Stablecoin Regulation Is Congress’ Top Priority, Says Bitwise General Counsel

Stablecoin regulation, namely about reserve reporting and liquidity requirements, has been a long time coming, Dowling said

article-image

Tupungato/Shutterstock.com modified by Blockworks

share

As Congress gears up for its next session with a slew of what the industry hopes will be crypto-friendly lawmakers, Bitwise’s general counsel has her eye on stablecoin regulations. 

“The first Congressional focus point will no doubt be stablecoins,” Katherine Dowling, general counsel and CCO at Bitwise Asset Management, told Blockworks. 

Stablecoin regulation, namely about reserve reporting and liquidity requirements, has been a long time coming, Dowling said, pointing to the bipartisan bill lawmakers failed to pass last session. With much of the legwork already done, Dowling said stablecoin legislation has the potential to be an early win for Congressional members looking to solidify some sort of crypto policy. 

“Regardless of where members of congress are on the crypto spectrum — pro or con — or on the learning curve, there is a general sense that something must be done here,” she said. “The more complex, hairier topic of crypto market structure regulation will follow, but this topic will require more education, hearing and will take longer to arrive at negotiated, bipartisan agreement.”

Crypto, no longer a new issue on Capitol Hill, has already proven to be a major focus for both the House and Senate. While there were several attempts at a more comprehensive legislative package, a more focused approach is probably more likely in the near-term, Dowling said. 

The Senate has been paying attention to the emerging asset class, most recently with a focus on crypto tax regulation and token classification, both of which will impact traders and exchanges. 

New Financial Services Committee Chair Patrick McHenry, R-N.C., who made digital assets a pillar of his Congressional platform in the past several elections, created the Subcommittee on Digital Assets, Financial Technology and Inclusion. The Subcommittee will be led by Rep. French Hill, R-Ark, Rep. McHenry announced Thursday.

Coinbase rated Rep. Hill “very supportive” of the industry in its crypto sentiment calculator, based on “legislative record, media statements, social media posts, caucus membership, and public letters,” the exchange said. 

Coming off of a tumultuous year for markets, coupled with bankruptcies, criminal charges and generally low sentiment toward the industry, lawmakers are feeling the pressure now more than ever to get bills over the finish line, Joe Acosta, partner at law firm Dorsey and Whitney, said. 

“Without regulation, you can see how customers can easily be duped,” Acosta said, pointing out that the turf war over jurisdiction between Federal agencies needs to be cleaned up as well. 

Generally, regulatory clarity will be a net positive for the space, Dowling added.

“Right-sized legislation in the space will be a huge boon to the industry and while there may be some pain points in the short term around preparing and organizing, over the long term we will all benefit from clear rules of the road,” she said.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Unlocked by Template.png

Research

With the spot ETH ETF approval, the institutions are coming. stETH - given its dominance in marketshare, existing liquid market structures, and highly desirable properties - is poised for institutions.

article-image

The QT taper begins this month…but what does that mean for markets?

article-image

Plus, the rise of RWAs could bring about a significant shift in how real-world investments are managed and accessed

article-image

The distributed cell plan provider started selling its own hotspots in October 2023

article-image

The Brazil-based asset manager’s filing comes during a year of milestone bitcoin and ether fund approvals

article-image

The purchase of five sites in Georgia set to help CleanSpark hit its mid-year operating hash rate target of 20 EH/s

article-image

Plus, it’s beginning to look like we may be in for a cruel summer