As Congress gears up for its final stretch of lawmaking for the year, two major crypto bills are on the docket. Despite claims of bipartisan support, passing these bills into law in the current year seems unlikely.
These two proposals were passed by the House Financial Services Committee in July. One bill focuses on crypto market structure and aims to put the Commodity Futures Trading Commission in charge of regulating a wide range of tokens. Some Republicans and crypto companies believe this move would counteract the Securities and Exchange Commission's crackdown. The other bill sets out requirements for stablecoins, a type of token that is pegged to the value of the dollar and backed by reserves.
Many crypto firms hope that these bills will bring clarity to the regulation of digital assets. They believe that clear regulations would make it easier for them to operate in the United States and could potentially attract traditional firms that have been hesitant to enter the world of coins and tokens.
However, barring any unexpected breakthroughs, it is unlikely that either bill will become law soon. "It’s fair to say that there’s no expectation that they’re going to become law this year or next year," stated Owen Tedford, a senior research analyst at Beacon Policy Advisors in Washington.
The market structure bill has faced significant criticism from industry critics. Congressman Stephen Lynch even described it as a "bad bill" during a hearing, claiming it to be the worst piece of legislation he has seen during his 20 years in Congress.
There was initially more support for regulating stablecoins, but negotiations were halted because of the White House's intervention, according to House Financial Services Chair Patrick McHenry (R., N.C.).
The Stalemate: Crypto Regulation in Limbo
A Lack of Compromise
According to McHenry, the White House's lack of willingness to compromise has once again brought negotiations to a halt. This impasse has put both pieces of legislation in precarious positions.
Running Out of Time
The House and Senate, operating on slightly different calendars, have only a limited number of weeks left in session this year—around a dozen weeks, to be precise. These weeks will be consumed by clashes over how to avoid a potential government shutdown, which looms as soon as this month.
Senate's Lack of Interest
While the House may still pass the bills later this year or next year, the Senate has shown no indication of taking up the issue. Matthew Wholey, a digital asset policy analyst at PolicyPartner in Washington, D.C., cites policy maker interest and time constraints as the primary impediments to advancing both bills.
In the absence of legislation, regulatory enforcement will continue to be led by SEC Chair Gary Gensler. Gensler's agency has already filed lawsuits against major crypto firms, including Coinbase Global (ticker: COIN) and Binance, alleging securities law violations. Both companies deny these charges.
Upholding Enforcement Efforts
Despite recent court losses against Ripple Labs and Grayscale Investments, Gensler remains committed to his enforcement efforts. The SEC intends to appeal the Ripple ruling, which appeared to narrow the scope of the agency's regulatory oversight over token transactions.
Congress' Waning Urgency
As time passes and the memory of the crypto crises of 2022 fades, Congress seems to be losing its sense of urgency to act swiftly. Without a significant catalyst, neither Congress nor the White House feels compelled to take immediate action, as noted by Tedford.