Abstract: This report is the second in a series of two reports by the Program on International Financial Systems dedicated to cryptoassets. The first report in this series was published in February 2023 (“Phase I Report”) and overviewed the regulation of cryptoassets in the United States. This report describes how other jurisdictions have begun to implement more effective regulatory frameworks for the issuance, trading, and custody of cryptoassets, identifies the costs to US markets and investors stemming from the lack of an effective framework in the US, and recommends reforms that can reposition the US as a leader in cryptoasset regulatory structure. The US government has recognized that the rise of cryptoassets creates an opportunity to reinforce American leadership in global financial markets and at the technological frontier. Providing regulatory clarity to the cryptoasset sector will help to ensure cryptoasset market participants from the US and around the world continue to entrust their resources to the private sector of the US economy, as the number and types of available cryptoasset products expand over time. The report consists of three parts: Part I compares the status of cryptoasset regulation in the United States with four major jurisdictions that have taken significant steps toward dedicated cryptoasset regulatory structures: (1) Japan, (2) the European Union, (3) Hong Kong, and (4) the United Kingdom. It also briefly reviews three other jurisdictions that have taken meaningful steps toward similar frameworks: (1) Australia, (2) Canada, (3) Singapore, and (4) the United Arab Emirates. The comparison shows that the US has fallen far behind other jurisdictions in implementing a regulatory structure that facilitates the efficient issuance, trading, and custody of cryptoassets while protecting cryptoasset investors and customers of cryptoasset service providers. Part II identifies the current and future costs for US markets arising in part from the absence of an effective cryptoasset regulatory framework. We present data indicating that the share of global cryptoasset trading activity that occurs on US trading platforms and the share that is denominated in US-issued assets lag far behind traditional financial markets and are declining, limiting the ability of US cryptoasset investors and businesses to participate in those markets and lessening the ability of US policymakers and regulators to supervise and regulate them. We show that the US has lost and will continue to lose cryptoasset-related jobs and businesses, tax revenue, and other economic benefits associated with cryptoasset-related activities as a result in part of the ongoing regulatory uncertainty in the US. We also show that despite the presence of domestic cryptoasset trading platforms and other service providers that comply with US laws, including anti-fraud, anti-money laundering, and relevant state law regimes, and that voluntarily implement additional rigorous customer protections, many US investors have relied on service providers that take advantage of regulatory gaps and that do not adhere to similar standards, suffering losses from fraud and mismanagement. Part III recommends reforms that can reposition the US at the forefront of cryptoasset regulatory structure. These reforms include the creation of a workable framework for the registration and operation of cryptoasset trading platforms, clarifying the regulatory status of cryptoassets, and implementing workable custody requirements. Although some of our recommendations could require new legislation, we include recommendations for how US regulators can begin to address the most pressing problems pending the passage of necessary legislation.