World 1, USA 0
Hello dear readers and welcome to our latest Crypto Decrypted. Over the past months I’ve been talking a lot about the demand wave I see before us, the building blocks that I believe are foundational to the growth in this space, and also the way this sector is being adopted. This month we’re going to dive a little deeper into one subset that I think has the biggest impact on defining who the leaders in an industry are… and that would be regulation.
The punchline? American business has embraced this space. The world has embraced this space. AND the world is also creating clear regulatory guardrails. Our regulators however, instead of promoting innovation, are now treading water. That has to change.
Fútbol v Soccer
It’s kind of like the world cup. We had a huge amount of enthusiasm here. The USA was one of the three host countries and we turned out in force. We filled stadiums. Had tons of supporters. Overall, we were also pretty enthusiastic about the US team and its chances to advance. Then we completely folded in the round of 16 to a very good but, in my opinion, beatable Belgium team. Dreams crushed. Hopes abandoned. Fingers pointed. At the end of the day we didn’t advance.
Now, we can go through all the reasons this may be the case but let’s just say that, while the US is becoming a soccer country, we’re just not there yet. At least not at the highest levels. The world embraced this sport, known as fútbol virtually everywhere, way before we did. And it shows. From Europe to South America to world cup darlings Cape Verde (look it up), just about every country is on board. In fact it’s estimated that roughly 5.8B people watched some part of the world cup. That’s roughly ¾ of the world population!!! The reason for this is quite simple. Anyone can play. You just need a ball and some basic rules. Note the latter part of that sentence. RULES. The same is true of crypto and blockchain. We have the ball. Now we just need rules.
Just like fútbol, it looks like the rest of the world gets it. World governments are getting their crypto and blockchain ducks in order so they can play the game. But here in the US, we’re just… not. It’s true we have the GENIUS Act signed into law to regulate stablecoins, however we’re still waiting for the actual rules. It’s true CLARITY, the market structure act passed the house, but it’s stalled on ethics of all things (a much bigger issue that transcends crypto in my opinion.) So, while Washington spent July arguing about whether the President should be allowed to profit from crypto, the rest of the world finished its homework. And here in the States, instead of being innovators and scoring by moving regulation forward, we’re still arguing over how we should kick the ball. Frankly I don’t care how, I think we need to take a shot. But I suspect it’s actually worse than that.
Countries Qualifying
The rest of the world is scoring goals. We have great examples starting with the EU. MiCA, the European Union’s Markets in Crypto Assets regulation, became fully enforceable across all 27 EU member states as of July 1, 2026. This legislation set aside a clear set of rules for companies that want to operate in the EU. They may choose to comply or choose not to comply. But they know exactly what it will take. Interestingly, of the 3000 crypto firms that were based there only approximately 244 that have managed to meet the compliance criteria so far and received full authorization. That’s not a lot and the doomers and gloomers love this and are saying it’s all over for the EU. I don’t think that’s true in any form. The simple fact is that the EU has made it clear what their rules are. No guessing. And that’s a Goal. Not to be outdone, the UK also finalized rules with a mandatory authorization regime taking effect 2027. That’s a ball in the back of the net for the UK as well.
Hong Kong granted two stablecoin licenses back in April, and has had ordinances effective since August 2025. This stablecoin rulebook provides a framework and rails and, accordingly, HSBC plans to have HKD stablecoins inside PayMe app for its 3.3M users in H2 2026. Goal, Hong Kong.
Japan also took strides. Japanese parliament approved its FIEA amendment July 15, 2026, which reclassifies crypto as financial instruments with the same footing as stocks/bonds. In the course of that they also cut crypto taxes to 20% to encourage adoption. Wasting no time Progmat (Japan's largest security-token platform) migrated ¥452B (~$2.7B) of live security-token assets to the Avalanche blockchain. Japan is not only regulating, they have tokenized securities on public-chain rails at real scale. Goal, Japan.
In addition, Singapore is preparing for their MAS stablecoin framework to be fully operational this year. This framework allows SGD or G10 currencies with full reserves to participate and is now a credibility marker recognized by international banks and corporate treasuries. GOOOOOOOOAL Singapore.
