US Senators Unveil Long-Awaited Legislation to Establish Crypto Market Regulations

U.S. senators late on Monday unveiled draft legislation aimed at establishing a regulatory framework for cryptocurrency. If enacted, this law would clarify the jurisdiction of financial regulators over the rapidly growing sector, potentially enhancing the adoption of digital assets.

The cryptocurrency industry has long advocated for such legislation, arguing that it is crucial for the future of digital assets in the U.S. and essential for addressing longstanding issues faced by crypto companies.

One of the key components of the proposed legislation is the definition of when crypto tokens are classified as securities, commodities, or other categories. This would provide the industry with the long-sought legal clarity it has been pursuing.

Additionally, the bill would empower the U.S. Commodity Futures Trading Commission (CFTC)—the preferred regulator of the industry—over the U.S. Securities and Exchange Commission (SEC) to oversee spot crypto markets.

Moreover, the legislation addresses a concern raised by the banking industry regarding a loophole in last year’s law that established a federal regulatory framework for dollar-pegged crypto tokens, known as stablecoins. Bank lobbyists have urged Congress to close this loophole, which they believe allows intermediaries to pay interest on stablecoins, potentially leading to a flight of deposits from the insured banking system and threatening financial stability.

In response, crypto companies have countered that prohibiting third parties, such as crypto exchanges, from offering interest on stablecoins would be anti-competitive.

“What is threatening progress is not a lack of policymaker engagement, but the relentless pressure campaign by the Big Banks to rewrite this bill to protect their own incumbency,” stated Summer Mersinger, CEO of the Blockchain Association, a trade group representing the crypto industry.

“Their demands to eliminate stablecoin rewards are designed to choke off consumer choice and kill innovative financial products before they can compete.”

The proposed bill, which may undergo changes as senators consider amendments, would prohibit crypto companies from paying interest to consumers solely for holding stablecoins. However, it would allow them to offer rewards or incentives for specific activities, such as making payments or participating in loyalty programs.

Furthermore, the SEC and CFTC would be mandated to issue a joint rule requiring clear disclosures from crypto companies regarding rewards associated with the use of stablecoins.

‘CRYPTO PRESIDENT’

The Senate Banking Committee is set to debate the bill and consider potential amendments on Thursday. Meanwhile, the Senate Agriculture Committee, which is drafting its own version of the legislation, will convene later this month to discuss its proposals.

“It is encouraging to see the process continue to move forward,” remarked Cody Carbone, CEO of the Digital Chamber, a crypto industry trade group.

“We will remain actively engaged to improve the text as the bill continues to evolve and are encouraged by the continued momentum to advance a market structure bill this year,” he added.

Former President Trump had courted industry support by pledging to be a “crypto president,” and his family’s ventures in the crypto space have helped propel the sector into mainstream awareness.

The industry invested heavily in the 2024 elections to support pro-crypto candidates, hoping to see this landmark market structure bill successfully passed. While the House of Representatives approved its version of the bill in July, discussions in the Senate stalled last year due to divisions over anti-money laundering provisions and requirements for decentralized finance platforms.

As Congress shifts its focus to the upcoming 2026 midterm elections, where Democrats may regain control of the House, some lobbyists express skepticism about the bill’s chances of becoming law. This uncertainty leaves crypto firms reliant on regulatory guidance that could be overturned by future administrations, according to industry executives.

Topics
USA

U.S. senators late on Monday unveiled draft legislation aimed at establishing a regulatory framework for cryptocurrency. If enacted, this law would clarify the jurisdiction of financial regulators over the rapidly growing sector, potentially enhancing the adoption of digital assets.

The cryptocurrency industry has long advocated for such legislation, arguing that it is crucial for the future of digital assets in the U.S. and essential for addressing longstanding issues faced by crypto companies.

One of the key components of the proposed legislation is the definition of when crypto tokens are classified as securities, commodities, or other categories. This would provide the industry with the long-sought legal clarity it has been pursuing.

Additionally, the bill would empower the U.S. Commodity Futures Trading Commission (CFTC)—the preferred regulator of the industry—over the U.S. Securities and Exchange Commission (SEC) to oversee spot crypto markets.

Moreover, the legislation addresses a concern raised by the banking industry regarding a loophole in last year’s law that established a federal regulatory framework for dollar-pegged crypto tokens, known as stablecoins. Bank lobbyists have urged Congress to close this loophole, which they believe allows intermediaries to pay interest on stablecoins, potentially leading to a flight of deposits from the insured banking system and threatening financial stability.

In response, crypto companies have countered that prohibiting third parties, such as crypto exchanges, from offering interest on stablecoins would be anti-competitive.

“What is threatening progress is not a lack of policymaker engagement, but the relentless pressure campaign by the Big Banks to rewrite this bill to protect their own incumbency,” stated Summer Mersinger, CEO of the Blockchain Association, a trade group representing the crypto industry.

“Their demands to eliminate stablecoin rewards are designed to choke off consumer choice and kill innovative financial products before they can compete.”

The proposed bill, which may undergo changes as senators consider amendments, would prohibit crypto companies from paying interest to consumers solely for holding stablecoins. However, it would allow them to offer rewards or incentives for specific activities, such as making payments or participating in loyalty programs.

Furthermore, the SEC and CFTC would be mandated to issue a joint rule requiring clear disclosures from crypto companies regarding rewards associated with the use of stablecoins.

‘CRYPTO PRESIDENT’

The Senate Banking Committee is set to debate the bill and consider potential amendments on Thursday. Meanwhile, the Senate Agriculture Committee, which is drafting its own version of the legislation, will convene later this month to discuss its proposals.

“It is encouraging to see the process continue to move forward,” remarked Cody Carbone, CEO of the Digital Chamber, a crypto industry trade group.

“We will remain actively engaged to improve the text as the bill continues to evolve and are encouraged by the continued momentum to advance a market structure bill this year,” he added.

Former President Trump had courted industry support by pledging to be a “crypto president,” and his family’s ventures in the crypto space have helped propel the sector into mainstream awareness.

The industry invested heavily in the 2024 elections to support pro-crypto candidates, hoping to see this landmark market structure bill successfully passed. While the House of Representatives approved its version of the bill in July, discussions in the Senate stalled last year due to divisions over anti-money laundering provisions and requirements for decentralized finance platforms.

As Congress shifts its focus to the upcoming 2026 midterm elections, where Democrats may regain control of the House, some lobbyists express skepticism about the bill’s chances of becoming law. This uncertainty leaves crypto firms reliant on regulatory guidance that could be overturned by future administrations, according to industry executives.

Topics
USA