The United States Congress is set to introduce legislation to regulate the cryptocurrency sector in the next two months. The House Financial Services Committee and House Agriculture Committee will work together to create the legislation after holding joint public hearings starting in May. Representative Patrick McHenry, chair of the House Financial Services Committee, said that the bill will address both securities and commodities regimes and issues that are hard to fix on either side. Senator Cynthia Lummis, the other panellist during the session, said she looked forward to coordinating those efforts with McHenry, adding that the House had a better chance than the Senate at getting legislation through earlier.
The U.S. Congress has so far been unable to get comprehensive legislation on crypto passed despite a number of bills making progress on Capitol Hill last year. However, this month Republicans on the House Financial Services Committee took a swing at finding bipartisanship support for a second effort at stablecoin legislation, though bipartisan support remains uncertain. Lummis, who has been dubbed the Senate’s “Crypto Queen,” had introduced the bipartisan “Responsible Financial Innovation Act,” aimed at creating a regulatory framework for the industry last year with Senator Kirsten Gillibrand.
A bipartisan bill introduced in both the U.S. Senate and House of Representatives on Thursday calls for the federal government to study crypto use cases for illegal activity, including studying how terrorists or other criminals might use cryptocurrencies. Last week, McHenry’s committee grilled U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler over his refusal to say whether ether (ETH), the second-largest cryptocurrency by market cap, was a security. While the deadlock in Congress between Republicans and Democrats continues, lawmakers have been facing increasing pressure to legislate the industry after the meltdown of the FTX crypto exchange and the more recent collapse in crypto banking.
McHenry also said that crypto’s recent role in the U.S. banking crisis, which has left the industry’s banking relationships strained, is fair to call “Operation Choke Point 2.0.” “We have to fix this problem, we have to provide certainty that you can bank in a safe and sound manner,” he said. “This is a great example of why Congress must legislate and provide clarity.” Meanwhile, jurisdictions such as the European Union have approved the Markets in Crypto Assets (MiCA) law, making it the first major jurisdiction in the world to introduce a comprehensive crypto law. Regulators in Japan and the United Arab Emirates have also moved toward regulating the space while Hong Kong and the UK are revisiting how they approach crypto.
During the Consensus 2023 event, McHenry and Lummis emphasized the need for the U.S. to catch up with other countries in regulating the crypto industry. Lummis mentioned the EU’s MiCA law and other efforts, saying “We are falling way behind. These countries are telling us to catch up.” The U.S. Congress’s inability to pass comprehensive crypto legislation has been a concern for many in the industry, and the recent banking crisis has only added to the urgency of the situation. McHenry and Lummis hope that the legislation they are working on will provide clarity and certainty for the industry, allowing it to continue to grow and innovate.