21 Interest Groups Oppose US Republican Crypto Bill “Aiming for Regulatory Clarification”

Letter to House Committee

Twenty-one interest groups have issued an open letter expressing their strong opposition to the cryptocurrency bill currently under consideration by the US House Financial Services Committee. A letter sent to the committee and the House Agriculture Committee dated Nov. 11 criticized the bill as leading to “undermining consumer and investor protections in the name of ‘crypto innovation.’” ing.

The letter was sent by the Consumer Federation of America, the think tank Public Citizen, the Woodstock Institute for economic justice and racial equality, the corporate accountability lobby group American Economic Liberties Project, and Wall. Twenty-one groups, including financial reform Americans, are working to tighten regulations on the city.

The letter said that “much of the industry’s wounds,” including the collapse of FTX, were self-inflicted, due to a lack of basic financial controls and rampant fraud. Cryptocurrencies “still struggle to demonstrate viable use cases outside of speculative investment, even after 14 years,” and “the bright spot for cryptocurrencies is always over the horizon.”

Opponents appear to fear that “radical” legislation could pass the Financial Services Commission before its August recess due to “intense crypto industry lobbying.”

Problems with the bill

The letter points out the following points as problems with the bill:

• Changes to SEC’s mandate and powers: Require new rules to be evaluated on the basis of ‘innovation’ = ‘dangerous approach’, weakening SEC powers
• A blueprint for unregistered equity issuance: qualified as a decentralized network under certain conditions, enabling exemption from securities regulation
• Allowing Traditional Financial Institutions to Avoid Tighter Regulatory Oversight by Satisfying Decentralized Network Conditions
• A Process That Can Self-Certify As A Crypto “Commodity” Expects A Spike Of Crypto Companies Seeking Jurisdiction From The Commodity Futures Trading Commission (CFTC) Instead Of The SEC
• Giving the CFTC regulatory authority over cryptocurrencies and traders, but its mandate is vague and narrow
• CFTC’s responsibility will increase, but the budget to support its activities will not increase
• Relaxation of regulatory requirements for cryptocurrency securities = significant exemption for cryptocurrency issuers with annual revenue less than $75 million = risk of price manipulation
• Until the SEC and CFTC enact regulations, create a “safe harbor” that allows provisional registration for virtual currency platforms and issuers = risk of acquiescence to non-compliance

The letter warned that the bill would lead to the introduction of “a ‘cure’ that is far worse than a disease,” creating significant harm beyond the cryptocurrency industry. He argued that the “best course” for Congress to take to protect consumers was to “support the continued efforts of regulators” to apply “existing rules” rather than new legislation.

Establishing a functional regulatory framework

The interest groups oppose a discussion draft proposed in June by House Financial Services Committee Chairman Patrick McHenry and House Agriculture Committee Chairman Glenn Thompson, both Republicans. McHenry said the draft “provides a legal framework for digital asset regulation that is intended to provide clarity, fill regulatory gaps and foster innovation while providing adequate consumer protection.” explains.

The draft provides a path for classification of cryptocurrencies (commodities vs. securities) and also steps into the regulatory framework for payment stablecoins. The framework recognizes digital assets that are “deemed to be functional and decentralized” as “digital goods” and requires the SEC to provide “in-depth analysis” of any objection to corporate diversification.

Circle and Ava Labs testified at hearings before the House Financial Services Committee in mid-June, voicing their support for the bill.

connection:U.S. Lawmakers Take Two Initiatives Toward Comprehensive Crypto Regulation Bill

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