Meanwhile, back in the States, every single agency missed the July 18 rulemaking deadline for the GENIUS Act. Not one. Not two. All six. Adding to this, the CLARITY Act is stuck in political quagmire. I think this is best summed up by RealClearPolitics: "While Congress debates whether to regulate digital assets, the rest of the world has stopped debating and started building…. The United States is the conspicuous holdout." Ouch. Harsh? Perhaps. True? Sure seems to be! Let’s look a little closer.
ReguLATE Again
The GENIUS Act , which was signed into law on July 18, 2025 and is designed to regulate stablecoins, had a deadline of July 18th, 2026 for agencies to weigh in their proposed rules. This is in preparation for a January 18th, 2027 Launch. And, over the course of one year not one rule was put in place by any agency. Not the Treasury or the OCC. Not the FDIC or Federal Reserve. Not the NCUA or SEC. It’s embarrassing.
That leaves a $310B+ market with companies operating on “draft” rules that may or may not make it to the final revision. The irony of all of this is that the OCC can approve bank trusts for crypto companies… they just did for Circle… but they can’t seem to finalize the stablecoin rules Congress told it to write. Given that the go-live date for this legislation is January 2027 there is still time before the law is supposed to go into effect but, c’mon guys. This is not only silly, it’s self-defeating. The US is getting lapped by the rest of the world here.
Then there’s the CLARITY Act, which we’ve been following monthly. CLARITY, which is also known as the Market Structure Act, is going to provide the guardrails for which agency can regulate which asset. Common thinking is that, once done, it will open up the institutional capital floodgates. It was first tied up by banks, who didn’t want crypto companies to be allowed to provide yield on stablecoins. That was resolved in May. Then this bill was tied up with an ethics clause, noting that a sitting president or other high ranking government official shouldn’t be able to directly benefit from, say, issuing a token (I’m looking at you, President Trump. Your own actions are stalling your commitments to move this industry forward!) I do agree that we need ethics among our leaders however, as noted last month, I think we need proper sweeping ethics regulation across the board and we shouldn’t use it as a weapon to tie up a bill about how to safely operate in markets. That being said, this point was ALSO conceded in July, when Trump agreed to an ethics clause. This should have been a clear path for CLARITY to clear the senate before the Aug 7 deadline, which is right before Senate goes into recess. But nooooo… those that are arguing for ethics say it’s not enough.
I believe those that are still arguing are missing the point. There is a bigger picture here and it transcends partisan politics. We need to get this done because just like in fútbol, we are way behind. As someone who has been in this space for 9-odd years now, I really thought that once we got out of the Gensler “witch hunt” era we’d be back on the innovation forefront. From an industry side I say we are, and it sure looks like just about everyone wants us to be. Perhaps except policymakers as a whole, who are operating like single-issue voters trying to keep their jobs.
While CLARITY is not completely dead before recess, its odds of passing as of July 31st had fallen to roughly 27% on Polymarket. So it *looks* like this is going to get pushed to September. Given mid-terms coming up, I think that really says we’re looking at next year. Which would mean we get no CLARITY, while the world races ahead.
Which means that, in my opinion, the real loser is America. Sad.
If You Build it…
Even without clear guidance however, companies in the US are still building. That’s how much belief there is in this space. Looking back on memory lane, 2022 was a rough bear. Companies went under, markets were terrible, we even had some fraud. It was no fun. Yet during that time and the years after, the crypto markets grew. People were building. And this was all speculative as we were under the Gary Gensler “regulation by enforcement regime,” which meant there was virtually no guidance and virtually no rules, just lots of Wells notices. Now, while we are still waiting on a live GENIUS Act and movement on CLARITY, industry has taken over again and we have lots of new products in the market. Here are a few new and notable examples:
The Depository Trust and Clearing Association (DTCC) as of July now has production trades of tokenized securities. This includes converted equities by Citadel and Vanguard and the tokenization of the Invesco QQQ ETF by JP Morgan. Other participating firms include BlackRock, Goldman Sachs, Circle, Ondo Finance & Ripple Prime. However, this is being built under the guidance of an SEC “No Action” letter from Dec 2025. Meanwhile Morgan Stanley, who famously was anti-crypto like so many others prior to 2024, now allows native crypto trading for its nearly 9 Million E*TRADE users. Robinhood, the trading platform of choice for many, launched its very own blockchain. They believe that darn-near everything will be traded on a blockchain in the future, including equities and real world assets. (Of course if you live in the US you still cannot trade equity tokens because, why would we allow that? I won’t rant on this topic but I think this is criminal.) Moving right along, Bank of America named Sonali Theisen as head of global digital assets, clearly denoting their commitment to this space. Circle, a crypto company focused on the USDC stablecoin, received final OCC approval to be a national trust bank. Finally, Swift, the legacy network that is the messaging backbone for virtually every cross-border bank payment on Earth launched its very own blockchain-ledger pilot. Yes, that means they are moving to blockchain (and this is a direct shot across Ripple’s bow.)
