Bitcoin

<p>While the United States Department of Justice (DOJ) has promised to <a href="https://www.ft.com/content/5aac457e-cc80-44ae-ac40-9b51d9b601a3" rel="noopener noreferrer nofollow">crack down</a> on illicit behavior on <a href="https://finbold.com/guide/best-cryptocurrency-trading-platforms/" rel="noopener noreferrer nofollow">cryptocurrency exchanges</a> and the Securities and Exchange Commission (<a href="https://finbold.com/topic/sec/" rel="noopener noreferrer nofollow">SEC</a>) is in no rush to establish <a href="https://finbold.com/category/regulations-news/" rel="noopener noreferrer nofollow">regulatory</a> clarity on <a href="https://finbold.com/cryptocurrencies/" rel="noopener noreferrer nofollow">cryptocurrencies</a>, the US Congress seems to be making progress on <a href="https://finbold.com/guide/stablecoins/" rel="noopener noreferrer nofollow">stablecoin</a> legislation.</p><p>Indeed, the bipartisan ‘McHenry/Waters <a href="https://finbold.com/guide/stablecoins/" rel="noopener noreferrer nofollow">stablecoin</a> bill’ is back on the table as Congress has revived the 2022 legislative draft in April, and now it has moved to the House of Representatives, according to a Twitter <a href="https://twitter.com/RonwHammond/status/1658140446458101767" rel="noopener noreferrer nofollow">thread</a> by Ron Hammond, Director of Government Relations at a non-profit <a href="https://finbold.com/guides/cryptocurrency/" rel="noopener noreferrer nofollow">crypto</a> advocating group the <em>Blockchain Association</em>, on May 15.</p><h2 id="header-0">Bipartisan crypto efforts</h2><p>As Hammond specified, “the stablecoin bill has deep roots in bipartisan collaboration starting with the scrutiny of Facebook’s Libra program,” as “policymakers on both sides were skeptical of the social media giant dipping into <a href="https://finbold.com/guides/finance/" rel="noopener noreferrer nofollow">financial</a> services,” which resulted in Libra folding after several hearings.</p><blockquote>“Post-Libra, much of the conversation on Capitol Hill focused on reserves. A large part of this concern was due to foreign-based Tether (<a href="https://finbold.com/cryptocurrency/tether/" rel="noopener noreferrer nofollow">USDT</a>) and questions around the transparency of reserves. Both sides feared this lack of transparency given their large market presence.”</blockquote><p>Meanwhile, he explained that the Biden Administration had consulted with <a href="https://finbold.com/guides/banking/" rel="noopener noreferrer nofollow">banking</a> regulators, including the SEC, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), the Commodity Futures Trading Commission (<a href="https://finbold.com/topic/cftc/" rel="noopener noreferrer nofollow">CFTC</a>), and the Federal Reserve, on the prerequisites for stablecoin regulation, concluding in 2021 that Congress should pass legislation as soon as possible or the regulators would step in.</p><p>With this in mind, “House leaders Patrick McHenry and Maxine Waters spent a large majority of 2022 holding hearings, engaging stakeholders, and drafting a bill,” but ran out of time before they could finish it because of the election. In the meantime, the implosion of the <a href="https://finbold.com/topic/terra/" rel="noopener noreferrer nofollow">Terra</a> ecosystem has renewed the pressure on Congress to act soon.</p><h2 id="header-1">Regulators lose patience</h2><p>In early 2023, the House held a few hearings on the issue, but some regulators (such as the SEC) have lost patience and begun to act, bringing more confusion and further strengthening the need for clear rules from Congress. After the <a href="https://finbold.com/topic/ftx/" rel="noopener noreferrer nofollow">FTX</a> crash, the main concerns shifted to custody and segregation of customer funds.</p><p>More recently, multiple Republican and Democrat representatives have offered separate drafts including many of the same provisions in the earlier bipartisan draft, although the bone of contention is the role of the state versus federal regulators, and while Hammond wonders if both sides would come together, he is certain that it’s possible.</p><p>In conclusion, he believes that many Democrats and Republicans “agree on principles, and while there are political and substantive hold ups,” they will most likely resolve them as the House holds more hearings on stablecoins.” However, the question remains if the Senate would even take up the bill.</p><h2 id="header-2">SEC refuses to clarify</h2><p>Interestingly, the SEC has recently begun to argue that legislation is not necessary for crypto and stablecoins, moving away from its 2021 position, other banking watchdogs, and both parties in Congress. In its <a href="https://storage.courtlistener.com/recap/gov.uscourts.ca3.119939/gov.uscourts.ca3.119939.26.0_1.pdf" rel="noopener noreferrer nofollow">response</a> to the request by the crypto exchange <a href="https://finbold.com/review/coinbase-review/" rel="noopener noreferrer nofollow">Coinbase</a> for clarification on crypto regulation, it said:</p><blockquote>“Neither the securities laws nor the Administrative Procedure Act impose on the Securities and Exchange Commission an obligation to issue the broad new regulations regarding ‘digital assets’ Coinbase has requested.”</blockquote><p>Paul Grewal, Coinbase’s chief legal officer, <a href="https://twitter.com/iampaulgrewal/status/1658271335066505217" rel="noopener noreferrer nofollow">expressed</a> regret with the response, calling it a “resounding maybe” and stating that the SEC had argued its position that rulemaking might take years and that it was no rush, but that it would continue to use enforcement actions instead.</p><p>In light of this most recent development, the question remains whether such a response would elicit a stronger and faster course of action by the decision-makers on both sides of the US Congress and Senate.</p><p><strong>Read more cryptocurrency news on <a href="https://finbold.com/category/cryptocurrency-news/?utm_source&#61;CMC&amp;utm_medium&#61;social&amp;utm_campaign&#61;CMC&amp;utm_content&#61;long" rel="noopener noreferrer nofollow">Finbold.com</a>.</strong></p>

This week in Congress and crypto: Key insights

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