3 - 5 minute read
The US House Financial Services Committee and House Agriculture Committee are set to draft legislation to regulate the crypto sector in the next two months. This announcement was made by Rep. Patrick McHenry (R-N.C.), the chair of the House Financial Services Committee, during CoinDesk’s Consensus 2023 event. The legislation will address securities and commodities regimes and will tackle issues that are challenging to fix on either side.
Sen. Cynthia Lummis (R-Wyo.), another panelist during the session, expressed her eagerness to coordinate efforts with McHenry, adding that the House had a better chance of getting legislation through earlier than the Senate. She emphasized that this is a bipartisan subject that needs to be addressed before the 2024 election.
The US Congress has been unable to pass comprehensive legislation on crypto despite several bills making progress on Capitol Hill last year. However, this month, Republicans on the House Financial Services Committee tried to find bipartisan support for a second effort at stablecoin legislation, although bipartisan support remains uncertain. Republicans introduced a discussion draft, which may mark a new starting point for negotiations with Democrats.
The bipartisan “Responsible Financial Innovation Act,” aimed at creating a regulatory framework for the industry, was introduced last year by Lummis and Sen. Kirsten Gillibrand (D-N.Y.). Lummis revealed that a new-and-improved version of the bill would be unveiled in six to eight weeks. The new version would have a stronger section on national security and a stronger cybercrime aspect.
A bipartisan bill was introduced in both the US Senate and House of Representatives last week, calling for the federal government to study crypto use cases for illegal activity, including how terrorists or other criminals might use cryptocurrencies.
In the meantime, lawmakers have been facing increasing pressure to legislate the industry after the meltdown of the FTX crypto exchange and the more recent collapse in crypto banking. The US Securities and Exchange Commission (SEC) Chair Gary Gensler’s refusal to say whether ether (ETH), the second-largest cryptocurrency by market cap, was a security, was also grilled by McHenry’s committee last week. Lummis emphasized that Congress needs to provide sufficient guidance in this area and anticipates that they will still be using the Howey Test in the most modern way expressed by US courts.
The Bottom Line
The crypto sector is set to receive comprehensive legislation in the US in the next two months. The legislation aims to address securities and commodities regimes and tackle issues that are challenging to fix on either side. This will have significant implications for traders, as it will provide much-needed regulatory clarity in the sector. However, the industry is still facing increasing pressure from lawmakers to legislate after recent collapses in crypto banking. Traders should keep an eye on developments in this area as they may impact the market moves in the future.
