In recent years, the cryptocurrency and digital asset industry has operated without specific regulations tailored to its unique characteristics. Ben Van Vliet, James B. Finkl Endowed Professor and Associate Professor of Finance, commented on this regulatory gap: "In the past, we haven't had really any regulations, that have directly spoken to the cryptocurrency or digital asset industry. And so, what the government was trying to do was sort of shoehorn the industry into existing laws that were designed for fiat currencies and traditional financial infrastructure."
Van Vliet highlighted a shift in approach with new legislation such as the CLARITY Act. He explained that designing regulation specifically for digital assets marks a significant change: "So when it comes to designing new regulations, there's sort of two sides to the coin here. One is that there needs to be new regulation designed specifically for this new asset class. And the fact that there is going to be new regulation is already providing some clarity that the government is no longer going to assess the activities of this new industry relative to old traditional laws that are designed for other industries. So that in and of itself is a good thing."
He also pointed out ongoing uncertainty regarding how effective these future rules will be: "The second part is, well, are these new regulations for this new industry going to be good regulations or bad regulations, and we're not really to that point yet. But with the laws that are being passed—in this case the CLARITY Act—it is simply saying that the government is now going to design new regulations specifically for this new industry."
According to Van Vliet, establishing dedicated legal frameworks gives those working in crypto more certainty about how their activities will be judged moving forward: "And that is giving the industry much more confidence going forward that they won't be judged, their activities won't be judged relative to these other old laws, regulations designed for traditional financial industry."