Draft GOP Bill Earns Applause from Crypto Chiefs, While Democrats Express Reservations

Digital asset leaders gathered in Congress for a second session in just one week, demonstrating their backing for a proposed piece of legislation aiming to govern the increasingly scrutinized digital asset sector. Representatives from major crypto organizations such as Ava Labs and Circle voiced their perspectives before the House Financial Services Committee regarding the Digital Asset Market Structure Discussion Draft. This draft bill was put forth by members from both the Financial Services and the House Agriculture Committee.

The CEO of Circle, Jeremy Allaire, expressed his support for the bill’s measures to oversee stablecoins. He argued these would bolster the backing for digital dollars, thus helping the U.S. to sustain its worldwide competitiveness. He mentioned in his introductory statement that, “The actions the US government takes in the near future will significantly affect dollar competitiveness for the ensuing decades. Neglecting to act properly could have disastrous effects for our nation.”

The committee chairman, Rep. Patrick McHenry (R-NC), who also champions the bill, claimed this hearing has been “in the works for years,” asserting the proposed legislation would modify the current regulatory framework concerning crypto assets. According to McHenry, a fundamental aspect of the bill concentrates on forming more explicit prerequisites for trading platforms to register with either the Securities and Exchange Commission or the Commodity Futures Trading Commission. He further stated that a critical part of the bill is setting a timeline for assets to transition from being securities to commodities.

Crypto industry participants have long demanded this segment of the bill, with many leaders criticizing the SEC’s approach as vague and overly dependent on enforcement actions.

Ava Labs’ CEO, Emin Gün Sirer, stressed that not every blockchain network is associated with financial operations, a characteristic shared by tokens. This necessitates regulations that reflect this diversity, according to Sirer. “The regulatory approach to tokens should not be one-size-fits-all, given their varying functionality and characteristics,” Sirer remarked.

This point gains significance as lawsuits against Binance and Coinbase, two of the largest crypto exchanges, were initiated by the SEC last week. Both firms were charged with failing to register as exchanges and trading in unregistered securities. Binance faced additional accusations of misleading regulators and mixing customer funds. Both firms have refuted the SEC’s claims.

Democrats Express Reservations and Criticism Regarding the Draft Bill

Democratic representatives expressed more reservations about supporting the draft in its present state at the hearing. The committee’s ranking member, Rep. Maxine Waters (D-Calif.), said Democrats would need more time to study the bill, but she did express concerns about a bill segment that permits firms to apply for “provisional registration” that could offer “limited relief” to companies under SEC enforcement scrutiny. Waters compared this to a “get out of jail free” card for firms accused of violations.

Other Democrats were more critical. Rep. Stephen Lynch (D-Mass.) blamed Republicans for attempting to weaken the SEC’s authority with the bill. Rep. Brad Sherman (D-Calif.) even asserted that the bill was accomplishing the objectives of Sam Bankman-Fried, the dishonored CEO of the now-insolvent FTX. “Perhaps we should release him from jail to at least enjoy this victory,” Sherman quipped cynically.

Before FTX’s demise, Bankman-Fried, who was indicted by federal prosecutors in December for multiple financial crimes, illegal political contributions, and foreign official bribery, had been lobbying Congress persistently for crypto regulations.”

Related

• Is Gary Gensler Bent on Destroying Crypto?
• Ripple CEO Criticizes Gensler, SEC Chair, for Deciding Which Crypto Coins Are Securities
• Operation Choke Point 2.0: US goes after crypto amid confusion and uncertainty

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