Watchdog organizations in the US are opposing a proposed draft bill about how the crypto market should be regulated. They wrote a letter to the United States House Financial Services committee in charge, saying that people involved in the crypto industry have been supporting this bill because it benefits them. The watchdogs also argued that the crypto industry hasn’t shown any real uses for cryptocurrencies other than people buying them as investments.
The letter accused the crypto market of seeking favorable legislation under the guise of crypto innovation. The provision in the proposed bill that drew particular concern would change how the U.S. Securities and Exchange Commission (SEC) evaluates regulatory rulemaking in all securities markets, making “innovation” a benchmark. The watchdogs believed that this provision could have detrimental effects.
The draft bill aimed to establish a regulatory framework for the crypto industry in the United States, providing clear rules and guidelines. Committee Chair Representative Patrick McHenry had planned to hold a committee vote on the bill in July 2023. The involvement of the SEC in overseeing the regulatory framework was a key aspect of the proposed bill.
In June 2023, the SEC took legal action against two major crypto exchanges, Coinbase and Binance, known for their significant trading volumes. Despite this news, traders in the crypto market showed little concern, and the impact on crypto market prices was minimal.
Recently, several countries have passed similar bills as they support and find them beneficial for their countries’ economies, including the UK and South Korea, among others. On June 28, 2023, the United Kingdom gave its final approval to the Financial Services and Markets Bill. This bill enables the UK government to regulate financial service rules along with digital assets. The rule aims to exert control over financial services and attract crypto companies from the US, as there are many regulatory issues faced by crypto companies.
In addition, South Korea also introduced “Virtual Asset User Protection” to regulate the cryptocurrency industry and protect crypto users. The aim is to safeguard users’ digital assets, promote transparency, and protect investors in the crypto market.
In contrast to the widespread demand for accommodating the crypto industry, the watchdogs argued that Congress should support the SEC’s ongoing enforcement actions as a way to protect consumers. In the meantime, various jurisdictions in Europe and Asia are actively working to attract crypto businesses that are moving away from the United States.