provided that the total market value of stablecoins in circulation does not exceed $10 billion.
• The value of the reserve assets must be equal to or higher than the total face value of all issued stablecoins.
• Qualified reserve instruments include: U.S. dollars held in the form of cash, demand deposits, or shares of deposits at custodial institutions; short-term government bonds with a maturity of no more than 93 days; and overnight reverse repurchase agreements fully collateralized by government bonds.
• The issuer must disclose the details of reserve assets and circulation every month, and conduct an independent audit annually to confirm the 1:1 asset backing ratio and asset compliance.

Although the bill prohibits interest-bearing stablecoins, many projects may offer returns through alternative means, such as launching loyalty programs, rebate mechanisms, etc., to simulate income effects without directly paying interest. This regulatory pressure is expected to accelerate the consolidation of the stablecoin industry, with users likely to prefer the most attractive non-yield incentive platforms, while stablecoin providers with well-developed loyalty or rewards systems may capture a larger market share, pushing the industry from a decentralized "yield ecosystem" towards a centralized pattern, ultimately led by a few top players offering innovative compliant reward mechanisms.

CLARITY Act

What is the "CLARITY Act"?

The "GENIUS Act" provides a clear framework for the regulation of stablecoins, but there is still no legislation to ensure that the trading infrastructure for stablecoins is decentralized and "trustless." The introduction of the "CLARITY Act" is precisely to fill this gap, as it clearly delineates the responsibilities of the SEC and CFTC in the regulation of digital assets.

The "CLARITY Act" provides precise legal definitions for "digital assets," "digital goods," and "mature blockchain systems:"

• Digital Assets: Refers to the digital representation of value or rights recorded on an encryption-secured distributed ledger.
• Digital goods: Refers to replaceable digital assets that are not classified as securities, issued or existing within mature blockchain systems, and can be transferred between individuals without relying on intermediaries.
• Mature blockchain system: refers to a protocol that is functional, public, and sufficiently decentralized, where no individual or group can unilaterally control the protocol rules or asset issuance.

According to the CLARITY Act, the SEC is responsible for regulating tokens that have the attributes of an "investment contract." These tokens are typically issued by projects that are under centralized control or in the early stages of development for financing purposes. In contrast, the CFTC oversees "digital commodities," which are non-securities and alternative digital assets based on mature blockchain systems. The Act allows for digital assets to "migrate" from SEC regulation to CFTC oversight once they achieve sufficient decentralization and widespread adoption.

Analysis of the "CLARITY Act"

The "CLARITY Act" clearly defines the connotation of "decentralization":

• A mature blockchain system must have openness and interoperability. It should use open-source code and not restrict anyone from participating in the functional activities of the blockchain.
• A mature blockchain system must have a governance mechanism. No individual or group may unilaterally modify the functions and operational rules of the blockchain, and no individual or group may hold more than 20% of the total circulating voting rights of the blockchain.

For a project to transition from SEC regulation to CFTC regulation, it must achieve sufficient decentralization. Tokens regulated by the SEC are considered securities, with restrictions and regulatory requirements similar to those of publicly listed companies; in contrast, the regulatory requirements for digital commodities under CFTC jurisdiction are more lenient, requiring no detailed reporting, imposing no restrictions on token access, and allowing the market to be open to all participants, without even setting a "qualified investor" threshold.

Before the introduction of this legislation, encryption project teams always faced an ambiguous regulatory environment. No one could clearly define the standards for "decentralization", leading to the industry enduring excessive legal pressure for a long time. Today, this situation has completely changed. The legislation provides a clear legal definition for decentralization, allowing teams to no longer chase constantly changing or unattainable goals, but instead to have clear, quantifiable benchmarks. This certainty brings much-needed relief to industry innovators and paves the way for predictable development.

We believe that the bill will prompt project teams to find a balance between "moderate centralization for performance optimization" and "advancing decentralization for market access and regulatory benefits."

Anti-CBDC Act

What is Central Bank Digital Currency (CBDC)?

Central Bank Digital Currency (CBDC) is a digital version of a country's legal tender, directly issued and regulated by the central bank. Compared to stablecoins, CBDCs are inherently more susceptible to government oversight. Each transaction must go through a national centralized ledger, or it can be monitored by it, allowing authorities to precisely track, analyze, and even restrict citizens' financial activities.

Central bank digital currencies and stablecoins have essential differences: stablecoins are issued by private institutions and are backed by reserve assets such as fiat currencies or government bonds, thus lacking the central bank guarantee that central bank digital currencies possess. However, because stablecoins are traded on public ledgers like Ethereum and Solana, their transactions are difficult for the government to scrutinize.

What is the "Anti-CBDC Act"?

The formal name of the "Anti-CBDC Act" is the "Anti-Central Bank Digital Currency Surveillance National Act," which is a legislative measure aimed at preventing the Federal Reserve or any U.S. government agency from creating and promoting central bank digital currency without explicit authorization from Congress. This provision prohibits the government from searching and seizing the financial data of Americans, while also closing loopholes that would allow for the indirect issuance of central bank digital currency through third-party intermediaries, and requires that any attempts to launch a U.S. digital dollar must first obtain explicit formal approval from the legislative department.

Analysis of the Anti-CBDC Bill

The "Anti-CBDC Act" directs financial innovation and activities towards public decentralized blockchains rather than state-controlled ledgers. Combined with the "GENIUS Act" and the "CLARITY Act," this legislative framework reveals a clear policy inclination: the U.S. government chooses to support stablecoins on decentralized ledgers rather than centralized digital currencies on permissioned government ledgers.

This approach reduces the possibility of state-led financial monitoring in the central bank digital currency system, protecting personal financial privacy. By supporting decentralized infrastructure, this legislation is highly aligned with the core spirit of blockchain, ensuring that users maintain sovereignty over their economic lives without worrying about transaction scrutiny.

Conclusion

Last week was a historic moment for the cryptocurrency industry.

• The "CLARITY Act" sets clear standards for digital goods.
• The "GENIUS Act" establishes clear rules for the issuance and operation of stablecoins.
• Ultimately, the "Anti-CBDC Act" in the "National Defense Authorization Act" eliminates the risks of government surveillance, protects privacy, and encourages the development of decentralized networks.

As cryptocurrency regulation in the United States becomes increasingly clear, the industry is experiencing a strong recovery centered around the U.S. We are seeing a surge in demand for local talent: teams that previously moved overseas are returning to the U.S., and many projects are actively recruiting experts in policy, developer relations, and partnership expansion within the U.S.

The token issuance model is also transitioning to "adapt to the U.S. market": many projects are no longer defaulting to the offshore foundation model, but instead choosing to issue tokens directly through Delaware entities; the token economic model is also being redesigned to better fit the expectations of the U.S. market. As shown in the case of OpenSea, airdrop activities are increasingly targeting U.S. users; mainstream platforms like Telegram are also launching Web3 wallets and mini-programs for U.S. users, highlighting the market's renewed focus on the United States.

A new era of regulatory certainty is injecting strong momentum into the digital asset industry, driving the flourishing development of innovative stablecoin banks and payment companies. Whether industry leaders or agile new entrants, everyone is quickly launching institutional-grade solutions such as custody, liquidity, compliance, and privacy protection, which are the core pillars of a mature encryption ecosystem. After 12 years of industry evolution, we have never been so optimistic. With rapid development momentum and a solid legal framework, the United States is quickly consolidating its unshakeable position as the "Global Cryptocurrency Capital."