Cryptocurrencies: chances of passing a bill in the US are dwindling
The chances of the U.S. Congress passing a major cryptocurrency bill by the end of this year are diminishing.
Several high-profile, multi-party bills that once seemed to have a good chance of passing before the end of 2022 are now on hold, with Congressional committees postponing important votes. And now that MPs are focused solely on next year’s elections, their chances of going into effect in 2022 are virtually extinct. “Given the calendar, passing any bill through both chambers will be a huge challenge,” said Perianne Boring, founder and CEO of the Digital Commerce Association.
While most sectors of the economy are fine with – and even working for – the mess in Washington, the cryptocurrency industry is struggling to get new legislation passed. They argue that Congress must intervene because current U.S. financial regulations and the government agencies that enforce them are inadequate for digital assets.
Recent perturbations in the cryptocurrency markets, including the collapse of the popular algorithmic cryptocurrency TerraUSD, have burdened investors with billions of dollars in losses and increased calls for action from Capitol Hill. In addition to a lack of regulatory clarity and market failures, the price of Bitcoin – the world’s largest cryptocurrency – has fallen more than 50% since the beginning of the year.
Among the many bills under consideration, a bill to regulate stablecoin cryptocurrencies and give the Commodity Exchange and Trading Commission greater authority to oversee digital assets has received the most favor. However, the multi-party consensus so far is not translating into success.
For example, the stablecoin bill, which has been privately negotiated for months by leaders of the House of Representatives Financial Services Committee with input from the Biden administration, has been blocked because lobbyists and members’ staffs cannot agree. The point of contention is the role of state regulators and who should receive Federal Reserve accounts, which are usually intended for banks, according to people familiar with the matter. Maxine Waters, chairwoman of the committee, and Patrick McHenry, the highest-ranking Republican Party politician on the committee, did not respond to a request for comment.
Members missed the committee’s deadline to vote on the bill last month – in part because members still need time to understand the complex provisions in the latest draft. Republican Party politicians on the committee will be in a better negotiating position if the chamber takes control of the party in next year’s elections.
Difficulties also arise in two high-profile Senate efforts that would strengthen the ability of the Commodity Exchange and Trading Commission to directly oversee trading in Bitcoin and any other cryptocurrency that is not subject to U.S. securities laws.
One bill is led by Senate Agriculture Committee leaders Debbie Stabenow and John Boozman, and the other is part of a much larger package backed by Wyoming Republican Cynthia Lummis and New York Democrat Kirsten Gillibrand. The Financial Oversight Council, which is led by the Treasury Department and includes the top Wall Street regulators in the US, said this week that Congress should give them the ability to directly oversee tokens that are not securities.
The chances of passing a crypto bill this year are increasingly diminishing, as Congress is likely to be in recession by mid-December. But there is still a small chance, especially if MPs attach one of these bills to the government funding bill, which must be voted on by mid-December.
The delay may not be the worst thing for the industry, as it will have more time to lobby against changes it dislikes, including those relating to decentralized finance platforms. “From our perspective, it doesn’t matter when something happens,” said Kristin Smith, CEO of the Blockchain Association. “What matters is what happens.”