US Stablecoin Bill Hits Pause: New Delay Sparks Criticism
The House Financial Services Committee’s decision to delay a vote on stablecoin and crypto trading legislation by a week has caused a stir.
Previously scheduled for July 17, the rescheduling to July 26 marks another chapter in the United States’ complex stance on crypto regulation.
US Stablecoin Bill Sparks Debate
The legislation, designed to “provide for the regulation of payment stablecoins, and for other purposes,” has sparked bipartisan debate.
On one side, Democratic lawmakers continue to display skepticism. They align with industry advocates who contend that current securities laws are robust enough to manage cryptocurrencies.
“It proposes a cumbersome framework with inherent structural issues that will undermine the ability of our federal financial regulators to properly regulate and oversee an industry already rife with instability and fraud,” Rep. David Scott said.
On the other side, Republicans, spearheaded by Reps. French Hill and Patrick McHenry, see the need for new legislation to regulate digital assets. They have turned towards the Commodity Futures Trading Commission (CFTC) as a preferred regulator.
The goal is to marginalize the Securities and Exchange Commission’s (SEC) reach into the crypto industry.
“[We want to put out a stablecoin] bill that deals with both the capital raising piece for digital assets all the way through how a product goes from a securities regime to a commodities regime. At the same time, [we want to] preserve our right around products that [fit] neither neatly into the securities or commodities regime and the ability for people to exchange those,” McHenry said.
Read more: This Congressman Wants to End America’s War on Crypto
Recent developments in the SEC’s case against Ripple Labs could potentially influence the proceedings. A landmark ruling by federal Judge Analisa Torres stated that Ripple’s XRP sales to institutional investors violated securities laws.
Still, other sales, notably those to everyday investors on crypto exchanges, were exempt from these rules.
“The ruling gives large institutional investors greater protections than everyday Americans. Outcomes like this are what happens when regulators force courts to make policy instead of Congress. Our comprehensive market structure legislation will give all investors, customers, and market participants the same longstanding protections found in traditional financial markets,” McHenry stated.
The Influnce of SEC vs. Ripple Ruling
The verdict’s ramifications extend beyond Ripple, sending waves throughout Wall Street and Silicon Valley. The investor protections granted to registered investment products, it appears, do not extend to retail traders.
This discrepancy, as Howard Fischer, former senior trial counsel at the SEC, points out, is “almost counterintuitive.”
The implications of this ruling have given Republicans an opportunity to rally support for their proposed stablecoin bill. However, they face staunch opposition from Democrats. They generally support SEC Chair Gary Gensler’s position that most crypto activity falls under the SEC’s jurisdiction.
Read more: Senator Elizabeth Warren Wants to Form an Anti-Crypto Army
The House Agriculture Committee also expected to debate and vote on the legislation. The anticipation surrounding these discussions is heightened by their potential implications for the future regulatory framework of cryptocurrencies. Especially Bitcoin, the largest digital asset viewed as a commodity.
The delay of one-week for the stablecoin bill may provide a breather for all parties involved, allowing for more negotiation and changes.
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