Bill to Counter Wall Street’s Influence on Cryptocurrencies

Proposals to regulate cryptocurrencies that have circulated so far on Capitol Hill have been largely pro-industry, but opposition to that approach is beginning to organize.

In what is almost certainly a first step toward building a coalition for strict regulation, Senator Elizabeth Warren of Massachusetts is circulating a letter among her colleagues calling on acting Comptroller of the Currency Michael Hsu to repeal the ruling in favor of cryptocurrencies than allowing banks to engage more deeply with digital assets.

Also read: Sen. Warren Calls DeFi the “Most Dangerous” Part of Crypto at Senate Hearing

The three interpretive letters, issued by then-Comptroller Brian Brooks between July 2020 and January 2021, grant banks permission to hold cryptocurrency for customers, maintain stablecoin reserve accounts, and use stablecoins to make payments and settle transactions. . Brooks had been the chief legal officer of public crypto exchange Coinbase before being appointed acting comptroller.

In the letter he wants other senators to sign, Warren said Hsu’s earlier decision to allow the rulings to stand but tell banks to seek permission from the Office of the Comptroller of the Currency (OCC) did not go far enough. , reported Bloomberg.

See also: SoFi Bank Charter Ruling Indicates Crypto Still Out of Reach of Banks

Citing the recent $48 billion collapse of a stablecoin and subsequent bankruptcies of crypto lenders, the letter said those failures have exposed banks to unnecessary risk, even though Hsu’s stance has been widely interpreted as ask first so we can tell you no, since they don’t. t “adequately address the shortcomings of the previous interpretative letters and the risks associated with banking activities related to cryptocurrencies, which have become more serious in recent months.”

Also read: How Stablecoin’s $48B Crash Spread Across Crypto

However, battle lines are forming and the crypto-friendly group is better organized, with the Congressional Crypto Caucus led by Tom Emmer of Minnesota and Bill Foster of Illinois.

Here’s a look at some of the key players in the upcoming cryptocurrency regulation fight, which will begin in earnest in October, when federal agencies are scheduled to present a plan for a comprehensive regulatory framework for cryptocurrencies in order to comply. with President Joe Biden’s March executive order. .

See more: Biden Executive Order Establishes Expedited Crypto Policy

It is important to note that this is not a pro-crypto/anti-crypto list, but rather a look at members of legislators who have been active in the field. Virtually every member of Congress who has discussed the issue publicly has stated that they want to balance protecting innovation with protecting the public.

A light or heavy hand?

A key differentiator is whether cryptocurrencies should be treated as securities under the authority of the Securities and Exchange Commission (SEC) or as commodities under the supervision of the Commodity Futures Trading Commission (CFTC). The latter is believed to offer a lighter approach and is favored by the crypto industry, while SEC Chairman Gary Gensler’s position is that virtually all cryptocurrencies are a commodity.

The leaders of this campaign begin with Senators Cynthia Lummis of Wyoming and Kirsten Gillibrand of New York, whose Responsible Finance Innovation Act was the first fully-formed regulatory framework proposal ever introduced. It would give the CFTC control of cryptocurrencies. The same would happen with the Digital Commodities Consumer Protection Act proposed by Senators Debbie Stabenow of Michigan and John Boozman of Arkansas, who chair the Senate Agriculture Committee that oversees the CFTC.

Read more: Crypto Fight on Capitol Hill Increasingly Favors the CFTC

In the House, Emmer and Reps. Darren Soto of Florida and Ro Khanna of California introduced the Securities Clarity Act, which would define fewer cryptocurrencies as securities than Gensler would prefer.

Meanwhile, Rep. Patrick McHenry of North Carolina has the Digital Token Clarity Act, which would also exclude some tokens from classification as securities.

Longtime crypto skeptic Rep. Maxine Waters of California, chair of the House Financial Services Committee, organized the Digital Assets Task Force for Democrats in June, which includes Rep. Brad Sherman of California, another vocal critic. of digital assets. On the other hand, it also includes Rep. Ritchie Torres of New York, who told Politico in March that “radically decentralizing the internet and finance strikes me as a deeply progressive cause. No technology should ever be defined by its worst uses.”

Representative Stephen Lynch of Massachusetts chairs the FinTech Task Force and introduced the ECASH Act, which would create a US central bank digital currency (CBDC). His co-sponsors include Representatives Jesús “Chuy” Garcia of Illinois and Rashida Tlaib of Michigan.

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