U.S. Congress held its first-ever markup for digital asset legislation on Wednesday, aiming to establish clear jurisdiction for the country’s main market regulators. However, the bill faced criticism from Democrats who believe it is too favorable to the crypto industry and reminiscent of the views expressed by disgraced FTX CEO Sam Bankman-Fried.
During the hearing, House Financial Services Committee Chair Patrick McHenry stated that the bill, titled the Financial Innovation and Technology for the 21st Century Act, would provide clarification on how the Supreme Court’s Howey Test applies to digital assets, focusing on aspects of “decentralization” and “functionality.”
Despite McHenry’s explanation, Rep Maxine Waters voiced her concerns, calling the bill a “wish list” for the crypto industry. She argued that there is no need to create new regulatory structures simply because crypto companies refuse to comply with existing rules. Waters also criticized the bill for disregarding the views of both the Biden Administration and the Securities and Exchange Commission (SEC).
Rep Brad Sherman further expanded on the criticism, suggesting that the bill could enable public companies to re-issue their securities as blockchain tokens, allowing them to be regulated by the Commodities and Futures Trading Commission (CFTC) instead of the SEC. He even mentioned Sam Bankman-Fried, implying that the bill’s purpose is to evade SEC regulation.
However, not all Democrats were against the bill. Rep. Ritchie Torres, who has previously criticized the SEC’s treatment of crypto, acknowledged that the legislation is not perfect but viewed it as a good-faith attempt to bring clarity to the industry. He emphasized the need for action in a dangerously deregulated environment.
While the Congressional Stablecoin Bill is facing opposition from Democrats, it represents a significant step in the ongoing efforts to regulate the digital asset space. The debate surrounding the bill highlights the challenges of finding a balance between innovation and investor protection. As the discussions continue, it remains to be seen how the bill will evolve and what impact it will have on the crypto industry.
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