Discussions about the U.S. crypto bill continued among congress members even though there will be no markup hearings this week. The senate banking members and industry representatives met in secret and revealed that their discussion was effective.
The Current State Of The U.S. Crypto Bill
Based on the report by Fox journalist, Eleanor Terrett, those that attended the meeting came out optimistic that progress was being made on the crypto bill. The session was chaired by Senate Banking Committee Chairman Tim Scott and both sides of Congress were present.
The meeting also aligned with an earlier crypto bill draft timeline outlined by Scott. Sources told Terret that senators debated on the new language of the crypto bill and sought deeper questions. However, the tone was positive, cooperative, and aimed at solving the any outstanding differences.
Senators, Mark Warner and Catherine Cortez Masto, who are Democrats, were also active participants during the meeting. Those who attended claimed that the two legislators put tough questions to industry officials and committee employees.
Even though formal markup is not expected until next year, discussions and negotiations hasn’t stopped.
What Problems Are Holding Up The Crypto Bill?
There are three areas of policies that are yet to be agreed upon and are still under discussions. The first is token classification and the definition of securities and commodities. Clarity to these issues will determine crypto areas where the SEC or CFTC should exercise oversight authority.
Industry participants are already providing clarity for regulators, with Coinbase responding to the CFTC regarding crypto market rules. In addition, a regulatory framework would help decrease the enforcement ambiguity for crypto projects and exchanges.
The second issue is about stablecoins, particularly, interest payments and rewards. There is a debate among lawmakers on ways that issuers can package incentives such that it doesn’t resemble a bank-like product.
There’s need for clear stablecoin rules due to their importance in terms of payment settlements, as well as the tokenized asset markets. Regulators desire protections without necessarily inhibiting innovation or dollar-linked digital assets.
The third area that is not resolved is decentralized finance (or DeFi). There is debate among lawmakers over the application of compliance rules to protocols that lack central operators.
Will Crypto Classification Unlock Institutional Confidence?
The response of the industry to the meeting emphasized why there’s a problem regarding token classification. Using XRP as an example, a commentator said that a more effective classification would open up the path to more institutional involvement.
The final crypto bill should transform the issuance, trade, and regulation of digital assets. The regulatory clarity has already affected demand narratives at the state front as observed in the advanced crypto bill in Indiana.
It can also affect market players’ confidence over the long-run. Progress on the bill is likely to be resumed by legislators at the beginning of the next year.
