The market is accelerating its decline, but the regulatory "ice" is beginning to thaw

Author: Techub Hot News

Unlike the recent gradual warming of temperatures, the cryptocurrency market has been on a downward trend since Bitcoin fell below $90,000 on February 25. Around 10:50 today, Bitcoin dropped below the $80,000 mark, hitting a new low in nearly three and a half months. According to Coinglass data, the total liquidation amount across the network in the past 24 hours reached $728 million, with long positions liquidated at approximately $621 million and short positions at about $107 million. Additionally, data from Alternative.me shows that although the cryptocurrency fear and greed index has rebounded slightly compared to yesterday, it still remains in a state of "extreme fear."

However, amidst the anxious market conditions, a series of recent actions by U.S. financial regulators suggest that the previously hardline stance on cryptocurrencies is softening, and the regulatory "ice" filled with hostility from the last administration is slowly melting.

Attitude of the New U.S. SEC

If the previous U.S. SEC led by Gary Gensler was filled with hostility towards the cryptocurrency industry, the new U.S. SEC's attitude can be described as actively embracing it. Since Gary Gensler officially stepped down on January 21, the new U.S. SEC, under the leadership of acting chair Mark Uyeda, has been working to change its image in the eyes of the public.

In the past week, the U.S. SEC has concluded investigations and enforcement actions against OpenSea, Robinhood Crypto, Uniswap Labs, and Gemini, and has officially withdrawn its lawsuit against Coinbase, planning to dismiss lawsuits against ConsenSys and MetaMask. Furthermore, Binance and the U.S. SEC submitted a joint motion in mid-month, requesting a 60-day pause in the lawsuit on the grounds that "the newly established cryptocurrency working group may impact the case," marking the first request for a pause in cryptocurrency-related litigation since Mark Uyeda took over as acting chair. As a result, the Tron Foundation and Justin Sun also jointly submitted a motion to pause the lawsuit with the U.S. SEC.

Additionally, regarding the controversial Memecoin, the U.S. SEC has changed its previously ambiguous stance and issued clear guidance stating that it "does not fall under securities but is similar to collectibles." The U.S. SEC believes that trading related to Memecoin does not involve the issuance and sale of securities as defined by federal securities law. Therefore, individuals participating in the issuance and sale of Memecoin do not need to register their transactions with the commission under the 1933 Securities Act, nor do they need to comply with the registration exemption provisions in the Securities Act. Of course, the department also pointed out that buyers or holders of Memecoin are not protected by federal securities law.

Perhaps due to the recent cooling of the market and the proactive and frequent signals from the U.S. SEC, people have begun to observe the significant changes it has made. In fact, since the establishment of the new U.S. SEC, various actions have been continuous.

On the day after Gary Gensler officially resigned, Mark Uyeda announced the establishment of a special cryptocurrency working group led by Hester Peirce, "dedicated to developing a comprehensive and clear regulatory framework for cryptocurrency assets." Subsequently, on January 24, the U.S. SEC officially withdrew the accounting standard for crypto assets SAB-121, marking the "first shot" in a comprehensive reform. After that, the U.S. SEC began to reduce the size of its cryptocurrency enforcement division, reallocating some lawyers and staff to other departments, and forming new task forces to publish ten major tasks, such as examining the status of different types of crypto assets under securities law and providing clear statements on methods for approving or disapproving cryptocurrency ETFs. Following this, we saw various news regarding the U.S. SEC's review of ETFs, such as publicly soliciting comments on the Grayscale Litecoin ETF, accepting Grayscale's 19b-4 application for the Solana ETF, accepting Grayscale's application for the XRP Trust conversion ETF, and accepting Cboe BZX's 19b-4 application to add staking functionality for the 21Shares Ethereum ETF.

All of this indicates that the new SEC will present a completely different image.

Other Regulatory Developments Beyond the U.S. SEC

In addition to the U.S. SEC's proactive reforms in cryptocurrency regulation, other regulatory developments are also worth noting.

The U.S. House Committee on Financial Services recently passed a resolution to repeal the IRS "DeFi broker rule" with a vote of 26 to 16, which is a significant positive for DeFi. It is important to note that this resolution still needs to be approved by a majority in both the House and Senate and signed by the President to take effect.

Moreover, at the recent hearing chaired by Cynthia Lummis of the U.S. Senate Banking Committee on Digital Assets, legislative progress regarding stablecoins became the focus. Lummis emphasized that stablecoins will be the top priority for the committee and "plans to develop a bipartisan legislative framework for stablecoins and their market structure in the coming months." Former Commodity Futures Trading Commission (CFTC) Chairman Timothy Massad also suggested at the hearing that lawmakers should prioritize addressing the legal framework for stablecoins while postponing discussions on market structure-related issues. Additionally, Virginia Democrat Mark Warner called for committee members to discuss the possibility of KYC processes for stablecoin users.

At the same time, more and more government departments are accelerating their efforts to hear from the cryptocurrency industry. For instance, U.S. Treasury Secretary Scott Bessent recently hired Galaxy Digital legal advisor Tyler Williams as a policy advisor on digital assets and blockchain technology. According to Michael Saylor, he recently met with U.S. House Financial Services Committee Chairman French Hill and proposed a regulatory framework for digital assets.

These initiatives from the government, regulatory agencies, and industry leaders all signify that the regulatory environment in the cryptocurrency space is gradually maturing. Against this backdrop, although the current market is cooling, from a long-term perspective, the cryptocurrency market may usher in a healthier and more regulated development period.

Progress on Strategic Bitcoin Reserves in Various States

Unlike the direct regulatory benefits released by the U.S. SEC and various agencies, the progress of strategic Bitcoin reserves in various states has not been as smooth, but overall, it remains positive.

The website " Bitcoin Laws " established by Julian Fahrer shows that currently, 24 states in the U.S. have proposed strategic Bitcoin reserve bills, totaling 31 bills. Among them, Bitcoin reserve bills in Montana, South Dakota, North Dakota, Pennsylvania, and Wyoming have been rejected or shelved. The state making the fastest progress is Utah, where the relevant bill has been submitted to the Senate. Following that is Arizona, where the bill passed its third reading in the Senate with a vote of 17 in favor and 12 against, and is now submitted to the House for review. Other states making relatively quick progress include Oklahoma and Texas. (Note: Bills can be introduced in either the House or Senate, and if introduced in the Senate, they are submitted to the House after Senate approval, and vice versa. If both chambers pass, the bill will be submitted to the governor for signing into law or veto. Once signed by the governor, the bill becomes law.)

Although the pace of progress varies among states, the legislative progress of strategic Bitcoin reserves signifies local governments' attention to and adoption of cryptocurrencies. While it is unclear how the Trump administration currently views this strategy, it may be more reasonable to refrain from acting hastily.

Conclusion

Despite the market facing severe price fluctuations and the panic stemming from the largest hacking crisis in history, there is hope that the gradual improvement of the regulatory environment can melt away the past regulatory "ice," injecting new vitality into the market like a subtle warm breeze in spring. As for the current declining market conditions, I also advise everyone to wait and see for a while.