Get ready for a ‘wicked hot summer’ of crypto legislative activity as the U.S. industry gears up for significant regulatory push, with former Rep. Patrick McHenry predicting a battle between stablecoin giants Tether and Circle will shape the final outcome of law governing U.S. stablecoin issuers.
The U.S. cryptocurrency industry is poised for a significant regulatory push in the coming months, with former Representative Patrick McHenry predicting a ‘wicked hot summer’ for legislating.
Crypto lobbying efforts have significantly increased in recent years, with industry players investing heavily in shaping regulatory policies.
In the United States, for example, major crypto companies have hired high-profile lobbyists to influence lawmakers and regulators.
According to a report by the Center for Responsive Politics, cryptocurrency-related lobbying spending has surged from $500,000 in 2017 to over $20 million in 2022.
This increased investment aims to promote favorable regulations and mitigate potential restrictions on the industry.
As a senior advisor at a16z, McHenry has been instrumental in shaping crypto legislation and now sees an opportunity for the industry to get good law under the current makeup of Congress.
The final outcome of the law governing U.S. stablecoin issuers will be shaped by a battle between stablecoin giants Tether and Circle. Both companies want to ensure they can operate in the U.S. market after Congress passes a law, with McHenry expecting a ‘reasonable landing spot’ to be found for Tether.
Stablecoins are a type of cryptocurrency designed to maintain a stable value relative to a fiat currency.
As their popularity grows, so does the need for effective regulation.
In 2020, the US Securities and Exchange Commission (SEC) charged Telegram with conducting an unregistered initial coin offering (ICO) through its Gram token.
This incident highlights the importance of clear guidelines for stablecoin issuers.
Regulators are working to establish frameworks that balance innovation with investor protection.
Solid law will provide a better future defense against bad regulators than regulatory stopgaps associated with congressional action, according to McHenry. He notes that the industry has an opportunity to establish sound law, particularly in areas such as market structure and stablecoin regulation.
Regulatory agencies take time to write and implement rules even after Congress acts, warns former Commodity Futures Trading Commission chief Rostin Behnam. McHenry agrees, noting that the industry will continue to operate largely unregulated at the federal level while lawmakers work on converting ideas into law.
As the industry continues to evolve, McHenry predicts a ‘wicked hot summer’ of legislative activity in the coming months. With Senator Tim Scott and Representative French Hill leading efforts in the Senate and House, respectively, McHenry believes that the industry has an opportunity to get good law under the current makeup of Congress.
It’s going to take a while for laws from a cooperative Congress, offers a reality check for those waiting Behnam. He notes that market regulators and bank regulators will write rules, which often takes over a year, even at the quickest clip. McHenry agrees, emphasizing the importance of establishing sound law to protect digital innovation.
As lawmakers work on converting ideas into law, the industry must adapt to changing regulations, stresses McHenry. He notes that debates over technical policies will eventually transition from ‘science to art’ as lawmakers do what they can to convert ideas into law. He argues that solid law is essential for protecting investors and ensuring the long-term success of the U.S. cryptocurrency industry.
The importance of industry engagement in shaping crypto legislation cannot be overstated, according to McHenry. He notes that companies like Tether and Circle must be involved in the regulatory process to ensure their interests are represented. By working together, the industry can establish sound law that protects digital innovation and promotes growth.
As the U.S. cryptocurrency industry continues to evolve, it is clear that regulation will play a critical role in shaping its future. With McHenry’s prediction of a ‘wicked hot summer’ of legislative activity, one thing is certain: the industry must be prepared to adapt to changing regulations and work towards establishing sound law.
The crypto regulatory landscape has undergone significant changes in recent years.
In 2013, the US Securities and Exchange Commission (SEC) first recognized Bitcoin as a commodity.
In 2020, the SEC clarified that certain digital assets are securities subject to federal regulations.
The European Union's Markets in Crypto-Assets Regulation (MiCA) aims to harmonize crypto regulations across member states.
As of 2022, over 60 countries have implemented or proposed crypto regulations.
