US Lawmakers Prepare to Tackle Landmark Crypto Bill

The cryptocurrency industry has long been asking Washington for more regulatory clarity.

This week could finally put the sector on the road to that goal, as U.S. lawmakers begin considering landmark legislation that would govern the digital tokens.

“Obviously we’ve had some important decisions come from the courts in the past, but this is by far the most significant legislative moment that we’ve had,” Kristin Smith, CEO of the Blockchain Association, told Reuters Wednesday (July 26).

Smith’s comments come as the House Financial Services Committee prepares to discuss a bill that would delineate when a cryptocurrency is a commodity or security. A second bill would provide regulations for stablecoins.

The legislation is scheduled to go before the financial services committee Wednesday, with the House Agriculture Committee taking up the matter Thursday (July 27).

As Reuters notes, this debate — putting the bills on the path to consideration by the full House — marks the first time such crypto regulations will be voted on by Congress.

The bills were advanced by House Republicans, but it’s not clear how much support they have on the other side of the aisle. The bills could also face pushback by the Democrat-controlled Senate, with Sen. Sherrod Brown, head of the Senate Banking Committee, having indicated he isn’t sure if the industry needs additional regulation.

“For anything to be sticky, it’s going to need some bipartisan backing,” Miller Whitehouse-Levine, CEO of the DeFi Education Fund, said in a Reuters interview.

Meanwhile, the ongoing uncertainty around the crypto industry continues to shake up the decentralized finance (DeFi) sector, as PYMNTS wrote earlier this week.

Trading volumes on DeFi platforms have fallen by more than three-quarters since January of last year, and volumes on centralized exchanges aren’t performing much better, declining nearly 69% in the same period.

“That’s because the crypto sector is increasingly embattled, as a historical lack of regulatory clarity empowered bad actors who then tarnished the industry’s reputation among retail and institutional investors, as well as policymakers,” PYMNTS wrote.

And even after a landmark court ruling in the Securities and Exchange Commission’s (SEC) case against Ripple, the outlook on Capitol Hill for crypto continues to shift as lawmakers seek to rein in what they view as a history of abuses.

“The digital asset space is muddled with regulatory uncertainty, lack of authority and a lacking framework for core operating principles,” Rep. Dusty Johnson of South Dakota, a Republican who sits on the agriculture committee, said recently.