In a highly contentious move, House Republicans recently introduced a bill focused on regulating the crypto market structure. However, the proposal has faced immediate pushback from Democrats on the House Agriculture Committee, who criticize the bill for allegedly favoring the crypto industry with unnecessary privileges.
The bill, titled the Financial Innovation and Technology for the 21st Century Act, was introduced by House Agriculture Committee Chair Glenn Thompson, R-Pa., along with Rep. French Hill, R-Ark., and Rep. Dusty Johnson, R-S.D.
The main objective of the bill is to grant the Commodity and Futures Trading Commission (CFTC) increased authority over the crypto market, specifically with regard to digital asset commodity markets.
It also aims to provide clear definitions for crypto assets as either “securities” or “commodities.” While the Republican proponents of the bill argue that it will bring much-needed regulatory clarity to the rapidly evolving crypto landscape, Democrats are expressing concern that the proposed legislation may create unnecessary advantages for the industry.
Is Crypto Regulation a Top Priority?
The introduction of this bill has sparked debates about the urgency of crypto regulation compared to other pressing financial and agricultural issues in the United States. Hilary Allen, a professor at the American University Washington College of Law, questioned the timing and necessity of swift crypto regulation in a series of tweets. Allen suggested that there might be more pressing matters facing the American public, indicating that resources could be better allocated elsewhere.
House Agriculture Committee Democrats echoed Allen’s sentiments on their official Twitter account. They criticized House Republicans for prioritizing the regulation of the crypto market over other critical issues, such as the Farm Bill. Democrats accused the Republicans of trying to provide favorable treatment to crypto exchanges, Wall Street, and Silicon Valley venture capitalists, potentially at the expense of ordinary American consumers and retail investors.
The SEC’s Role and Controversial Perspectives
The debate over crypto regulation also delves into discussions about which regulatory body should oversee the industry. Hilary Allen aligned her stance with Gary Gensler, the Chair of the Securities and Exchange Commission (SEC), who believes that the SEC should be responsible for overseeing the crypto market. Gensler has repeatedly argued that cryptocurrencies do not need their own separate set of rules and that existing securities laws can be applied to the industry.
Allen emphasized that blockchain-based businesses should comply with existing securities laws. However, she criticized blockchain technology, stating that it is not as efficient as some proponents claim. Furthermore, Allen raised concerns about fraudulent practices, such as “pump and dump” schemes, where assets are artificially inflated and then quickly sold off for profit. She asserted that the SEC should take an active role in curbing such practices and ensuring the safety of client assets on crypto exchanges.
Conclusion
While the Financial Innovation and Technology for the 21st Century Act faces an uphill battle in garnering Democratic support, it has received backing from influential committees, including the House Financial Services Committee. However, the bill’s future remains uncertain, as it lacks the bipartisan support necessary to be signed into law by President Joe Biden. The debate surrounding this legislation underscores the complexity and divisiveness of crypto regulation and its implications on the broader financial landscape. As the crypto market continues to grow, policymakers will grapple with finding the right balance between innovation, investor protection, and regulatory oversight.
