An important congressional committee is gearing up to vote this week on several bills designed to establish a regulatory framework for cryptocurrencies, marking a significant milestone for Capitol Hill in its ongoing efforts to create federal oversight for the digital asset industry. The crypto sector has been under scrutiny by regulators since last year's incidents of sudden collapses of companies like Celsius Network, Voyager Digital, and FTX, which left investors reeling. One of the bills slated for consideration by the House Financial Services Committee aims to provide clear definitions for when a cryptocurrency should be classified as a security or a commodity.
Another bill seeks to create a regulatory regime to oversee stablecoins, which are digital tokens typically backed by traditional assets such as the US dollar.
These markups, where legislative proposals are discussed and brought to a vote, represent the first time that crypto regulatory bills will be subjected to a vote in Congress. This development is seen as a victory for crypto lobbyists who have been advocating for regulatory clarity within the industry.
However, the fate of these bills hinges on garnering support from Democrats, which is seen as crucial to their chances of becoming law. The Democratic-led Senate may pose additional obstacles, as Senate Banking Committee Chair Sherrod Brown remains unsure about the need for additional crypto regulation.
Representative Patrick McHenry, the Republican committee chair, prioritises advancing a crypto market structure bill. This bill aims to expand the Commodity Futures Trading Commission's oversight of the crypto industry while clarifying the Securities and Exchange Commission's jurisdiction and addressing concerns about the agency's perceived overreach.
The bill has received considerable support from the crypto industry, with many hoping that bipartisan backing could increase its chances of success in the Senate.
The current regulatory landscape for crypto companies has been vague, with the SEC asserting its authority over the industry, claiming that most cryptocurrencies should be treated as securities, subjecting them to investor protection rules. This assertion has led to conflict with crypto companies, prompting calls for Congress to clarify that cryptocurrencies should be treated more like commodities.
Among the bills being considered is one that would task the Federal Reserve with setting requirements for issuing stablecoins while still preserving state regulators' authority. The bill was modified to address concerns from some Democrats that stablecoin issuers might evade stricter oversight by opting for state-level regulation.
Despite the hope for bipartisan support, it remains uncertain whether Democrats, including Representative Maxine Waters, the top Democrat on the Financial Services Committee, will back the market structure bill.
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