July 31, 2023
By Anjali Kochhar
In a groundbreaking move, the US House Financial Services Committee has taken significant steps towards advancing cryptocurrency and blockchain legislation. For the first time, lawmakers voted in favour of crypto-specific bills based on their individual merits, rather than as part of broader legislation.
During the recent markup session on Wednesday, the committee deliberated on a set of bills aimed at establishing a unified legal framework for cryptocurrencies and addressing blockchain-related issues. Despite concerns surrounding the fallout from the FTX crypto exchange, a majority of lawmakers showed support for H.R. 4763, the Financial Innovation and Technology for the 21st Century Act, as well as H.R. 1747, the Blockchain Regulatory Certainty Act. Both bills were subsequently referred to the full House of Representatives for voting.
However, the road to consensus was not without its challenges. Some committee members, both Republicans and Democrats, expressed reservations about a specific clause in the market structure bill. This clause proposed granting more power to the Commodity Futures Trading Commission (CFTC). Critics feared this could weaken consumer protections established by long-standing U.S. securities laws, leaving American investors vulnerable to fraud.
Despite the criticisms, Rep. Patrick McHenry (R-N.C.), the committee’s chair, commended the legislation, highlighting the importance of comprehensive digital asset market structure laws. He emphasised that while some digital assets might be offered as part of investment contracts, they should not be automatically classified as securities.
Rep. Stephen Lynch (D-Mass.), one of the bill’s detractors, strongly criticised the proposed legislation, labelling it the worst piece of legislation presented for markup in the past two decades. Democrats were particularly concerned about the increased authority the bill would grant the CFTC without providing additional funding, which they feared might lead to inadequate regulation and potential fraud in the crypto space.
On the other hand, Republican supporters of the bill argued that the recent approval of an additional $120 million in funding by the Agriculture Committee would equip the CFTC with the necessary resources to regulate the crypto industry more effectively. They praised the potential clarity the legislation could bring to the crypto market, mitigating what they perceived as the Securities and Exchange Commission’s (SEC) aggressive crackdown on digital assets. The hope is that this clarity would encourage crypto companies to remain in the United States instead of relocating to more crypto-friendly jurisdictions.
The legislative journey is not over yet, as the House Agriculture Committee will commence its own markup of the Financial Innovation and Technology for the 21st Century Act. Concurrently, the Financial Services Committee will also focus on stablecoin legislation.
Overall, this significant advancement of crypto and blockchain bills showcases the increasing importance of regulating these emerging technologies and their impact on the financial landscape. The decisions made by lawmakers will likely shape the future of the crypto industry in the United States and its ability to remain competitive on a global scale.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
