Crypto Regulation Up Against Political Party Divide in Congress
2023’s first congressional session ended on Tuesday with no agreement on how to create and enforce crypto regulations.
The Senate Banking Committee focused on digital asset regulation and the crypto crash. Most Democrats supported tightening regulations, while Republicans blamed the watchdogs for stifling innovation.
Democrats push for strict crypto regulations, Republicans blame the SEC
Committee Chairman Sherrod Brown (D) argued that the cryptocurrency sector was formed to circumvent regulations. Sen. Elizabeth Warren (D) has also maintained her longtime view. She has suggested that those involved in illegal activity and money laundering like cryptocurrency.
In contrast, Senator Tim Scott (R) blamed the FTX collapse on SEC Chairman Gary Gensler. Scott said, “To date, the SEC has failed to take any meaningful, preventative action to ensure that this type of catastrophic failure does not happen again.”
Based on the hearing, the cryptocurrency industry is no closer to meaningful policy decisions that are predicted to be completed by the first half of 2023. Although members of the House Financial Services Committee hope that the stablecoin legislation will pass soon.
“I think Chairman Gensler is doing a very good job,” Democratic Sen. Chris Van Hollen told Unchained.
In contrast, Republican Senator Bill Hagerty told the platform: “What we have in this market is opacity and a lack of clarity.” According to Hagerty, there is a real risk that the SEC or CFTC may conclude wrongdoing by crypto companies.
Last week, Rostin Behnam, the head of the Commodities and Futures Trading Commission (CFTC), promised to crack down on non-compliant cryptocurrency projects through enforcement in 2023. Meanwhile, SEC Chairman Gensler claimed that unless crypto firms comply with standards requiring full disclosure, they do not survive.
Much more needed to regulate digital assets
On January 27, the White House released a statement asking Congress to “step up its efforts.” An earlier hearing in December before the Senate Agriculture Committee had also urged Congress to quickly pass CFTC laws.
Witness Linda Jeng, adjunct professor of law at the Georgetown Institute of International Economic Law, noted her view of the regulations. Jeng stressed that it would take much more than specifying the agency’s jurisdiction and organizing digital assets into government organizational structures.
Vanderbilt University Law School Professor Yesha Yadav stated, “private exchange self-regulation is only one part of a robust and comprehensive public regulatory framework for cryptocurrency markets.”
On the stablecoin front, an overarching bill has been up against legislative hurdles in Congress since 2022.
Witness Lee Reiners, Policy Director, Duke Financial Economics Center, noted: “I recommend that Congress give the SEC the authority to regulate stablecoins as money market funds, with strict requirements that stablecoin reserves be held in cash and government securities and that these reserves be subject to periodic audits and disclosure.”
Disclaimer
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