U.S. Crypto Legislation: A Long-Awaited Solution or a Pipe Dream?
The crypto industry has been pleading for issue-specific legislation in the U.S. for years, in the hopes that this legislation may create clear permissions for companies to develop and issue tokens, manage blockchain networks or otherwise operate free of the concern that regulators may come knocking.
Current State of Affairs
The closest Congress has gotten so far is the Financial Innovation and Technology for the 21st Century Act, a House bill supported by Financial Services Committee Chair Patrick McHenry (R-N.C.).
With a limited number of working days left in the year, the chances for crypto legislation moving through the Senate are slim. So, what could happen, and what are the potential roadblocks?
What Could Happen
The House bill, if passed, could create a framework for the regulation of cryptocurrencies, making it easier for companies to operate and for investors to participate. The bill includes provisions for the oversight of cryptocurrencies by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
Another possibility is that Congress might choose to pass a smaller-scale bill that focuses on a specific aspect of cryptocurrency regulation, such as the taxation of cryptocurrency income.
Alternatively, Congress could opt to do nothing, allowing the regulatory landscape to continue evolving through case law and guidance from regulatory agencies.
Potential Roadblocks
One major roadblock to passing cryptocurrency legislation is the lack of agreement on what constitutes a “security” in the context of cryptocurrencies.
Regulators have struggled to define whether cryptocurrencies are considered securities, commodities, or something entirely new. This ambiguity has led to inconsistent enforcement and a lack of clear guidance for companies.
Another roadblock is the partisan divide in Congress, with Democrats and Republicans holding different views on the regulation of cryptocurrencies.
For example, some Democrats have called for stricter regulation of cryptocurrencies, while Republicans have argued that they should be regulated more lightly.
Conclusion
The passage of cryptocurrency legislation in the U.S. is far from guaranteed. Despite the efforts of the House Financial Services Committee, the lack of agreement on the definition of a “security” and the partisan divide in Congress are significant obstacles to overcome.
Nevertheless, the crypto industry remains hopeful that legislation will be passed, and many companies are continuing to push for change.
FAQs
- What is the Financial Innovation and Technology for the 21st Century Act?
This is a House bill supported by Financial Services Committee Chair Patrick McHenry (R-N.C.) that aims to create a framework for the regulation of cryptocurrencies.
- What are the potential roadblocks to passing cryptocurrency legislation?
The lack of agreement on the definition of a “security” in the context of cryptocurrencies, as well as the partisan divide in Congress, are significant obstacles to overcome.
- What could happen if cryptocurrency legislation is passed?
It could create a framework for the regulation of cryptocurrencies, making it easier for companies to operate and for investors to participate.
- What is the current state of affairs in terms of cryptocurrency regulation?
The closest Congress has gotten to passing cryptocurrency legislation is the Financial Innovation and Technology for the 21st Century Act, a House bill that includes provisions for the oversight of cryptocurrencies by the SEC and the CFTC.
