Bill to counter Wall Street’s influence over crypto

The proposals to regulate cryptocurrency that have so far been circulated on Capitol Hill have largely been favorable to the industry, but opposition to that approach is beginning to organize.

In what is almost certainly a first step toward building a coalition in favor of tough regulation, Sen. Elizabeth Warren of Massachusetts is circulating a letter among her colleagues urging Acting Comptroller of the Currency Michael Hsu to overturn the pro-crypto ruling that would allow banks to become more deeply involved in digital assets.

Also read: Sen. Warren calls DeFi the ‘most dangerous’ part of Crypto during Senate hearing

The three interpretive letters, issued by then-Comptroller Brian Brooks between July 2020 and January 2021, authorize banks to deposit crypto for clients, hold stablecoin reserve accounts and use stablecoins to make payments and settle transactions. Brooks had been public crypto exchange Coinbase’s chief legal officer before being named acting controller.

In the letter she wants other senators to sign, Warren said Hsu’s earlier decision allowing the rulings to stand but telling banks to seek permission from the Office of the Comptroller of the Currency (OCC) did not go far enough, Bloomberg reported.

See also: SoFi Bank Charter Ruling Signals Crypto Still Off Limits for Banks

Citing the recent $48 billion collapse of a stablecoin and subsequent bankruptcies of crypto lenders, the letter said these rulings have exposed banks to unnecessary risk — although Hsu’s stance has been interpreted as asking first so we can say no — as they do not “address properly the shortcomings of the previous letters of interpretation and the risks associated with crypto-related banking activities, which have become more serious in recent months.”

Also read: How a $48 Billion Stablecoins Collapse Rippled Over Crypto

However, battle lines are forming and the crypto-friendly group is better organized, with the Congressional Crypto Caucus led by House Tom Emmer of Minnesota and Bill Foster of Illinois.

Here’s a look at some of the key players in the upcoming battle over crypto regulation, which will begin in earnest in October, when federal agencies will present a plan for a broad regulatory framework for crypto to comply with President Joe Biden’s March executive order. .

See more: Biden’s Executive Order Set to Fast-Track Crypto Policy

It’s important to note that this is not a pro-crypto/anti-crypto list, but rather a look at members of the legislature who have been active in the field. Virtually every member of Congress who has discussed the issue publicly has stated that they want to balance protecting innovation with protecting the public.

A light or heavy hand?

An important differentiating factor is whether cryptocurrencies should be treated as securities under the authority of the Securities and Exchange Commission (SEC) or as commodities under the supervision of the Commodity Futures Trading Commission (CFTC). The latter is believed to offer a lighter touch method and is preferred by the crypto industry, while SEC Chairman Gary Gensler’s position is that virtually every cryptocurrency is a commodity.

Leaders of this campaign begin with sens. Cynthia Lummis of Wyoming and Kirsten Gillibrand of New York, whose Responsible Financial Innovation Act was the first fully-formed regulatory framework proposal to be introduced. It would give the CFTC control over crypto. So would the Digital Commodities Consumer Protection Act proposed by Sens. Debbie Stabenow of Michigan and John Boozman of Arkansas, who chair the Senate Agriculture Committee that oversees the CFTC.

Read more: Crypto battle on Capitol Hill increasingly favors the CFTC

In the house introduced Emmer and reps. Darren Soto of Florida and Ro Khanna of California The Securities Clarity Act, which would define fewer cryptocurrencies as securities than Gensler prefers.

Rep. Patrick McHenry of North Carolina, meanwhile, has the Clarity for Digital Tokens Act, which would also exclude some tokens from being classified as securities.

Longtime cryptoskeptic rep. Maxine Waters of California, chair of the House Financial Services Committee, organized in June the Digital Assets Working Group for Democrats, which includes Rep. Brad Sherman of California, another vocal critic of digital assets. Again, it also includes reps. Ritchie Torres of New York, who told Politico in March that “radical decentralization of the Internet and finance strikes me as a profoundly progressive cause. You should never define any technology by its worst use.”

Rep. Stephen Lynch of Massachusetts chairs the FinTech Task Force and has introduced the ECASH Act, which would create a US central bank digital currency (CBDC). The co-sponsors include Reps. Jesús “Chuy” García of Illinois and Rashida Tlaib of Michigan.

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