This week in Washington, crypto enthusiasts, regulators, and lawmakers alike hold their collective breath as Congress moves on long-awaited crypto regulatory bills.
Unprecedented Legislative Leap
Nearly five years since a bipartisan group of lawmakers put their heads together to craft a regulatory framework for cryptocurrency, Congress has an ambitious slate of crypto regulatory bills to consider. Let’s take a closer look at what’s on deck.
Bill #1: All Eyes on Stablecoins
First up, we have the Clarity for Payment Stablecoins Act of 2023. Born from the scrutiny of Facebook’s Libra project, the bill, led by Rep. Maxine Waters, aims to address issues such as the infamous Terra implosion, concerns surrounding Tether’s reserves, and the controversial co-mingling of customer funds by FTX and Binance.
The crux of this bill lies in the tug-of-war between state and federal regulators. Intriguingly, California appears to be paving its path with its stablecoin regime.
Bill #2: Embracing Financial Innovation
The Financial Innovation and Technology for the 21st Century Act is another heavy hitter. As a market structure bill, it integrates elements from several previous bipartisan initiatives like the Token Taxonomy and Securities Clarity Act.
This legislation brings the crypto industry and skeptics to a head, aiming to lay out the rules of the road for the SEC and the CFTC in uncharted territory. It proposes new rules for token issuance, VCs, accounting standards, and spot market regulation. Despite concerns over its complexity, this bill is crucial in helping crypto be viewed as a ‘legitimate’ asset class, much like our G-7 counterparts.
Bill #3: Ensuring Regulatory Certainty
Next, we have the Blockchain Regulatory Certainty Act. This bipartisan bill from GOP Majority Whip and Rep. Darren Soto offers a safe harbor for validators, software developers, and other service providers against any registry as a money services business – a stark contrast to the stance of Warren/Marshall.
Bill #4: Protecting the Right to Self-Custody
The Keep Your Coins Act, led by Rep. Warren Davidson, aims to safeguard users’ rights to self-custody. The importance of self-custody protection has been highlighted following the collapses of platforms like FTX.
Bill #5: Fortifying Financial Technology
Last but certainly not least, the Financial Technology Protection Act, led by now Senator Ted Budd and currently championed by Reps. Zach Nunn and Jim Himes, seeks to deter illicit activity via crypto. This legislation would establish a task force to identify the best ways to organize relevant law enforcement experts.
A Glimmer of Hope Amid Partisanship
The initial votes on these bills are confined to committees, i.e., those Members of Congress who have invested hours into hearings, briefings, and dialogues on these issues. The next crucial step will be a vote on the House floor, where all members will cast their votes.
Despite the palpable tension of an increasingly partisan climate, there is optimism that these bills will pass, albeit the degree of bipartisan support remains to be seen. With the 2024 election looming, the stakes are high, and the time for action is now.
Congress holds the key to providing businesses with clear rules and combating bad actors exploiting regulatory gaps.
