The U.S. House Financial Services Committee took another important step towards what Representative Bryan Steil described as the “second half” of former President Donald Trump’s initiative for cryptocurrency: a proposed law intended to establish regulations for the U.S. crypto market, aiming for a completely regulated domestic industry.
According to Steil, who chairs the committee’s crypto subcommittee, progress on the first phase of Trump’s agenda is well underway, highlighted by stablecoin legislation making headway in both congressional chambers. A hearing on Wednesday focused on the anticipated digital assets bill designed to shape the framework for crypto markets. These hearings serve as an essential step in the legislative process within Congress.
Representative French Hill, the Arkansas Republican overseeing the committee, announced that discussions are progressing towards unveiling a follow-up to last year’s Financial Innovation and Technology for the 21st Century Act (FIT21), which passed the House but stalled in the Senate.
“The committee has been collaborating with a variety of stakeholders, including government representatives and key players in the industry, to refine and enhance the market structure legislation,” Hill stated during the hearing. “We are actively working on a draft of the legislation that integrates feedback from various members and market stakeholders.”
Democrats on the committee frequently raised concerns regarding the Trump family’s involvement in the cryptocurrency industry, questioning legal representatives about potential conflicts of interest. Representative Maxine Waters, the senior Democrat on the committee, accused the group of attempting to position Trump as the “king of crypto” by enabling regulations that could allow him to dominate the stablecoin market and even create his own stablecoin.
Though witnesses generally avoided engaging with Trump-related inquiries, consumer advocate Alexandra Thornton, who testified on Wednesday, observed, “Several actions taken during the Trump administration have favored the crypto sector, including the reduction of enforcement personnel and the dismissal of numerous cases related to crypto.”
Legislation was also discussed concerning the roles of the Securities and Exchange Commission and the Commodity Futures Trading Commission in managing future crypto regulations, with deliberations focusing on how Congress should categorize various digital assets. The SEC’s approach to using securities law to determine which crypto tokens qualify as securities has caused significant legal uncertainties and led to enforcement challenges for the industry, despite some initial guidance from the agency on navigating legal standards.
“Market participants are still finding it difficult to implement these definitions,” remarked Tiffany Smith, a legal advisor for crypto clients at the law firm WilmerHale. She emphasized that these definitions become increasingly complex as a majority of crypto transactions occur on secondary markets, such as exchanges. “We need regulatory clarity,” she asserted.
Read More: U.S. House Stablecoin Bill Poised to Go Public, Lawmaker Atop Crypto Panel Says