Lawmakers gathered in Washington for the first market structure hearing of the 2025 congressional session, aiming to tackle the growing confusion surrounding cryptocurrency regulation. The hearing, led by the Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence, focused on updating U.S. securities laws to better address the unique challenges posed by the rapidly expanding digital asset space.

The session, titled “American Innovation and the Future of Digital Assets: Aligning the U.S. Securities Laws for the Digital Age,” explored how outdated regulations are holding back U.S. innovation in blockchain technologies while also risking the protection of investors. Industry experts, legal advisors, and lawmakers all pointed to the need for clear guidelines that can support the growth of cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) while maintaining safeguards for investors.

The Need for Clearer Rules on Digital Assets

Rep. Bryan Steil of Wisconsin, who chaired the hearing, stressed the importance of creating a legal framework that promotes the growth of digital assets while ensuring that investor interests are protected. He argued that the current regulatory environment, with its lack of clear definitions and guidelines, is hindering the potential of blockchain technology in the United States.

Rep. Steil pointed out that while some progress has been made with the regulation of certain aspects of the digital asset space, such as payment stablecoins, much more needs to be done. He highlighted the need for a comprehensive approach that clearly defines the role of digital assets within existing financial systems.

“It’s crucial for Congress to act now,” Rep. Steil said. “Our country is at a crossroads, and if we want to remain a leader in innovation, we must create clear rules for the digital asset market that ensure both market integrity and the protection of investors.”

SEC’s Role Under Scrutiny

A significant portion of the discussion focused on the U.S. Securities and Exchange Commission (SEC) and its growing influence over the digital asset industry. Lawmakers expressed concern that the SEC’s broad and aggressive stance on regulating digital assets has created confusion and uncertainty in the market. Several witnesses argued that the SEC’s approach is unsuitable for the fast-evolving world of cryptocurrencies and blockchain technology.

Rep. Troy Downing from Montana expressed frustration over the SEC’s efforts to extend its authority over the entire digital asset market, warning that such overreach could push cryptocurrency innovation and development overseas. “The SEC’s current approach risks driving innovation away from the U.S.,” Rep. Downing said, emphasizing the need for Congress to step in and create clear, fair rules for the industry.

Legal experts at the hearing agreed with this sentiment, calling for Congress to take the lead on digital asset regulations. Tiffany J. Smith from WilmerHale argued that while the SEC has made efforts to clarify certain aspects of crypto regulation, it is not enough. “We need comprehensive legislation from Congress to truly establish regulatory clarity,” she said.

Concerns About U.S. Losing Blockchain Leadership

One of the central themes of the hearing was the concern that without clearer regulations, the U.S. risks falling behind other countries in blockchain and cryptocurrency development. Jake Werrett, the Chief Legal Officer of Polygon, highlighted how blockchain technology has the potential to transform industries well beyond finance.

“If the U.S. doesn’t provide clear, supportive regulations, we could lose our competitive edge in blockchain innovation,” Werrett said. “This is not just about cryptocurrencies; it’s about creating a technology infrastructure that can support decentralized systems in various sectors.”

The hearing underscored the growing urgency of the situation, as countries around the world are already moving forward with their own crypto regulations. Lawmakers emphasized that the U.S. must act quickly to ensure that it remains a global leader in blockchain technology and digital asset innovation.

What’s Next for U.S. Crypto Regulation?

The hearing is just one part of a larger movement in Congress to modernize financial laws for the digital age. While there is broad agreement on the need for reform, it remains to be seen whether Congress will be able to pass new legislation that addresses all of the concerns raised.

For now, the crypto industry and lawmakers alike are looking to the future, hopeful that clearer regulations will foster innovation, improve investor protections, and position the U.S. as a leader in blockchain technology.

As the crypto market continues to grow, it is clear that U.S. lawmakers must act quickly to create a regulatory framework that aligns with the fast-paced nature of the industry. The upcoming months and years will be crucial in determining the future of U.S. digital asset regulations and how they will shape the global blockchain landscape.