Democrats Working to Regulate Stablecoins
There is ongoing work to get House Democrats on board for a bill that would regulate stablecoins and another that takes a more comprehensive approach to writing rules for crypto, said Rep. Wiley Nickel, D-N.C. The two bills passed out of the Republican-led House Financial Services Committee over the summer but still need to be voted on in the full House before moving over to the Senate.
Rep. Maxine Waters, D-Calif, who used to chair the committee, had concerns over a provision that would allow state regulators to approve stablecoin issuance without Federal Reserve input. Waters also said the larger digital asset market structure bill would create more confusion and will have fewer protections for consumers.
Nickel shed some optimism about those two bills on Tuesday during DC Fintech week and said lawmakers were not very far apart when it comes to state regulators’ connection to federal regulators. There will be changes made to garner support, even from Waters, Nickel said.
For the stablecoin bill, there will be “some finessing of what a strong federal floor means,” the freshman Democrat said on Tuesday. For the larger market structure bill, there is a willingness to work across the aisle, he added. “You will see changes in the House and then if we can get it through the Senate, you will see changes there,” Nickel said.
One place to trade interests would be for the Senate’s Secure and Fair Enforcement Regulation Banking Act, which would allow financial institutions to provide services to the marijuana industry, Nickel suggested. “Those are places where I see some deals being made,” Nickel said.
FTX’s Shadow
Sen. Elizabeth Warren, D-Mass., reintroduced a bill in July that would crack down on the use of crypto for money laundering and sanctions evasion as well as extend Bank Secrecy Act requirements to digital asset wallet providers, miners, among other participants. The bill has been criticized by some in the crypto industry, who say rules around anti-money laundering are already in place.
Nickel said everyone can agree crypto shouldn’t be used by terrorist groups. “So much of this is colored by FTX and that I think just has been a real challenge because any time you say crypto that’s kind of where a lot of my colleagues’ minds go,” Nickel said. The digital asset market structure bill passed out of the House committee would prevent another FTX, Nickel added.
Nickel’s comments almost a week after former FTX CEO Sam Bankman-Fried’s criminal trial came to an end after he was found guilty on all counts for defrauding investors.
Hot Take: Cryptocurrency Regulations in Congress
Congressional Democrats are working towards regulating stablecoins and creating comprehensive rules for cryptocurrencies despite differing opinions within party lines. While negotiations are ongoing with regards to state regulators’ connection to federal regulators and provisions for stablecoin issuance without Federal Reserve input, there is optimism about garnering support from key members like Rep. Maxine Waters.
Additionally, concerns over cryptocurrency being used by terrorist groups have led Sen. Elizabeth Warren to introduce a bill aimed at cracking down on money laundering and sanctions evasion through cryptocurrencies. Despite criticisms from some within the industry about existing anti-money laundering regulations, these efforts reflect growing attention towards regulating cryptocurrencies in Congress.
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