The chaotic approach to AI regulation reflects a larger systemic breakdown. The established New Deal framework—creating agencies to promulgate rules—is defunct, replaced by an ad-hoc executive branch and an ineffective Congress, leaving major policy questions in a "jump ball."

Brian Armstrong notes that while the Clarity Act failing in the Senate is disappointing, regulatory clarity for crypto is inevitable. He believes that if Congress doesn't act, regulators like the SEC and CFTC have indicated they are willing to create clear rules under their existing authority.

Terry Duffy says 2,500 self-certifications were submitted to the CFTC since the second Trump administration began, and none were denied by the agency. He cites hot-dog and George Santos contracts as examples that seem susceptible to manipulation, undermining confidence that core principles are actually enforced.

The Supreme Court is systematically dismantling laws that protect heads of independent agencies (like the CFPB and FTC) from being fired at will. This aligns with the "unitary executive theory," concentrating power in the presidency and eroding the apolitical nature of regulatory bodies.

Investors should not over-react to congressional turbulence. Many of the most market-relevant policies—on trade, regulation, industrial strategy, and AI—are executed via executive authority, not congressional action. This means their trajectory is unlikely to be altered by events like a shutdown or shifting political dynamics in Congress.

A favorable SEC chairman provides temporary relief, but long-term investment and innovation in the U.S. crypto industry depend on the permanent stability that only legislation can provide, insulating it from the whims of future political administrations.

Investors should not expect a shift in key policies like tariffs, trade, and deregulation even if Congress changes hands. The executive branch retains control over these market-moving variables, meaning that policy uncertainty driven by the White House is likely to persist.

Coinbase's policy chief reveals the Trump administration is fast-tracking crypto-friendly regulations. The strategy is to establish them so firmly in market practice that courts would be hesitant to allow a future, less favorable administration to reverse them, effectively creating regulatory 'stickiness' that outlasts a single political term.

The SEC is proposing crypto regulations because Congress's Clarity Act has stalled. While this provides immediate clarity for companies issuing tokens, it's a weak foundation. Agency rules can be easily overturned or modified by future administrations, making them far less permanent and reliable than legislation passed by Congress.