With the EU and countries around the world going full steam ahead on drafting and establishing regulations for the cryptocurrency market, it appears that the US Congress may finally be ready to discuss what many of us feel is the future of currency. Doing so will contribute much-needed stability to crypto trading and encourage investors of all stripes to take up crypto as a newly-legitimized asset.
At a CoinDesk event in April, House Representative Patrick McHenry (R-N.C.) affirmed that President Biden may be signing a regulatory bill for the crypto sector within the next 12 months. McHenry said the House is preparing to discuss such a bill following public hearings held in May.
Regulating cryptocurrency is considered to be a bipartisan issue as both parties have supporters who are keen on seeing the market stabilized and expanded – especially as inflation continues to rattle the values of fiat currencies around the world. Both the House and the Senate have been weighing different approaches, with the Senate coming the closest to passing legislation with last year’s Digital Commodities Consumer Protection Act of 2022. If the House can develop and pass a cryptocurrency bill first, it will move things along faster in the Senate, according to Senator Cynthia Lummis (R-Wyo.).
Chief among the concerns to be addressed in a regulatory bill for the cryptocurrency sector is its usage for illegal activities, including terrorism. Cybersecurity is another major factor as creating more protections against theft is paramount when stolen funds are untraceable. These are both big topics in and of themselves, but they represent only part of what Congress is attempting to outline with a regulatory bill.
With that said, however, Congress is not forging a new path here. As noted earlier, the EU and other countries have already rolled out cryptocurrency regulations (with the EU’s Markets in Crypto Assets [MiCA] rules passing in mid-May and poised to take effect next year) that can be readily referenced to ensure that all factors are taken into consideration. The US is certainly behind in this race, but still has a chance to catch up.
Under MiCA, cryptocurrency trading companies operating in the EU will need to be licensed to trade there. Importantly, they will be liable for repaying investors in the event of unusual asset loss. Other regulations include requiring trading companies to disclose how much energy is required for the trade to take place.
Along with possible solutions, however, precursor regulations in other governments also highlight challenges. For instance, in Germany, where regulations have been in effect for years, there are approximately 20 companies awaiting operating licenses who are looking at wait times that are more than 800 days long. Clearly, introducing regulations without inadvertently blockading the sector is the more desirable path for crypto supporters and for Congress alike, but navigating to that outcome in a timely manner is no easy task.
The resulting stop and start of the legislation process in the respective branches of Congress has undoubtedly led to the ongoing instability in the cryptocurrency market even as investors are increasingly looking for inflation-resistant assets.
Recently, of course, Congress has been focused on negotiating lifting the debt ceiling to prevent the country’s default. The House has passed the bill that will do just that, and, in a mark of good news for cryptocurrency supporters, it did not include an originally proposed section that would have taxed crypto miners at a rate of 30%.
With the debt ceiling now likely to be lifted, and no crypto mining tax in place, the crypto sector is rising once again. If Congress can successfully pass regulations, that’s a trend that will undoubtedly continue as investors increasingly look toward cryptocurrency as a premier inflation-resistant asset.