U.S. Representative Warren Davidson said a policy shift in Washington is weighing on crypto markets, arguing that regulatory choices are pushing the industry toward an account based financial system with higher surveillance and fewer freedoms. In a detailed post on X, Davidson said the current environment explains why crypto markets feel flat or stagnant, despite global adoption continuing elsewhere. Davidson tied the slowdown to what he described as the collapse of crypto’s original disintermediation use case in the United States. He argued that when digital assets mirror traditional account based finance, they lose any real advantage over banks. As a result, capital and users avoid U.S. markets , while activity shifts offshore. He added that legal uncertainty and slow legislation have amplified the problem. According to Davidson, regulatory pressure has discouraged innovation, while enforcement actions against developers have sent a signal that self custody and privacy tools face growing risk. GENIUS Act and stablecoin structure concerns Davidson pointed directly to the GENIUS Act, which became law in 2025 and created a federal framework for stablecoins. He said the law favors banks by using an account based model and blocking non banks from paying interest on stablecoins. In his view, that structure weakens competition and limits user choice. He also warned that the framework does not clearly protect self custody. Instead, he said it lays the groundwork for what he called a “wholesale CBDC,” even if the term central bank digital currency is not used directly. Davidson argued that the back end features of CBDCs, such as tracking and permissioned access, are being built quietly. At the same time, he acknowledged that stablecoins could increase demand for U.S. Treasuries and help manage federal debt costs. Still, he said those benefits come with trade offs, including higher surveillance and less financial autonomy for users. CLARITY Act and fears of digital ID expansion The broader digital asset market, Davidson said, now depends on the fate of the CLARITY Act, which passed the House but remains stalled in the Senate. He noted that the bill aims to define rules for tokenized commodities, securities, and real world assets, while also addressing gaps in the stablecoin law. However, Davidson expressed skepticism that the Senate will deliver meaningful changes. Even if the bill passes, he said any protections for individual freedom may be cosmetic and leave the account based system intact. He closed with a warning that digital ID and CBDC style systems could merge in the future. According to Davidson, tying identity to money risks expanding surveillance and control, undermining the original promise of Bitcoin as a permissionless peer to peer payment system.
