The cryptocurrency sector is actively lobbying politicians in Washington to enact new laws regulating money.
Coinbase (COIN), a cryptocurrency exchange, and more than 50 entrepreneurs of cryptocurrency businesses have been at the forefront of the movement, dubbed “Stand with Crypto,” which has gained support from many other cryptocurrency companies. On Wednesday, they went to Capitol Hill to alert lawmakers that if they didn’t enact new, business-friendly regulations, they would be forced to send jobs abroad.
In a one-on-one discussion with Yahoo Finance Live, Coinbase CEO Brian Armstrong expressed, “This will resemble our 5G or semiconductor turning point, where, in five years, we’ll be pondering how to repatriate this if we don’t take action now.”
“We lack well-defined regulations similar to 83% of other G-20 nations regarding cryptocurrency regulation, safeguarding consumers, and fostering innovation within the United States,” he asserted.
One option that Coinbase and others have fought for is legislation that the House Financial Services Committee approved this summer on a bipartisan basis. That law aims to clarify any discrepancies between the Securities and Exchange Commission’s (SEC) and Commodity Futures Trading Commission’s (CFTC) guidelines, as well as specify the conditions under which a cryptocurrency token would fall under either classification. Additionally, it aims to specify the steps businesses must take in order to register with the SEC and calls on the SEC to create new regulations specifically designed to regulate cryptocurrencies. The House is likely to pass the legislation this fall, despite the fact that members have recently been preoccupied with other issues, such as the impending government shutdown, the Farm Bill, and the National Defence Authorization Act, both of which must be passed.
Analysts predict that the Senate won’t take any action on the crypto legislation in any event.
We don’t see a way to solve this problem by the end of 2024. Democrats oppose giving the CFTC control over such a large portion of the cryptocurrency world because it lacks expertise in protecting small-scale investors, according to TD Cowen analyst Jaret Seiberg. On the contrary, cryptocurrency aims to diminish the SEC’s power while bolstering the authority of the CFTC.
However, Armstrong asserts that he believes there are a number of plausible locations where new regulations might end up and that lawmakers have assured him that they are all acutely aware of the dangers of doing nothing. He expects that the House bill would complement the extensive, comprehensive legislation that Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) have proposed to regulate the cryptocurrency business in the upper chamber.
Armstrong informed Yahoo Finance, “I’m open to any of them. What’s important to me is having well-defined regulations. The current approach from the SEC seems to be regulation through enforcement, or what some might consider harassment. It involves startups in the industry receiving subpoenas or Wells notices, and this approach is not viable in the long run,” he added.
Armstrong issued a warning that the legal system will be compelled to make a decision if Congress doesn’t pass legislation.
“At present, the SEC has experienced defeats in all three of the latest court cases. Consequently, Armstrong believes that the courts are repudiating their approach. He also mentioned that many of the legislators’ desired outcomes may not be favourable should this ultimately reach the Supreme Court.”
Smaller crypto company leaders joined the larger effort on Capitol Hill in an effort to convince lawmakers that the sector can contribute to economic growth.
Nina Blankenship, co-CEO of Crypto Tutors LLC, an Orlando, Florida-based black- and minority-owned company that provides Web3 and blockchain education, said: “It’s really important that everyone understands that blockchain technology is used across multiple different industries, from supply chain, financial services, to retail, communications, and security.”
‘Fraud, manipulation, and scams’
Gary Gensler, the chair of the SEC, appeared before the House Financial Services Committee on Wednesday when Armstrong and other crypto small business leaders were on Capitol Hill and reiterated his belief that the crypto industry is “rife with fraud, manipulation, and scams.”
According to Gensler, “The American public is still suffering as a result of the noncompliance in this field.” Unfortunately, we filed multiple lawsuits in this area in an effort to defend the American people and act as a vigilante against so many of these schemes.
The SEC’s attitude towards regulating cryptocurrency, according to Coinbase and a large portion of the industry, has turned hostile.
Despite the SEC’s wishes, he stated, “Everyone deserves equal treatment under the law, and the SEC cannot continue to punish cryptocurrency.”