Following their takeover of the House of Representatives, Republicans are establishing what they call a pioneering congressional group with a focus on digital assets.
On Thursday, Congressman Patrick McHenry (R-NC) announced the creation of a new subcommittee for the House Financial Services Committee, the Subcommittee on Digital Assets, Financial Technology, and Inclusion.
According to Politico on Thursday, McHenry said he thinks there is a significant gap in how they structure the committee, since it spends more time discussing issues pertaining to the digital asset sector than the broader financial industry.
French Hill (R-AR), who was appointed as the full committee’s vice-chairman, will serve as the subcommittee’s chairman. In addition to developing policies that target underprivileged communities through the promotion of financial innovation, the new panel will offer “rules of the road” for federal regulators of the digital asset ecosystem, according to a recent press release.
At a time of significant technological advancement and change in the financial sector, it is their responsibility to work across the aisle and promote responsible developments while stimulating FinTech innovation to flourish safely and efficiently in the United States, Hill said in a statement.
The Lummis-Gillibrand Responsible Financial Innovation Act was introduced in the Senate in June of last year, and more recently, the Stablecoin TRUST Act was introduced by former Republican Senator Patrick Toomey in the final weeks of his Congressional career. Several other pieces of crypto-related legislation are also currently making their way through the legislative process.
Hill is not new to proposals for crypto policy. When the Board of Governors of the Federal Reserve System was mandated to conduct a study on the potential effects of a U.S. Central Bank Digital Currency (CBDC) in 2021, Hill co-sponsored the legislation and referred to it as “essential work” when the report was eventually made public.
Republicans in Congress have criticized the way regulators have handled the digital asset market. Congressman Tom Emmer (R-MN) has critizised the Securities and Exchange Commission (SEC) under Chairman Gary Gensler for what he calls the agency’s “regulation through enforcement” strategy.
Republicans are anticipated to utilize the 118th Congress as an opportunity to create regulatory clarity for the developing asset class—a goal that is broadly supported both within the financial industry and within the halls of government.
In December, when he was chosen to lead the House Financial Services Committee, McHenry said the committee will focus on the digital asset ecosystem and pursue “a comprehensive regulatory framework for the digital asset ecosystem.”
McHenry was one of many legislators who voiced criticism after the abrupt collapse of the cryptocurrency exchange FTX in November, claiming that a strong regulatory framework would have helped prevent the catastrophe that rocked the industry and had a detrimental effect on countless American investors.
McHenry stated in a news release that he has long argued for Congress to provide a clear regulatory framework for the digital asset ecosystem, including trading platforms. It is crucial that Congress create a system that guarantees Americans have sufficient safeguards while also enabling innovation to flourish in the U.S.
Additionally, he raised the prospect of speaking with businesses like Binance, focusing on the part that company’s CEO Changpeng Zhao’s company played in FTX’s demise after he telegraphed his company’s decision to sell its holdings in FTT and eventually rejected its buyout of Sam Bankman-Fried’s now-bankrupt exchange.
He looks forward to learning more about these occurrences from FTX and Binance in the coming days, as well as the actions they will take to safeguard clients throughout the transition, McHenry said.
