US lawmakers are set to put together legislation to oversee the crypto sector in the “next two months” after holding joint public hearings starting May. Representative Patrick McHenry (Republican), chair of the House Financial Services Committee, said said at an event held by a crypto news publishing house that the bill will address both securities and commodities regimes and issues that are hard to fix on either side. He also said that the House would have a better chance than the Senate of getting legislation through earlier, and if the House moves first on crypto, it would “improve our chances” in the Senate.
Senatoe Cynthia Lummis (Republican),who has been dubbed the Senate’s “Crypto Queen,” said she looked forward to coordinating those efforts with McHenry, adding that the bill would be a bipartisan subject that they needed to address before the 2024 election. Lummis had introduced the bipartisan “Responsible Financial Innovation Act” last year aimed at creating a regulatory framework for the industry with Senator Kirsten Gillibrand (Democrat). She told the crowd that a new-and-improved version of the bill would be unveiled in six to eight weeks.
“We are probably going to have a stronger section on national security. You will see a stronger cybercrime aspect to our bill,” Lummis said. Meanwhile, a bipartisan bill introduced in both the U.S. Senate and House of Representatives calls for the federal government to study crypto use cases for illegal activity, including studying how terrorists or other criminals might use cryptocurrencies.
The US Congress has so far been unable to get comprehensive legislation on crypto passed despite a number of bills making progress on Capitol Hill last year. However, this month Republicans on the House Financial Services Committee took a swing at finding bipartisan support for a second effort at stablecoin legislation, though bipartisan support remains uncertain.
The recent collapse of the FTX crypto exchange and the banking crisis in the crypto industry have increased pressure on lawmakers to legislate the industry. McHenry also said that crypto’s recent role in the US banking crisis, which has left the industry’s banking relationships strained, is fair to call “Operation Choke Point 2.0.” “We have to fix this problem, we have to provide certainty that you can bank in a safe and sound manner,” he said. “This is a great example of why Congress must legislate and provide clarity.”
While the US is yet to introduce comprehensive crypto legislation, several other jurisdictions, including the European Union, Japan, the United Arab Emirates, Hong Kong, and the UK, have moved towards regulating the space. The EU’s Markets in Crypto Assets (MiCA) law makes it the first major jurisdiction in the world to introduce a comprehensive crypto law, putting the bloc in the lead on Web3 technology.
The lack of a clear regulatory framework for the crypto industry has caused confusion for investors, but legislation would provide certainty and attract more investment to the sector. However, over-regulation could stifle innovation and impede the growth of the industry. It remains to be seen how the new legislation will balance investor protection with innovation and growth in the crypto sector.