In recent developments, the long-anticipated cryptocurrency legislation has faced unexpected hurdles. The Senate Agriculture Committee has introduced a revised draft aiming for a markup on February 10, highlighting significant shifts in regulatory focus.
Exclusions in Stablecoin Yield Management
The latest draft focuses primarily on empowering the Commodity Futures Trading Commission (CFTC), expanding its regulatory reach over major digital currencies such as Bitcoin (BTC) and Ethereum (ETH).
On the other hand, the Senate Banking Committee’s segment emphasizes the role of the Securities and Exchange Commission (SEC) and its regulatory scope. Notably, this new bill proposes a budget of $150 million to assist the CFTC as they take on these new responsibilities.
Industry analyst Sarah Johnson shared her thoughts on the draft’s provisions, indicating a positive trajectory for the industry. She noted that this bill could facilitate avenues for decentralized finance (DeFi) to navigate around CFTC regulations, providing essential protections for developers and service providers.
Moreover, the Agriculture Committee’s bill specifically avoids imposing any regulations on stablecoin yields. This decision is crucial, especially following Coinbase’s (COIN) recent withdrawal of support from the Banking Committee’s proposal due to concerns over yield restrictions.
In contrast, the Banking Committee’s draft intends to limit the yields that stablecoin services can present. This approach finds backing from traditional banks, who worry about the outflow of deposits; however, cryptocurrency firms argue that such limitations restrict market competition.
Conversely, the Agriculture Committee’s proposal envisions stablecoins being exempt from CFTC regulations, leveraging existing legislation like the stablecoin framework or the GENIUS Act, which ensures that stablecoins are fully backed.
Delays Surrounding the Banking Committee’s Crypto Bill
Chairman John Boozman of the Senate Agriculture Committee expressed his gratitude for the teamwork among lawmakers, highlighting contributions from Senator Cory Booker and others focused on consumer protection and CFTC authority.
Despite ongoing divergences in policy, the committee chair emphasized the significance of progressing the bill:
Even though agreement was not reached, I value the collaboration that enhances this legislation. It is crucial that we advance this bill, and I eagerly await the markup next week.
As the cryptocurrency sector watches closely, the timeline for moving this legislation forward remains ambiguous.
Recent reports from Bloomberg indicate that the Banking Committee is likely to postpone discussions about its portion of the bill, potentially delaying negotiations into late February or March.
Image source: OpenArt; data from TradingView.com
