While the cryptocurrency industry has experienced a significant downturn in the past month, the atmosphere in DC remains surprisingly optimistic. On Tuesday, some of the country’s most influential lawmakers, regulators, and cryptocurrency advocates gathered in downtown Washington for the annual DC Blockchain Summit, a long-standing event since 2016. During the summit, speakers drew parallels between the growth of cryptocurrency and transformative inventions like the internet, the iPhone, and even the airplane. Senator Cory Booker even joked that if today’s regulators were around in the 1900s, the Wright brothers would never have achieved flight.
Attended by over 800 people, the summit demonstrated the multitude of crypto supporters on Capitol Hill and highlighted the ongoing efforts to facilitate the growth and normalization of the industry. Here are the main takeaways from this influential event.
A Collaborative Effort to Boost Crypto Adoption
Two prominent senators, Kirsten Gillibrand and Cynthia Lummis, joined forces to discuss their joint effort in spearheading a crypto bill called the Responsible Financial Innovation Act. Despite their ideological differences as a progressive New Yorker and a conservative from Wyoming, the senators shared a common goal of advancing crypto adoption.
The bill primarily aims to assign regulatory jurisdiction of cryptocurrency to the Commodity and Futures Trading Commission (CFTC), an agency historically more supportive of the crypto industry compared to the U.S. Securities and Exchange Commission (SEC). Currently, the SEC and CFTC, along with other governing bodies, are vying for control over crypto regulation. Lummis emphasized the bill’s objective to maintain a “light regulatory touch” to accommodate the rapid pace of innovation in the crypto space. Gillibrand expressed optimism regarding the bill’s release next month, with hopes of a vote by the end of this congress or early next year. Both senators emphasized the non-partisan nature of their collaboration.
Growing Support for Crypto Among Congress Members
Apart from Gillibrand and Lummis, other congresspeople also championed the cause of cryptocurrency. Senators Steve Daines (Republican) from Montana and Cory Booker (Democrat) from New Jersey made personal appearances at the summit. Booker, in addition to discussing crypto, also highlighted the potential of cryptocurrency to promote financial inclusion for marginalized communities. He noted that communities of color view traditional financial institutions with skepticism due to a history of discrimination, and thus turn to decentralized options for a more equitable playing field.
Representatives Tom Emmer, Darren Soto, and Stephen Lynch lent their support through pre-recorded videos, endorsing the conference and affirming their commitment to nationwide adoption of cryptocurrency. Soto even stressed the potential of blockchain technology to tackle complex issues facing the United States. The increased activity surrounding crypto legislation on Capitol Hill was underscored by Christy Goldsmith Romero, a CFTC commissioner, who stated that there are currently 42 bills related to digital assets under consideration in Congress.
Regulatory Caution amidst Optimism
Despite the prevailing optimism, there was one regulator who expressed a more cautious stance. Michael Hsu, the acting director of the Office of the Comptroller of the Currency, which oversees national banks and could play a crucial role in regulating stablecoins, voiced his concerns about the industry. Hsu criticized the “hype” surrounding crypto and highlighted the systemic vulnerabilities that exist within the system. He mentioned recent hacks affecting blockchain bridges, the contagion risks arising from the collapse of certain cryptocurrencies, and the lack of clarity regarding digital ownership.
Hsu emphasized the need for the OCC to adopt a careful and cautious approach toward crypto regulation to ensure the safety, soundness, and fairness of the national banking system.
Internal Differences at the SEC
The summit witnessed a spotlight on SEC Commissioner Gary Gensler, who has voiced skepticism about cryptocurrency in recent years. Perianne Boring, the founder and president of the Chamber of Digital Commerce, the hosting organization, openly criticized the SEC as the primary roadblock to the industry’s progress. Boring’s sentiment was echoed by SEC Commissioner Hester Peirce, who holds a more crypto-friendly perspective compared to Gensler.
During a panel discussion on regulation and innovation, Peirce criticized the SEC’s enforcement-oriented approach, advocating for a more balanced regulatory approach that fosters innovation. She remarked that the current balance is skewed in favor of enforcement.
A Long Road Ahead for Crypto Legislation
While the summit generated enthusiasm, the diversity of perspectives, governing bodies, and potentially conflicting initiatives indicate that it may take years to establish comprehensive legislation for cryptocurrency. Gillibrand explained that her and Lummis’s bill would undergo scrutiny by four different congressional committees, each with a lengthy agenda. Additionally, President Biden’s executive order on digital assets, released in March, will not produce direct legislation but rather a series of reports examining the benefits and risks of crypto.
Perianne Boring emphasized that significant policy changes in the crypto space should not be expected this year and cautioned that the legislative process would span multiple years.
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