Over the past several weeks, Congress has been holding multiple hearings on crypto and its role in the world, with the House Financial Services Committee taking the lead. Tomorrow, the House Agriculture Committee is set to discuss crypto regulation in yet another hearing. The crypto industry has long called for regulatory clarity, which could either come from a federal regulator providing formal guidance or rulemaking or from Congress passing a law defining those concerns.
Regulators, like the SEC or CFTC, have issued some proposed rules, although, so far, the industry’s hopes have been focused on Congress potentially taking action. However, there’s still uncertainty surrounding whether any actual legislation will move forward this year, given the setbacks like the stalled stablecoin bill.
Despite these challenges, lawmakers seem to be optimistic about passing a bill within the next year. Congressman Patrick McHenry, Chair of the Financial Services Committee, believes there is a path for legislation to become law this year, and he disclosed that a new bill addressing market structure issues would be introduced within two months. Senator Cynthia Lummis also appeared to be equally optimistic about the situation.
Wednesday’s hearing will feature former CFTC Chair and current Harvard Research Fellow Timothy Massad, who, in his written testimony, highlighted the lack of a federal spot market regulator for non-securities cryptocurrencies and the debate on how to classify a given crypto as a security or not. Massad proposed that Congress pass a law creating certain principles and standards that all exchanges would have to comply with, regardless of whether the token being listed is a security or a commodity. This solution would avoid expanding the definition of securities laws or creating a new category system for digital assets, while still encompassing the entire crypto market.
One of the key issues discussed during these recent hearings has been the lack of investor protection in the crypto market. As a result, the hearing is also expected to discuss a joint proposed resolution stating that Congress must provide further guidance for the SEC and CFTC on how to bring existing regulatory protections to the crypto sector.
As the hearings continue, it remains to be seen if any legislation will eventually become law, but it is clear that Congress is becoming increasingly active in addressing cryptocurrency regulation. In the meantime, the crypto community will continue to monitor the evolving landscape closely, hoping for a clear, coherent, and comprehensive regulatory framework that supports innovation and protects investors.