A joint committee meeting was held in the US, led by a group of representatives, to address cryptocurrencies and discuss regulatory uncertainties.
The group discussed a recent joint committee hearing in the U.S. House of Representatives on the topic of cryptocurrency regulation. The hearing highlighted the consensus among the committee members regarding the need for new crypto rules but also underscored the differences in their visions for what those regulations should look like.
Representative Patrick McHenry, the Republican chair of the House Financial Services Committee, emphasized that the Securities and Exchange Commission (SEC) needs to modify its rules for broker-dealers and securities exchanges. He also argued that the Commodity Futures Trading Commission (CFTC) needs more authority to regulate non-security digital assets like Bitcoin and that SEC disclosure rules should be updated for digital assets.
“The Securities and Exchange Commission needs to modify its rules for broker dealers and securities exchanges.”Patrick McHenry.
There are bipartisan consensus and diverging visions
McHenry’s Democratic counterpart, Rep. Maxine Waters, agreed on the need for legislation and noted bipartisan cooperation in developing a regulatory framework for stablecoins. She also explained that it was identified further gaps in oversight in the crypto markets, such as the limitations of the SEC’s authority to combat frauds like FTX, a cryptocurrency exchange.
“I hope this Congress we can quickly return to developing legislation together.”Rep. Maxine Waters.
However, there are differences in their visions for crypto regulation. McHenry has expressed his intention to draft legislation that can become law, indicating a willingness to compromise with Democrats, including the Biden administration.
McHenry, widely regarded as a highly skilled strategist in the House, emphasized the crucial role of Congress and President Joe Biden in implementing necessary changes, as he argued for the urgent need to pass digital asset legislation within the year. “These steps are imperative because the sole efforts of the CFTC and the SEC are insufficient,” McHenry asserted. “It is imperative that Congress takes action.”
Waters, on the other hand, has clearly stated her parameters for any regulatory actions, which include regulation for stablecoins, increasing the SEC’s authority, and giving the CFTC more power over spot markets for digital commodities. However, she is not in favor of major changes to the jurisdiction over the majority of the tokens created since the 2017 initial coin offering bubble.
Various proposals have been put forward
Renowned experts like Tim Massad and Matthew Kulkin shed light on the intricate task of differentiating between tokens utilized for capital raising purposes and those traded as commodities or derivatives. As Matthew Kulkin puts it, “It’s sort of easy to draw out the two ends of the spectrum in terms of the token being offered to raise capital, versus something that’s highly commoditized and hedged in the derivative markets, but that point in-between is a challenging one to try to draw a bright line.”
Various proposals have emerged to address this challenge, ranging from the establishment of a self-regulatory organization to the application of similar rules found in traditional exchanges to regulate crypto trading firms. Michael Blaugrund, the Chief Operating Officer of the New York Stock Exchange, advocates for extending comparable regulations governing his exchange to entities facilitating crypto trades. However, this notion has sparked concerns among crypto industry panelists who fear that such a move could force exchanges to make a choice between listing digital commodities like bitcoin or digital securities, potentially limiting their operations.
The ongoing discussions highlight the complexity involved in defining regulatory frameworks for digital assets. the meeting informs us that while there is significant agreement on the need for crypto regulation, the exact form that these regulations will take is still a matter of debate.