Crypto Bill Faces Challenges Despite Bipartisan Support
Senators are pressing ahead with an important cryptocurrency bill aimed at granting the industry greater control following a last-minute stall in committee voting.
The main sticking point revolves around finding common ground among Democrats, Republicans, the crypto sector, and banks—something that’s been in negotiation for months.
The latest version of the bill, revealed late Monday, was already facing hurdles by Wednesday afternoon. This came after Coinbase CEO Brian Armstrong tweeted that the company couldn’t support the proposed legislation. He raised several concerns, including a diminished role for the CFTC and restrictions on cryptocurrencies offering rewards to consumers.
In response to Armstrong’s tweet, Sen. Cynthia Lummis remarked, “This was the 1,000th slash of a 1,000 slasher who died.”
Shortly after Armstrong’s opposition, Banking Committee Chair Tim Scott (R-S.C.) officially canceled the hearing and scheduled it for an undisclosed later date.
Armstrong expressed surprise over some provisions of the bill introduced late on Monday. By the time Coinbase identified crucial issues, it was unfortunately too late to alter the markup.
“We have a chance to make another draft, and we hope to return to the markup in the next few weeks,” Armstrong stated.
Lummis indicated that another vote might not materialize until February or March. She mentioned, “I feel like I was hit by a Mack truck,” reflecting her disappointment as a strong crypto advocate in Congress.
“But we will return to the matter after this break and look for ways to amend the bill,” she added.
A significant debate surrounding the bill involves what rewards, if any, companies can provide to stablecoin holders. The Stablecoin Act’s language restricts virtual currency exchanges from offering interest on stablecoins while allowing them to give interest-like rewards.
Banks assert that this language risks moving hundreds of billions from traditional deposits to stablecoins. A report from the Fed indicates that if stablecoins could offer interest rates, it might lead to a credit crunch estimated at up to $1.2 trillion.
Armstrong mentioned that he wanted to communicate directly with bank CEOs regarding the matter, stressing the need for fair treatment of both sectors. “Cryptocurrency companies should be able to compete and provide loans just like banks,” he argued.
Furthermore, banks are gearing up for a push for better representation. A petition spearheaded by the American Bankers Association, with over 3,000 banks signing on, cautions that allowing crypto-based rewards like interest could “siphon trillions of dollars from local lending,” thus limiting funds available for auto loans, farm loans, mortgages, and small business financing.
Sen. Angela Allsbrooks (D-Md.) shared that she has been having discussions with both banking and cryptocurrency industry representatives, believing that a consensus might be achievable with additional negotiation time. “Everyone agrees that we have to make compromises to encourage innovation,” she added.
