The US Senate Banking Committee’s draft legislation regarding the structure of the cryptocurrency market contains unexpected surprises for leading figures in the industry.
Rebecca Rettig, who participated in part of the negotiations and also serves on the Commodity Futures Commission’s (CFTC) Subcommittee on Digital Assets, said that some clauses in the draft text raised serious questions for both the industry and regulators.
Following recent developments, the Senate Banking Committee has postponed its consideration of the cryptocurrency market structure bill. It is reported that Coinbase’s objections, after withdrawing its support for the final version of the bill, played a significant role in this decision.
According to Rettig, one of the biggest points of disagreement is whether or not returns can be paid on stablecoins. While rewarding stablecoin balances would be a significant revenue stream for crypto companies like Coinbase, banks are concerned that this practice would disrupt their deposit structure. Coinbase CEO Brian Armstrong is reportedly therefore wary of the draft.
Another controversial aspect of the draft is the tokenization of real-world assets. New regulations regarding the representation of securities on the blockchain, which could potentially restrict the SEC’s powers, have caused unease among industry players. Furthermore, it remains unclear how decentralized finance (DeFi) applications, which operate entirely on-chain and without intermediaries, will be regulated.
The draft law, which is over 200 pages long, has undergone numerous changes compared to the initial text published in September, and it is noted that the additional provisions that have emerged in the last 48 hours have not been adequately evaluated by the sector. In particular, concerns have been raised that regulations concerning surveillance, DeFi privacy, and the Treasury Department’s jurisdiction could push the draft to a more negative point for the sector.
Rettig noted that this regulation is one of the broadest financial regulatory initiatives since the Dodd-Frank Act, and said that reconciling both the crypto sector and banks in the same text is difficult but possible. It is stated that the bill’s process in the Senate may be resumed in the last week of January after further consideration. However, uncertainty remains both within the sector and among lawmakers regarding the final form of the draft.
*This is not investment advice.