The U.S. Supreme Court's recent decision to overturn the Chevron doctrine could complicate legislation to regulate the cryptocurrency industry and stablecoins, according to a note published today by investment bank TD Cowen.
The Supreme Court voted 6-3 on Friday to overturn a 40-year-old court decision that allowed federal agencies to interpret laws as they saw fit. This decision was seen as an advantage by many in the crypto industry, suggesting that institutions such as the Securities and Exchange Commission (SEC) will need to tread carefully in the future.
Jaret Seiberg, leader of TD Cowen Washington Research Group, said the following about the situation in his statement:
“The conventional wisdom after the Supreme Court took action is that the decision benefited the crypto industry. We partially agree, as this will help with future crypto challenges against SEC rules and practices. However, this decision does not change past decisions or open previous decisions to re-evaluation.”
But Seiberg highlighted a larger issue: What the decision means for lawmakers who want to introduce legislation to regulate the industry and stablecoins. In May, the U.S. House of Representatives passed the Republican-led Financial Innovation and Technology for the 21st Century Act (FIT21), which also received support from some Democrats. Meanwhile, lawmakers in the House and Senate are also considering bills to regulate stablecoins.
According to Seiberg, the Chevron decision “takes off the table the most common tactic for finding a bipartisan compromise: keeping the language vague to leave the final decision to the regulator.” This provides political benefits, as lawmakers can later criticize the regulator for not complying with Congressional intent, even if Congress has not clearly stated what should happen.
Seiberg also noted that lawmakers will need to go into detail about when a token will convert from a security to a commodity, among other details: “Neither side will no longer be comfortable relying on the regulator, as courts can now take a second look at these decisions.”
*This is not investment advice.
