Crypto bill passes congressional committee in victory for industry
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[July 27, 2023]
By Hannah Lang
WASHINGTON (Reuters) -A key congressional committee on Wednesday
advanced a bipartisan bill that aims to develop a regulatory framework
for cryptocurrencies, a milestone for Capitol Hill in its efforts to
codify federal oversight for the digital asset industry.
The crypto industry has been in the regulatory crosshairs since
investors were burned last year by sudden collapses of Celsius Network,
Voyager Digital, FTX and other companies.
The bill passed by the House Financial Services Committee would define
when a cryptocurrency is a security or a commodity and expand the
Commodity Futures Trading Commission's (CFTC) oversight of the crypto
industry, while clarifying the Securities and Exchange Commission's
jurisdiction, as many crypto advocates complain of the agency's
perceived overreach.
A handful of Democrats, including Reps. Jim Himes and Ritchie Torres,
joined committee Republicans in voting for the bill. The House
Agriculture Committee is scheduled to consider the same bill Thursday.
"As other jurisdictions like the UK, the [European Union], Singapore and
Australia have moved forward with clear regulatory frameworks for
digital assets, the United States is at risk of falling behind. We
intend to change that today," said Representative Patrick McHenry, the
Republican chair of the House Financial Services Committee, at the
markup.
The markup - where legislation is debated and brought to a vote, paving
the way for a full vote by the House of Representatives - is the first
time a crypto regulatory bill was put to a vote in Congress, a victory
for crypto lobbyists who have pushed lawmakers to provide regulatory
clarity for the industry.
"Obviously we've had some important decisions come from the courts in
the past, but this is by far the most significant legislative moment
that we've had," said Kristin Smith, CEO of the Blockchain Association.
The bill has galvanized many in the crypto industry, who say that with
Democrats' support, the bill could have a shot in the Senate.
"For anything to be sticky, it's going to need some bipartisan backing,"
said Miller Whitehouse-Levine, CEO of the DeFi Education Fund, a
lobbying group focused on decentralized finance.
But some Democrats, including Representative Maxine Waters, the top
Democrat on the Financial Services committee, fiercely oppose the bill.
Waters said the bill would create more confusion and offer consumers and
investors fewer protections than they have currently.
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The U.S. Capitol building is seen in
Washington, U.S., April 6, 2023. REUTERS/Elizabeth Frantz/
"This bill heeds the calls from the crypto industry while
disregarding the views of the administration, the Securities and
Exchange Commission and consumer and investor advocates," she said.
The measure may also face obstacles in the Democratic-led Senate,
where the head of the Senate Banking Committee, Sherrod Brown, has
said he is unsure if additional legislation to regulate crypto is
necessary.
CLARITY ON TOKENS
Crypto companies started out in a regulatory gray area, but the SEC
has steadily asserted its authority over the industry, arguing that
most cryptocurrencies are securities and subject to investor
protection rules. That effort escalated last month when the SEC sued
crypto exchanges Coinbase and Binance for failing to register some
crypto tokens. The pair deny the allegations.
Most crypto companies dispute the SEC's jurisdiction, and have
pushed Congress in recent months to write laws clarifying that
cryptocurrencies are more akin to commodities than securities.
Lawmakers are also set to consider on Thursday a bill that would
have the Federal Reserve write requirements for issuing stablecoins
while preserving the authority of state regulators.
The bill was modified to address concerns from some Democrats,
including Waters, that stablecoin issuers could evade stricter
oversight by opting to be regulated under a state regime.
While McHenry in an interview this month told Politico he remained
hopeful that he and Waters would reach an agreement on the bill, he
also said a federal stablecoin regime is "not essential," adding
that there are state frameworks already in place.
McHenry on Wednesday said he had "no news" on discussions with
Waters on the stablecoin bill, but that the two were continuing
negotiations.
(Reporting by Hannah Lang in Washington; Editing by Matthew Lewis,
Mark Porter and Diane Craft)
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