Through legislation that would establish unique guidelines for trading digital assets, House Republicans are likely to give the cryptocurrency lobby a significant victory.
Just one issue remains: Following a string of scandals and concerns that digital currency is vulnerable to criminal exploitation, a rising number of senators, both Republicans and Democrats, including Sens. Mitt Romney (R-Utah) and Elizabeth Warren (D-Mass. ), are supporting a crackdown that crypto businesses despise. They want to enact new regulations that will make it harder for cryptocurrency to be used for money laundering.
Even supporters such as Sen. Cynthia Lummis (R-Wyo. ), known as the “crypto queen” of the Senate, are cautioning the sector to face the new political reality.
According to Lummis, if we can address this issue right away, before the regulatory framework is adopted, then we will have eliminated that worry. Additionally, we can discuss digital assets in terms of regulation.
The political division in Congress serves as an example of a fresh obstacle for crypto exchanges and token providers.
Recent years saw significant progress in their efforts to influence Washington, and this lobbying effort is contributing to the GOP House’s decisive triumph. However, recent discoveries of widespread fraud and mismanagement, long-standing worries about the use of cryptocurrency to enable illegal activities, and the absence of obvious economic benefits have made a critical mass of MPs unwilling to deliver the business its legislative wish list unhindered.
According to Rep. Jim Himes (D-Conn.), who has been talking with House Republicans and is considering backing some of their plans, He believes the Senate approach is better in some ways because they’re addressing a very clear current problem. There is a belief [among the House] that exchanges might materialize in Australia. That would be depressing. According to him, there’s a lot of nonsense in this industry.
The most ambitious attempt yet by Congress to create a regulatory framework just for digital currency will be the subject of committee votes on historic crypto measures in the House on Wednesday and Thursday.
One of the measures would create government regulation of stablecoins, a type of cryptocurrency token that is backed by assets like the U.S. dollar.
A second, much more comprehensive proposal would empower the smaller Commodity Futures Trading Commission while placing new restrictions on the Securities and Exchange Commission’s ability to regulate cryptocurrencies. Republicans argue that this setup, which cryptocurrency companies have long sought, is essential to preventing them from moving offshore.
House Financial Services Committee Chair Patrick McHenry (R-N.C.) and other Republican leaders leading the effort, such Chair of the subcommittee on digital assets French Hill (R-Ark. ), have been collaborating with Democrats for weeks in an effort to draught legislation that has a chance of passing into law.
According to Hill, the failure of FTX this past fall has motivated both Democrats and Republicans to search for the right statutory remedies that would stop something similar from occurring again. The attempt to create a regulatory framework is being driven by this consensus.
Industry executives like Coinbase CEO Brian Armstrong, who spoke with moderate House Democrats on the proposals on Wednesday, among others, have assisted Republicans along the way. According to the CEO of the organization, Kristin Smith, the Blockchain Association has also been meeting often with Democratic offices in the [House].
McHenry stated that they will address any issues individuals may have with these two measures. That is the aim.
Although a few Democratic grassroots members have expressed support, it’s not clear how many will really vote in favor of the bill.
According to House Democrats, Federal Reserve officials have cautioned lawmakers about how the stablecoin bill permits states to continue to play a role in policing the tokens. Fed Chair Jerome Powell testified that it would be a mistake to permit a lot of private money creation at the state level. Concerns have also been raised about limiting the SEC’s ability to respond, since it has been one of the federal agencies most active in combating crypto fraud.
The Senate comes next.
Sherrod Brown (D-Ohio), chair of the Senate Banking Committee, is one of the key decision-makers in the chamber who has made it clear over the years that he sees little, if any, value in digital currency and instead thinks there are significant hazards for consumers.
He claimed that the House GOP’s proposal is quite rudimentary and fails to include everyone who needs to be covered by regulations.
He claimed that it is woefully insufficient.
The past few weeks have demonstrated that a number of other senators, on both sides of the aisle and on Brown’s committee, also want to adopt a more stern approach.
The new initiative is focused on getting digital asset companies to take more action to stop illegal transactions, like payments for drug trafficking and sanction evasion.
When she introduced a bipartisan bill to require crypto businesses to follow anti-money laundering regulations, Warren was one of the first lawmakers to make the subject a priority. The bill, which was co-sponsored by Sen. Roger Marshall (R-Kan.), met with fierce opposition from proponents of digital money.
Those same supporters have praised Lummis and Sen. Kirsten Gillibrand (D-N.Y.) for an idea to create a unique regulatory framework for cryptocurrency trading. But they are now working with Warren and Marshall to argue for the inclusion of measures for crypto financial crime in the Senate’s yearly defense policy bill.
Separately, a new bill introduced by Senators Jack Reed (D-RI), Mike Rounds (R-SD), Mark Warner (D-VA), and Mitt Romney would make decentralized cryptocurrency exchanges and crypto kiosks subject to the same anti-money laundering and economic sanctions regulations as banks.
According to Romney, they are just extending the same protections that were already offered elsewhere.
Companies that deal in digital assets have claimed that adding another layer of anti-money laundering regulations would be unnecessary and possibly damaging. Smith, from the Blockchain Association, described the worry as a bit of a non-issue and a part of policy that’s really working effectively.
But if the Senate does anything about digital assets, Brown, who has significant influence in the topic, claims that crypto anti-money laundering legislation would be its first priority.
He stated that the first step is doing all it takes to stop the criminal organizations and money launderers that use cryptocurrencies.
