The Trump administration’s moves regarding the crypto industry have been quite bizarre | Photo Credit: bizoo_n

Ever since Donald Trump took over as President, the regulations in the US have become much more favourable to stakeholders in the cryptocurrency ecosystem. Not only has the new administration relaxed curbs and scrutiny on investors and companies in this space, it is also helping boost the price of cryptocurrencies through its strategic crypto reserve. The Indian government, however, need not toe the US’ line in regulating crypto assets.

In a recent interview to this newspaper, Finance Minister Nirmala Sitharaman rightly said that India must adopt ‘its own studied approach’ in framing crypto regulations — one where innovation continues, but with adequate checks and balances. The Trump administration’s moves regarding the crypto industry have been quite bizarre. In a presidential order in January, the Biden administration’s efforts to frame a comprehensive crypto regulation, looking at money-laundering and other risks, was scrapped. Work on creating a central bank digital currency was also stopped. Instead, a strategic bitcoin reserve was created using crypto assets, notwithstanding civil or criminal proceedings. The Trump administration’s resolve to continue to build this stockpile has resulted in taking the price of bitcoin and other crypto assets to record highs. Other countries are unlikely to build similar reserves, given the extremely volatile price movement in crypto assets which can compromise the external account.

The strategic reserve has been followed by the passing of the GENIUS (Guiding and Establishing National Innovation for US Stablecoin) Act by the US Senate. These rules here appear to be less anarchic. The Act allows only issuers identified by the government to launch stablecoins which need to be fully backed by dollars, short-term US treasury bills or bonds, bank deposits or money market funds. Since the stablecoins will be linked to the dollar, they may turn out to be more stable than cryptos. Violations of the law could lead to fine of up to $1 million or imprisonment of up to five years. This Act will become a reality once the House of Representatives passes it. This could lead to a slew of stablecoin launches in the US.

India can shrug aside such developments in the US and continue working on its central bank digital currency, both the wholesale and retail versions. With cross-border payments between many countries being done in local currencies, CBDCs can play a large part in facilitating this. While the retail CBDC adoption is slow so far, it can gain traction going forward as the use of physical currencies declines. As far as the regulations of private cryptocurrencies such as bitcoin go, India needs to continue working towards a global regulatory framework which includes information-exchange between countries. Given the dispersion of miners, traders and users across geographies, it is not possible for a single country to crack down on misuse of these assets. A global framework is the way forward, regardless of the path the US adopts.

Published on July 7, 2025