Congress Makes Progress on Cryptocurrency Regulations

News | June 12, 2024 By:

After years of little movement, Congress has suddenly seen bipartisan agreements form around cryptocurrency policy issues. In a surprise flurry of legislative activity in May, both the House and Senate voted on several cryptocurrency-related bills.

The increased focus comes after extensive lobbying from the cryptocurrency industry and signs that voters want lawmakers to address digital assets. The Blockchain Association reports that PAC donations and lobbying spending from crypto firms have rapidly risen. A new industry super PAC also says it has raised over $100 million to support crypto-friendly candidates.

The bipartisan breakthroughs started when the Senate and House passed a bill to overturn SEC guidance on how crypto assets should be accounted for by institutional holders, known as SAB 121. While that bill was vetoed, it notably earned support from Senate Majority Leader Chuck Schumer. Days later, the House approved a comprehensive crypto regulation called the FIT 21 Act, with backing from 71 Democrats.

Experts say these floor votes exposed which lawmakers were willing to take a stance on cryptocurrencies. While crypto opponents have primarily been Democrats, votes showed growing acceptance across party lines. Now, bipartisan agreements in Congress are laying the foundation for possible regulations next year.

However, with the election looming, significant crypto legislation faces long odds this session. Neither chamber has had time to fully negotiate bills. And the White House hasn’t endorsed proposals in their current forms. Still, Congress is expected to build on 2023’s work. As House Financial Services Chair Patrick McHenry proclaimed, “crypto law is inevitable.”

All signs point to the FIT 21 Act as the most likely starting point for next year’s discussions. It would give oversight of digital assets to the CFTC and lay out a framework for which fall under SEC jurisdiction. Industry groups are identifying potential concerns with the bill to raise with lawmakers as it evolves.

Stablecoin regulation also remains a priority, though no legislation has reached the floor yet this year. If House Democrats and Republicans can reach a compromise, it could attach to a must-pass bill and advance more smoothly through the Senate. Treasury Secretary Janet Yellen supports stablecoin rules, and the White House wants to find a path forward.

While 2023 may end without new laws, Congress has turned a corner on cryptocurrency policy through bipartisan cooperation. These agreements set the stage for meaningful regulations that have a chance of passing once the new year begins.