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Cryptocurrencies Face a Crucial 2 Weeks in the US Congress – Here’s Why
The next two weeks could be make or break for the cryptocurrency industry as it faces major legislative developments in the US Congress. These developments could potentially reshape the regulatory landscape for digital assets in the United States.
3 major cryptocurrency laws are up for vote
The community is closely monitoring the upcoming Senate vote on the repeal Personnel Accounting Bulletin No. 121 (SAB 121). Initially issued by the Securities and Exchange Commission, SAB 121 requires financial institutions to list on their balance sheets the digital assets they hold in trust for customers.
This practice differs from traditional custodial asset management, which does not consider custodial assets as part of a company’s balance sheet. Critics argue that this could unfairly inflate a bank’s assets and liabilities, leading to increased capital reserve requirements and potentially stifling the growth of cryptocurrency custody services.
Last week, the House of Representatives saw a bipartisan effort to repeal this regulation, with 21 Democrats joining Republicans. “Last week 21 Democrats took a tough vote and joined Republicans in repealing SEC SAB 121. This is an important issue for both banks and cryptocurrencies and a personal priority for SEC Chairman Gensler .” She said Ron Hammond, Director of Government Relations at the Blockchain Association via
The Senate, led by Senator Cinzia Lummis, is expected to follow suit this week. However, President Biden has indicated intent to veto the repeal, requiring a difficult two-thirds majority in Congress to override the veto.
“Given slim majorities in both houses, we saw some Congressional Review Acts (CRAs) make it to the President’s desk on a bipartisan basis, but they failed at that stage. This requires a 2/3 congressional vote to overturn. Biden intends to veto on such a difficult hill to climb,” Hammond noted.
Another key legislative item on the agenda is a bill introduced by Representatives Larry Bucshon and Lisa Blunt Rochester. Scheduled for a vote this week, this bipartisan initiative calls for the Department of Commerce to serve as the President’s primary advisor on blockchain-related issues. The bill also proposes the creation of an advisory group within the Department of Commerce to further integrate blockchain technology into federal governance and decision-making.
Another highly anticipated legislative push is the upcoming vote on the FIT 21 bill, set for around May 23-24. Authored by Patrick McHenry, Chairman of the House Financial Services Committee, this bill represents the first comprehensive attempt to establish a regulatory framework for cryptocurrencies at the federal level.
“FIT 21 is Patrick McHenry’s legacy and the first time Congress will vote on a regulatory framework for cryptocurrencies. This is a moment nearly a decade in the making,” Hammond emphasized. The bill has garnered significant attention and its amendments will be crucial in shaping its final shape, appealing to both Democratic and Republican lawmakers.
Political and regulatory context
These legislative efforts come amid increased regulatory scrutiny from the SEC chaired by Gary Gensler and broader concerns expressed by the Biden administration regarding alleged risks associated with cryptocurrencies.
THE supports the administration that SAB 121 is vital to protect investors and maintain stability in the financial system. Conversely, many in Congress and the industry believe the SEC’s current approach hinders innovation and fails to provide clear compliance guidelines.
Additionally, the intersection of crypto politics and election year dynamics cannot be understated. With former President Donald Trump’s recent confirmations of cryptocurrency and its bipartisan potential, crypto policy is emerging as a major campaign issue.
“Trump’s entry into cryptocurrency carries little political risk, but the big benefits, given his bipartisan campaign wins, came in the primaries,” Hammond noted. This positions cryptocurrencies as a unique issue that could influence voter demographics, particularly among younger voters who have shown an ongoing interest in digital asset technologies.
At the time of writing, the total cryptocurrency market capitalization stood at $2.208 trillion, still 37% lower than its November 2021 all-time high.
Featured image by Ian Hutchinson/Unsplash, Chart at TradingView.com