Congress needs to get its “act together” to regulate cryptocurrencies, said Rep. French Hill, chair of a newly formed digital asset-focused House Financial Services subcommittee.
“We all have a front row seat to what happens in Congress if we don’t get our act together,” Hill, R-Ark., said in pre-recorded remarks on Tuesday at the DC Blockchain Summit. “Businesses will leave the U.S. to go elsewhere while the agencies are taking major steps to crack down on the crypto blockchain digital asset industry.”
Hill said Congress should first pursue legislation instead of being “replaced by enforcement actions or regulatory guidance from the regulatory agencies.” Though he didn’t name names, the Commodity Futures Trading Commission and particularly the Securities and Exchange Commission have been busy this year bringing enforcement actions against crypto firms and individuals.
The SEC brought a record number of crypto related enforcement actions in 2022, and it doesn’t seem to be slowing down this year. The SEC moved against crypto exchange Kraken over its staking services and also brought charges against Terraform Labs and its CEO Do Kwon last month. Decentralized company Sushi was also recently reported it was hit with a subpoena from the SEC.
Congress is at a crossroads, and the first step is to pick up on stablecoin legislation, Hill said.
In the last Congress, now-House Financial Services Committee Chair Patrick McHenry, R-N.C., along with former Chair Maxine Waters, D-Calif., worked behind the scenes to figure out a deal on how to regulate stablecoins. That draft legislation included creating a federal framework around stablecoins and temporarily banning the types of payment coins that are not backed by outside assets. But McHenry blamed the Treasury Department for holding up the talks.
Now, Hill said he wants the Treasury and the Federal Reserve to be “constructive partners” in continued work on stablecoins.
The Treasury Department, along with other agencies, released a stablecoin report in 2021. While Treasury Secretary Yellen said then that stablecoins have the potential to "support beneficial payment options," she argued that a lack of oversight presents risks to people and the larger system.
“We need House and Senate Democrats to work with us because that in turn will perhaps have a good stable working relationship with the Biden administration,” Hill said. “The Treasury and the Fed were constructive partners in our stablecoin work last year and we want that to continue.”
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