US Senators Unveil Comprehensive Bill for Crypto Market Regulation

On January 13, U.S. senators revealed draft legislation aimed at establishing a comprehensive regulatory framework for the cryptocurrency market. This move seeks to clarify the jurisdiction of financial regulators over digital assets, potentially enhancing their acceptance within the financial ecosystem.

Key Features of the Proposed Legislation

The new bill is significant for various reasons:

• Definition of Tokens: It outlines the classification of crypto tokens as securities, commodities, or other types.
• Regulatory Authority: The U.S. Commodity Futures Trading Commission (CFTC) would gain authority over spot crypto markets, as it is favored by the industry.
• Stablecoin Provisions: The bill addresses stablecoin regulations, a concern for banks regarding financial stability.

Banking Industry Concerns

Bank lobbyists are raising alarms about provisions in the proposed legislation that they believe could lead to deposit outflows from insured banks. They argue that allowing intermediaries to offer interest on stablecoins endangers financial stability.

Crypto Industry’s Position

In response, the crypto sector contends that restricting interest payments on stablecoins is anti-competitive. Summer Mersinger, CEO of the Blockchain Association, criticized the banking sector’s influence, arguing that it stifles innovation.

Legislation Specifics

The current draft of the bill prohibits crypto firms from paying interest for simply holding stablecoins. However, it does allow for rewards related to specific activities, like making payments or participating in loyalty programs. The SEC and CFTC must collaborate to establish clear guidelines for disclosures regarding rewards tied to stablecoins.

Legislative Process

Upcoming discussions will occur in the Senate Banking Committee, with potential amendments being considered. The Senate Agriculture Committee is also developing its version of the bill, set to meet later this month.

Political Context and Industry Engagement

The legislation’s development occurs against a backdrop of heightened political activity from the crypto industry. The market has heavily invested in promoting pro-crypto candidates ahead of the 2024 elections, with hopes of pushing this bill forward. Although the House had passed its version in July, Senate discussions stalled, particularly over anti-money-laundering provisions.

With the approach of the 2026 midterm elections, there are doubts about whether the cryptocurrency market structure bill will be enacted into law. Industry executives worry they may have to depend on regulatory guidance, which remains vulnerable to change with shifts in administration.

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