Cryptocurrency Legislation is Coming To The United States House of Representatives
Chairman of the House Financial Services Committee, Rep. Patrick McHenry (R), announced that the U.S. House would have a cryptocurrency bill in two months
During his appearance as a panelist at the Consensus 2023 event, Rep. Patrick McHenry (R); Chairman of the House Financial Services Committee, stated that both the House Financial Services Committee and the House Agricultural Committee are collaborating closely to draft legislation that would oversee and properly regulate the cryptocurrency industry within the next two months. This comes after both committees had extensive public hearings over the cryptocurrency industry and calling witnesses, such as Cardano founder Charles Hoskinson and SEC Chair Gary Gensler.
Although seemingly odd that the House Agriculture Committee placed hearings on regulating cryptocurrencies, the committee’s historical significance in regulating commodities and its overseeing of the CFTC enables it to serve as a perfect resource for providing comprehensive and fair legislation; especially given the current debate regarding whether or not (certain or all) cryptocurrencies should be classified as securities or commodities. Together with the collective knowledge, expertise, and perspectives of both committees and the plethora of witnesses, they intend to draft proper legislation for cryptocurrencies in an effort to quickly address the crisis of lack of regulatory clarity in this industry.
Rep. McHenry (R) expressed his confidence that the legislation proposed by both committees would be passed into law, replying “yes” to a question from the audience asking whether or not the legislation could pass Congress and be signed by President Joe Biden within the next 12 months, but also acknowledged that it always is quite difficult to pass legislation overseeing new industries into law.
Congress has failed time and time again to pass comprehensive cryptocurrency legislation into law despite numerous bipartisan bills being proposed and/or making substantial progress over the last few years. During her appearance at Consensus alongside Rep. McHenry (R), Senator Cynthia Lummis (R), dubbed the Senate’s “Crypto Queen” by CoinDesk for her pro-cryptocurrency stance, stated that these failures are a “bipartisan subject that we need to address before the 2024 election” and stated that she looked forward to collaborating with McHenry and the House Financial Services Committee to draft bipartisan legislation that can foster innovation and deter fraudulent activity. However, she, too, acknowledged concerns that passing such legislation may be an extremely difficult battle.
”If there is anything I could ask of innovators within this space, the users within this space; help us make the use-case for digital assets. Help us explain to lawmakers what the use-case is for the innovations that you’re making in this space. We can tell other lawmakers that it’s faster and cheaper. We can tell lawmakers that it’s easier to solve crimes committed with cryptocurrency than with fiat currency. But unless we can turn to specific examples to make the use-case, it’s not resonating with people. It’s falling on deaf ears.” - Senator Cynthia Lummis at Consensus 2023
Despite their fears that their proposed legislation could meet the same fate in Congress as those that came before it, McHenry expressed his expectation that the drafted legislation would address regulatory frameworks and issues for both securities and commodities stating that what they plan “to do over the next two months is report a deal out.” Lummis also relayed her confidence that these efforts would make substantial progress, stating that she believed the House would be able to pass through the legislation which in turn would “improve our chances” of passing legislation in the Senate.
Even so, their confidence doesn’t combat the harsh political environment that has made any progress toward enacting cryptocurrency legislation so utterly difficult. Just this month, Republicans on the House Financial Services Committee attempted to find bipartisan support for their proposed stablecoin legislation, but such support seems highly unlikely of being achieved. Senator Lummis herself introduced the bipartisan “Responsible Financial Innovation Act” aimed at addressing these very issues that failed to gain traction in Congress. Furthermore, the dynamic nature of the industry as well as the SEC’s legal perspective that they posses overriding regulatory authority over cryptocurrencies further complexes the legislative battle.
Although the journey ahead for such legislation to be passed into law remains a treacherous and long path, the collective effort of both committees shall be a force to reckon with that could potentially pave the way for incremental change in the currently unclear regulatory framework overseeing cryptocurrencies and as mentioned earlier; truly foster innovation and entrepreneurship, deter fraud, as well as protect the consumer. The cryptocurrency industry has shown it is certainly here to stay (although many cryptocurrencies are absolutely not), and providing a clear regulatory framework that can create a positive atmosphere for the industry in terms of growth and security is crucial to its success.
However, as Senator Lummis highlighted, the United States is far behind the rest of the developed world in terms of legislating cryptocurrencies; should we fail to catch up soon, the industry will flee the country and migrate elsewhere where they do have the ability to thrive. With the geo-political status of the United States steadily decreasing, it is ever-so important now more than ever to enable the country to soar as the hub of the industry rather than its shackles.