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Jurisdictional questions about which agencies should regulate cryptocurrencies will not be resolved anytime soon.
Dreamstime
Perhaps 2022 was the year when the crypto industry ended up in the sights of Congress. It may not be until 2023 that lawmakers have something to show for it.
A number of high-profile bills intended to rein in — and sometimes provide relief to — the crypto industry have a diminishing chance of moving forward as lawmakers turn their eyes to November’s midterm elections and the possibility of Republicans taking a majority in the House of Representatives.
The problem is not the usual partisan bickering, but the reality of how little time is left to finalize deals, move bills through the necessary committees and earn floor time in the full House and Senate.
If the bills stall, as some policy analysts believe they will, crypto companies ranging from trading platforms to stablecoin issuers may have to continue operating in a gray area, unsure of what standards they will ultimately be subject to. Government agencies, including the Securities and Exchange Commission, will operate in this gray area.
The House has just 23 days, including weekends, before they leave Washington on Sept. 30 for the run-up to November’s midterm elections. After the election, it has only 17 days of votes scheduled for the rest of the year. The Senate has a correspondingly shortened timetable.
That leaves a very narrow window for lawmakers to make progress on high-profile crypto bills developed in recent months, including a housework to put guardrails around so-called stablecoins whose values are pegged to the dollar and a Senate bill that would oversee much of the crypto market under the control of the Commodity Futures Trading Commission.
A marker will come as soon as next week, when the Senate Agriculture Committee tentatively plans to hold a hearing on a bill led by Committee Chairwoman Debbie Stabenow (D., Mich.) and Ranking Member John Boozman (R., Ark.).
The bill puts trading of “digital commodities,” including Bitcoin and Ether, under the CFTC’s oversight. Trading platforms such as
Coin base
(ticker: COIN) and FTX must register with the CFTC, take steps to prevent market manipulation and pay fees to help fund the agency’s oversight, among other requirements.
The bill does not attempt to define exactly what makes a specific cryptocurrency a commodity or security subject to SEC oversight. Putting aside that debate — a bone of contention among lawmakers — the bill has a better chance than most of eventually becoming law, though probably not this year.
The two-part hearing currently includes a panel with CFTC Chairman Rostin Behnam and one with representatives from Citadel Securities, Coinbase, the Stellar Development Foundation, the Center for American Progress and the Crypto Council for Innovation, according to people familiar with the matter.
Another attempt at a crypto bill — led by the House Financial Services Committee — faces similar challenges as the clock winds down. Committee Chair Maxine Waters (D., Calif.) and Ranking Member Patrick McHenry (R., NC) have been trying for months to come to an agreement on how to regulate stablecoins, a type of digital currency that typically tries to maintain a stable value of one dollar by holding a corresponding amount of dollar-denominated assets in reserves. The bill would regulate which entities are allowed to issue stablecoins and which assets are eligible to act as reserves, among other issues.
A Financial Services Committee schedule released last week by Waters’ office said a hearing to consider the stablecoin legislation “may be added to the calendar at a date and time TBD.”
“Republicans have little reason to compromise now, as they can get a better deal next year if they repeat the House,” said
Cowen
analyst Jaret Seiberg in a research note on Tuesday. “It’s even less likely that the Senate will consider a stable coin bill. There just isn’t enough time before this Congress ends in early January.”
Write to Joe Light at [email protected]
