While crypto prices rallied last week, the public learned House Republicans are forming a cryptocurrency subcommittee. The announcement may spell the beginning of the end of U.S. regulatory ambiguity on blockchain and digital assets.
“Strange, isn’t it? Each man’s life touches so many other lives. And when he isn’t around, he leaves an awful hole, doesn’t he?” — Clarence, “It’s A Wonderful Life” (1946 Christmas drama about a banking panic).
Addressing a Big Hole
Rep. Patrick McHenry, a Republican from North Carolina’s delegation, said Thursday he’s planning to create the new crypto subcommittee.
He says it will address “a big hole in how we structure the committee” to reckon with crypto. McHenry was referring to the House Financial Services Committee, for which he is the incoming chair for the 118th U.S. Congress:
“We’ve got to respond for oversight and policymaking on a new asset class.”
The announcement of a new House crypto panel coincided with a massive crypto price bull run. Over $600 million in BTC shorts were liquidated as the Bitcoin price rallied to $21,000. The overall crypto market cap ballooned to $1 trillion as altcoins posted double-digit gains.
After a year-long roll to ever-lower support levels, the cryptocurrency exchange market has finally shown some spirit. Maybe all it needed was a little broad-based consumer confidence and the hope of some regulatory clarity.
After the fall of FTX in November, the Republican McHenry joined with Democratic Rep. Maxine Waters (CA) to call for a bipartisan crypto bill.
Following a series of devastating insolvencies among various crypto startups, consumers and investors may welcome congressional rulemaking. It could also clear up the future of many projects by resolving the turf war among U.S. regulators.
For example, the SEC has been pushing for control over the regulation of crypto. But the Commodity Futures Trading Commission says Bitcoin (BTC) and Ether (ETH) are commodities.
Meet The House Republican Who Could Decide Crypto’s Future
A rule issued by legislation from the Republican Congress might not mean burdens for the crypto industry. It certainly could, for instance, if Bitcoin were defined by law as security. But it might not go that way.
A year ago, the Republican financial services chair tweeted:
“Congress must fully understand these innovative new technologies, like #crypto. We don’t need knee-jerk reactions by lawmakers to regulate out of fear of the unknown.”
McHenry has also encouraged policymakers to question whether they are taking cryptocurrency seriously and understand it well enough to even make sensible propositions about it:
“Let’s be clear, this technology is already regulated. The question for policymakers is whether you know enough about this technology, which is neither fish nor fowl, to have a serious debate.”
One indication that new rules from the Republican-led crypto subcommittee might not be onerous is McHenry’s position on payday loan regulations. He supported a 2020 Trump-era Republican rule change to relax compliance burdens for payday lenders issuing high-interest loans.
His top contributors are Alphabet Inc, a tech titan; Signature Bank, a New York commercial banking giant; and MetLife, Inc., an insurance company. There is a lot of overlap there with the concerns and economics of the crypto business.
Whatever happens next, crypto and traditional finance markets will be watching and strategizing about their futures.
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