As the new 118th Congress finalizes committee members, the Republican-led House of Representatives is showing signs of a new approach to the question of how cryptocurrencies will be regulated in the US, one of the first steps under the House Financial Services Committee in January. The committee is creating a new subcommittee on digital asset policy under newly appointed chairman Congressman Patrick McHenry (RN.C.).
The new chair of the Subcommittee on Digital Assets, Financial Technology and Inclusion is Rep. French Hill (R-Ark.), who shared with me what his goals are for the digital-asset industry. He pointed out that he has developed clear rules and plans to focus on payment.
A wider context
The 117th Congress It held 15 hearings focused on digital assets in 2022. Key digital assets legislation was introduced in the Senate last year, with the Lummis-Gillibrand Responsible Financial Innovation Act (RFIA) being introduced as the first universal bipartisan bill in Congress. The Senate Agriculture leadership soon responded by introducing its own bill, the Digital Products Consumer Protection Act (DCCPA). While it will take longer before the RFIA is considered to pass, the DCCPA is likely to pass, which would appoint the Commodity Futures Trading Commission as the primary regulator of digital assets. The Democratic-controlled House did not see any broad digital-asset bills last year, but McHenry has been negotiating a possible stablecoin bill with his colleagues across the aisle.
“Thanks to Chairman Patrick McHenry’s leadership, the House Financial Services Committee has been preparing for years on digital assets. As a legal matter, Congress needs to set clear rules of the road so that companies know what to do to effectively and legally operate and innovate in the United States. The new digital As Chair of the Subcommittee on Assets, Financial Technology, and Inclusion, I lead the subcommittee on creating a regulatory and legal framework for digital assets that protects consumers and investors, including digital payments, while keeping America a leader in fintech and fintech. Blockchain innovation.”
- Representative French Hill (R-Ark.), Chairman of the Subcommittee on Digital Assets, Financial Technology and Inclusion.
The new Subcommittee on Digital Assets, Financial Technology, and Congressional Inclusion includes:
- Providing clear rules for digital assets among federal regulators
- Develop policies that encourage the access of financial technology to underserved communities
- Identify best practices and policies to strengthen diversity and inclusion in the digital-property industry
Republicans have released the full list of members who will serve on the new subcommittee. Democrats are expected to report their work to this subcommittee soon.
Outlook and implications
Hill’s focus over the past few years has been on the Central Bank of America’s digital currency (CBCC). In the year In October 2022, Hill signed a letter with McHenry to the (DOJ) regarding the findings of a review to assess the need for legislation to issue the US CBCC. The letter told the administration that it was Congress that had the authority to spend the money and that legal issues must be considered. In a recent FTX hearing, Hill compared the actions of former FTX CEO Sam Bankman-Fried to Bernie Madoff, saying that large-scale fraud perpetrated by individuals should not serve as an indictment of the entire crypto industry or the underlying technology.
Pushback for Hill from Reps. Stephen Lynch (D-Mass.) and Jesus G. Chui Garcia (R-Mich) recently published an opinion that painted a bleak picture of the crypto industry, suggesting that the SEC is a regulator of digital assets and unwilling to comply with laws and regulations. When Senator Elizabeth Warren (D-Mass.) recently suggested that the SEC should double down on enforcement, Sherrod Brown (D-Ohio) as chairman of the Senate Banking Committee, specifically changed his policy approach in a public letter. Relying on the SEC to manage digital assets involves new legislation from Congress. Brown is expected to agree with Senate Agriculture Committee Chairman and DCCPA co-sponsor Deb Stabenow (D-Mich.) on legislation that would end the role of the SEC and the Commodity Futures Trading Commission (CFTC) in digital assets. , the rest of the Senate will respond positively to such a unified approach.
Key decision points
With major legislation being seriously debated in this Congress, the industry should consider the opportunity for legal and regulatory transparency for digital assets. As businesses see the growth and development of any industry as dependent on the mitigation of regulatory risks, this could be significant for digital assets in 2023 and 2024.
Individuals should consider how both the House Financial Services Committee and the Senate Banking Committee are referring to cryptocurrency regulation as a policy priority. In addition, the House Financial Services Panel may ask SEC Chairman Gary Gensler to spend more time in Congress explaining his approach to digital assets, which could slow down the agency’s enforcement efforts.
Another important question is the optics of what Congress will or should do as a result of FTX, as there may be pressure from parties to do something about the digital asset industry. This could provide the impetus needed to advance a major digital assets bill in Congress in 2023.