Crypto Industry Takes Stock After a Busy Month on the Hill
The House has been busy this month talking crypto — here’s what we know
Senator Elizabeth Warren | Source: Gage Skidmore "Elizabeth Warren" (CC license)
US representatives turned their attention to crypto this month with a series of congressional hearings tackling issues including stablecoins, spot markets and token classification.
Here’s the rundown on where things stand in Washington.
House dueling hearings
Subcommittees in the house held simultaneous hearings on spot market regulation Thursday.
Representatives from the digital asset subcommittees of the Financial Services and Agriculture Committees heard from industry members and financial experts on what challenges exist when trying to police the crypto industry.
On the Agriculture side, former CFTC Chair Timothy Massad was unable to give representatives an answer as to whether ether (ETH) is a commodity.
“I don’t have enough information,” Massad said in response to the question posed by Rep. Zach Nunn, R-Iowa.
“The concern about ether…was in the Merge, where they changed the system of validating transactions, there seemed to be a foundation, a group of people involved in that…is that, under the Howey test, a common enterprise?,” Massad added.
While both committees are led by Republicans, party lines continued to show across the House.
“We saw some Democrats borrow SEC talking points almost verbatim saying there was no need for legislation, crypto is out of compliance and that the SEC hasn’t lost a court case on crypto,” said Ron Hammond, director of government relations at the Blockchain Association.
“What remains to be seen is if the committees can split jurisdiction on what is obviously a tough subject matter,” Hammond added. “So far, they seem to be sharing well and are ready to tackle the large variety of gaps in the current regulatory regime.”
The House Agriculture Committee and the House Financial Services Committee, chaired by the often crypto-friendly Patrick McHenry, R-N.C., are set to hold a joint hearing on digital assets next month, Dusty Johnson, R-S.D., said.
The stablecoin situation
Days before gathering to talk about spot markets, the newly-formed House Subcommittee on Digital Assets met to discuss stablecoin regulation.
The main takeaway from the two-hour-long hearing was that stablecoin legislation is probably not coming as soon as the industry had originally thought.
Subcommittee Chair Rep. French Hill, R-Ark., kicked off the hearing by hailing the new draft legislation Republicans came up with for stablecoins. The draft bill has since been edited again.
Hill’s counterpart, ranking member Maxine Waters, D-Cali., was quick to oppose the draft.
The Republican’s plan “in no way recommends the final work on stablecoins by negotiations between the two of us,” Waters said, referring to unresolved conversations with Hill that started last session.
The main party disagreement revolves around qualifications for stablecoin issuers and know-your-customer rules. Insiders say the current iteration has no shot of getting passed though, so the industry will have to continue to wait for clarity.
Gensler’s return to the hill
SEC Chair Gary Gensler made a splashy return to the hill last week after a more than 500-day hiatus from his “annual” oversight hearing.
Representatives peppered the SEC head with questions, largely around crypto. Republicans focused on the need to keep innovation in America and tried to get answers about what tokens are considered securities, with little success.
Democrats highlighted the need for investor protections, especially in the wake of recent market turmoil and the collapse of FTX.
Rep. Bill Posey, R-Fla., asked if Gensler had concerns about FTX prior to its collapse.
“We filed these actions in December,” Gensler said, referring to charges brought against the collapse exchange a month after it filed for bankruptcy.
“But I’ve given speeches and I’ve been clear with many members of this industry…they need to come into compliance,” Gensler said.
What’s on tap in the Senate
The Senate Banking Committee has been busy with hearings this month, but none were focused specifically on crypto. Next week the group will meet to discuss the recent banking crisis, which, based on content from other hearings, will likely include some commentary on whether or not crypto had a role.
In terms of policy, Senate Republicans and Democrats are having a hard time getting on the same page. Even efforts with a “bipartisan” label are having a hard time making progress.
Sens. Elizabeth Warren, D-Mass., and Roger Marshall, R-Kan., have pushed back reintroducing their crypto anti-money laundering bill, originally expected to drop this week, in an effort to recruit more cosponsors, according to two people familiar with the matter.
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