Lawyer Calls for Regulatory Overhaul to Save U.S. Crypto Innovation

His focus: enabling innovation while setting clear boundaries for the rapidly evolving digital asset space.

Deaton’s first call is for legislation on stablecoins. He sees this as an opportunity to boost demand for U.S. Treasuries and modernize cross-border payments, strengthening the country’s influence in global finance. Alongside that, he’s pushing for a decisive classification of crypto tokens—distinguishing which fall under securities or commodities—to end the confusion between regulatory agencies like the SEC and CFTC.

Exchange oversight is also high on his list. Deaton wants strict rules that separate customer funds from platform holdings, along with public blockchain-based proof of reserves to prevent another round of risky behavior that plagued past cycles. He also believes crypto tax rules need loosening—calling for exemptions on small transactions and the option to pay federal taxes in crypto without extra penalties.

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Finally, Deaton suggests dismantling or reforming the Accredited Investor Rule, which he argues keeps regular investors locked out of early-stage opportunities. He’s warning that if Congress delays action beyond the 2026 elections, political shifts could stall progress even further.

These ideas align with current discussions in Washington. The GENIUS Act, for example, is already floating proposals that split oversight between the Federal Reserve and state regulators for stablecoin issuers. With the stablecoin market now exceeding $234 billion, a regulatory breakthrough may not be far off—especially with pressure from political figures to fast-track decisions.

Meanwhile, the SEC’s hardline approach appears to be softening. Recent moves toward cooperation with the CFTC, coupled with new leadership under Paul Atkins, signal a shift toward more balanced oversight. Legislation like FIT21 may help define this new direction, giving the CFTC more authority over decentralized assets and ending years of regulatory tug-of-war.

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