After the
recent victory of XRP (Ripple) against the SEC, some US congressmen have called for moving forward with the approval of new crypto regulation in the US.
In fact, the so-called Crypto-Currency Act has been in the works
since 2020, and a bill was submitted to Congress last year, but it is still stalled.
The Crypto-Currency Act of 2020 has been renamed the Responsible Financial Innovation Act, and the bipartisan bill was introduced by Senators Cynthia Lummis and Kirsten Gillibrand, Republican and Democrat respectively.
Crypto regulation: the request from congressmen after Ripple’s (XRP) victory against the SEC
Senator Lummis herself commented on the Southern District Court of New York’s ruling saying that it further reveals the need to pass the Responsible Financial Innovation Act.
She was joined by House Financial Services Committee Chairman Patrick McHenry and House Agriculture Committee Chairman Glenn “GT” Thompson.
The two House Republicans issued a joint
press release stating that the New York court ruling underscored the need for Congress to provide clear rules for the digital asset ecosystem.
Indeed, they also highlighted how this ruling provides greater protections for large institutional investors, compared to ordinary investors, saying that situations like these are the result of what happens when regulators force the courts to be policymakers instead of Congress.
They state:
“The decision also recognizes what Republicans have said all along: there is a limit to the SEC’s reach.According to the court, digital assets may not be inherently securities, but can be offered as part of an investment contract in certain circumstances, which our legislation acknowledges.
Gary Gensler’s SEC cannot continue to pursue its regulation by enforcement approach, which only harms investors and creates uncertainty.”
McHenry and Thompson refer specifically to the bill that seeks to regulate the market structure of digital assets (Responsible Financial Innovation Act), saying it is essential to close the regulatory loopholes highlighted in this matter.
Republicans vs Democrats
As can already be inferred from these few pieces of information alone, it is mainly Republicans who want to regulate the
cryptocurrency market in a way that makes it legally accessible to everyone, including institutional investors.
Democrats, on the other hand, are less supportive, despite the fact that the Responsible Financial Innovation Act was also drafted by Senator Gillibrand.
Indeed, it is no coincidence that Gillibrand herself has not commented on the ruling against the SEC, perhaps to avoid clashes with her party.
Next year there will be a presidential election, and it is possible that the Democrats have chosen a hard line against the crypto markets, in the hope of thus gaining support after the bear-market of 2022.
However, they may have miscalculated, as the election will be held in November 2024, which is after the halving of Bitcoin and perhaps at a time when a new bull run will have started.
It is not at all improbable that the reason why the bipartisan bill by which the US could regulate crypto markets is stalled is primarily due to electoral disagreements between Republicans and Democrats.
Which is to say, it is a bill that originated as bipartisan the year after Joe Biden’s new Democratic administration was formed, but may have stopped being truly bipartisan at some point in the run-up to next year’s elections.
The bill
As of now, the clash that seems to be preventing the approval of the Responsible Financial Innovation Act is over specifics.
Indeed, the text drafted last year by Lummis and Gillibrand has already been revised and tweaked a few times, but without reaching broad enough approval to allow it to reach Congress for final approval.
In other words, it seems that somewhat all US Congressmen, with a few rare exceptions, are calling for a specific law to regulate crypto markets, but in practice this common and shared demand is running aground against two conflicting positions that are aimed at achieving consensus rather than properly regulating the crypto sector.
Possibly even the SEC is in some way contributing to this political clash, and perhaps doing so at the behest of the current Democratic government.
The SEC’s role after the defeat against Ripple (XRP) in creating a regulatory framework on crypto
In theory, the SEC is an independent government agency, but its chairman is appointed by the current president.
Indeed, the current chairman of the SEC, Gary Gensler, was appointed in April 2021, which was a few months after Joe Biden took office as president of the United States of America in January of that year.
Moreover, the same Gensler in 2009 had already been appointed by the previous Democratic president, Barack Obama, as chairman of the Commodity Futures Trading Commission (CFTC), which was also a few months after Obama took office as US president.
Previously under the presidency of another Democrat, Bill Clinton, he was appointed Under Secretary of the Treasury for National Finance and Assistant Secretary of the Treasury for Financial Markets.
It is hard to imagine that Gensler is not a Democrat, or that he is not a man of Democratic administrations in the United States.
While the SEC chairman does not have the power to govern the agency authoritatively, it is clear that his role is such that he can influence its decisions.
Hence, in this entirely political battle, it is very difficult to imagine that the SEC is behaving impartially.
On the contrary, it seems rather obvious that he is siding with the Democratic side, which, most likely for pure electoral convenience (allegedly), has turned against the more open position of the Republicans.
The future
In this sort of stalemate position, it is possible that nothing will change until next year’s elections, unless the Democrats change their minds at some point.
Political propaganda certainly follows sentiment, and this can also change very quickly.
This means that next year, with the
halving of Bitcoin, sentiment could also change, perhaps forcing Democrats to abandon their propaganda against crypto markets and thus become more amenable to the Responsible Financial Innovation Act.
Then again, it is hardly a coincidence that from 2020 to the first half of 2022 they were relatively supportive, and instead became generally opposed after last year’s crashes.
However, it is curious that many of the politicians funded by Sam Bankman-Fried, the co-founder and CEO of
FTX, were indeed Democrats, but perhaps it is the end of that funding campaign of his that has suddenly brought them to the other side.
What is surprising is how the US can allow itself to be overtaken by, for instance, the EU, simply for trivial propaganda issues in the run-up to the next election.
Precisely this year, the EU released its
MiCAr, which will go into effect next year, thus effectively overtaking the US when it comes to crypto regulation.However, this evidently matters little to US congressmen and senators, because their main interest lies elsewhere..