So, what we see here is that industry has already voted with their pocketbooks. They are embracing this technology stack. All we are waiting on is clear regulatory guardrails but, importantly, they are doing so in anticipation of common sense rules.
So to all our government officials, lobbyists, talking heads and enthusiasts I say this: It’s time to stop the infighting. We need to get this done to support US innovation. We need to get this done to keep up with the rest of the world. We need to get this done because, if we don’t, it’s going to get done without us as this space is not stopping.
blockchAIn: The Same Coin
Wrapping up this month let’s turn our attention again to the world of AI and Blockchain. For months I have been arguing these are not two different worlds but different sides of the same coin (get it?). Let’s see if that thesis holds.
One of the distinguishing features of blockchain technology is the ability to have a permanent and indelible chain of title to prove authenticity of digital… anything. AI can generate text, images, video, code, research, compliance, novels, etc. etc. What AI cannot do is prove that any of it is real. And that’s a problem. Well, on August 2 the EU AI Act Article 50 takes effect, which requires any organization producing AI-generated content in the EU to mark it with machine-readable proof of authenticity. Provenance if you will. This is in the form of metadata that allows any third party to easily verify what is authentic, and what is not with strict penalties for non-compliance. I argue blockchain is the only existing infrastructure that has been architecturally designed from the ground up to do just that, and therefore is mandatory in the world of AI. (BTW, well done EU, you are again scoring goals!)
Meanwhile, as we’ve been monitoring the expansion of machine wallets over the past few months, we’re now seeing this ecosystem actually get moved into production. Use cases abound and could include things like smart meters that settle electricity immediately upon usage in real time, smart cars that pay for traffic data, AI agents that purchase compute with no human in the loop. The list is endless. In support of this Mastercard seems to be leading the race with its micropayments protocol and others are hot on their heels. The punchline here is that this has ballooned the current Machine-to-Machine (M2M) payments market to roughly $11.3B this year, a number that is expected to be five times that by the year 2034. It’s not hard to extrapolate that our economy could be moving to billions of continuous sub-one-cent transactions that happen in real time. Our current financial infrastructure is nowhere near being able to handle this. Blockchains can. In fact, that’s what they are designed to do. Currently we see this with stablecoins on Ethereum layer 2 chains, but the stablecoin race has just begun and blockchains like SUI, which just eliminated fees entirely for stablecoin transactions, are positioning to be the go to players. I think this is a precursor to a “race to zero” for fees and will lay the foundation for our truly commercially interconnected and enabled AI world. Think about it this way. If M2M payments are the new electricity, Blockchains are the new power grid.
My point here is we’re seeing evidence that these aren’t two industries running in parallel. AI Creates. Blockchain verifies and settles. And, as noted above, industry is moving at a breakneck pace to be first in line to this new frontier, with or without regulation. The only question left is, where will all of this great work be done. In the US? EU? Asia? It sure seems clear that whoever has the best guidance will get the lion’s share of this market and, right now, that’s not America.
In Closing
Some countries are ahead of the game. Others are behind. Regardless, this industry continues to advance at a breakneck pace. I’ve been sounding this klaxon all year. The real question now is who is going to lead the race. Right now it’s not America because US politics is doing what, seemingly, the only thing US politics can do. Argue. Fight. Battle. Demean. I don’t mean to be a downer here. Those that read this regularly know that I see a bright future for this space. But I also am committed to being real and in the real world I don’t see the US getting it done. Yet.
While that’s happening, the rest of the world is clearing the path. That’s good for the world, good for this sector and overall good for investors. How will this end? That’s akin to the world cup final which, in this specific area, has yet to be played. So grab the popcorn friends and we’ll continue to watch this unfold. Maybe, just maybe, the US can get a last minute goal in stoppage, and become a real player in this game that is now taking shape.
That’s all for now! Until next time be well, stay safe, and I’ll keep Decrypting Crypto for you!