It's Crypto Week. Congress Can Future-Proof the U.S. Financial System: Summer Mersinger

When Congress established the Securities and Exchange Commission in 1934, it was responding to myriad failures of an antiquated financial system. The regulatory architecture that emerged provided the foundation for nearly a century of American financial dominance. Today, Congress faces a comparable moment: the opportunity to modernize America's financial infrastructure for the digital age.

Two pieces of legislation now before lawmakers, the GENIUS Act on stablecoins and comprehensive market structure reform, represent more than incremental policy adjustments. Together, they constitute America's response to a fundamental shift in how money moves around the world.

The stakes are considerable. The $240 billion stablecoin market, projected to reach $3.7 trillion by 2030, has emerged as critical financial infrastructure largely outside formal regulatory frameworks. Nearly all major stablecoins peg voluntarily to the dollar, creating a curious phenomenon: private companies building elaborate technology to make American currency work better globally than existing payment systems.

This development comes as America's monetary hegemony faces its most serious challenge in generations. China's digital yuan initiatives, BRICS alternative payment systems, and growing reluctance among trading partners to transact in dollars signal a coordinated effort to circumvent American financial influence.

Stablecoins offer America's most effective response. They expand dollar accessibility globally while preserving the transparency and rule-of-law advantages that make the American financial system attractive. The GENIUS Act would formalize this system, establishing reserve requirements, audit standards and consumer protections that make dollar-backed digital assets both safer and more attractive than alternatives.

Yet currency infrastructure alone cannot suffice. The current approach of applying 20th-century regulations to 21st-century technology has produced predictable results: innovation migrating to jurisdictions with clearer and more welcoming rules.

The November federal court ruling that vacated the SEC's expanded dealer definition illustrates the problem. Regulators had stretched statutory language so far beyond original intent that judicial intervention became inevitable.

Digital asset platforms integrate functions that traditional finance deliberately separates, creating new efficiencies alongside new risks. Forcing these platforms into regulatory categories designed for different business models produces neither clarity nor protection. Comprehensive market structure legislation would establish bespoke registration frameworks that actually correspond to how these businesses operate, something the crypto ecosystem has been advocating for years.

The integration imperative here is crucial. U.S. financial supremacy in the 20th century derived not from any single innovation but from systematic coordination across monetary policy, market regulation and institutional oversight. Today's challenge demands similar coherence. Digital dollar infrastructure without a proper market structure leaves innovation vulnerable to regulatory uncertainty. Market structure reform without stablecoin clarity limits the global reach of American monetary policy.

International competition intensifies this urgency. The European Union's Markets in Crypto-Assets (MiCA) regulation, the U.K.'s stablecoin framework, and similar initiatives across Asia represent direct challenges to American leadership in financial technology. These frameworks may not be superior to what America could construct, but they exist, which is often a decisive advantage in attracting global investment and innovation.

Indeed, there is another step that American elected officials can take to ensure that the promise of crypto isn’t undermined: pass Rep. Tom Emmer’s legislation prohibiting the development in the United States of a central bank digital currency (CBDC). While several other countries have discussed such a rollout, American lawmakers should embrace our domestic privacy ideals and broad anti-surveillance sentiment by supporting this important legislation.

The Senate's 68-30 passage of the GENIUS Act suggests growing political recognition of crypto’s policy potency and the realities of international competition. Even skeptical Democrats acknowledge the state-of-play, with Senator Mark Warner (D.-VA) recently observing, that if American lawmakers fail to shape cryptocurrency regulation, "others will—and not in ways that serve our interests or democratic values."

President Trump's commitment to sign legislation before the August recess creates both opportunity and deadline. The political foundation appears solid: bipartisan support, industry consensus on key principles, and competitive pressure that occasionally motivates effective governance.

Yet significant obstacles remain. Congressional capacity for technical legislation is limited in a heated partisan political climate, and the temptation to pursue symbolic rather than systematic reform runs strong. The complexity of integrating stablecoin regulation with broader market structure reform demands precisely the kind of patient, coordinated policymaking that American politics sometimes struggles to produce.

The choice facing Congress is ultimately straightforward: lead the development of global digital finance infrastructure or cede that role to competitors. For the first time in years, the economic logic, political momentum, and strategic necessity align. Whether American lawmakers can capitalize on this convergence will determine not merely the fate of cryptocurrency regulation, but America's role in the next generation of global finance.

The 1930s regulatory framework served America well for nearly a century. Its digital successor, if properly constructed, could serve even longer.