Cryptocurrencies will be a hot topic as the United States Congress resumes and the battle lines are drawn between lawmakers for and against the fledgling financial industry.
But the Blockchain Association reports that more than 100 crypto industry advocates are fighting to help strike the right balance between protection and innovation.
The 118th U.S. Congress convened in Washington D.C. on Jan. 3. It’s scheduled to continue until Jan. 3, 2025, during the final two years of President Joe Biden’s first term.
The crypto industry is currently in the crosshairs following several high-profile meltdowns last year, the largest being the collapse of FTX in early November.
In a Twitter thread on Jan. 3, the director of government relations at the Blockchain Association, Ron Hammond, highlighted the challenges and opportunities for Congress on the day it resumed.
1) This week in Congress and crypto: The first day of the 118th Congress has arrived! It is no secret, the crypto industry is in the crosshairs of Congress after the FTX fallout. This Congress presents challenges and opportunities though so here is the latest from the ground…
— Ron Hammond (@RonwHammond) January 3, 2023
FTX founder Sam Bankman-Fried has gone from a political donation darling to public enemy No. 1 on Capitol Hill. Hammond added:
“The problem for many in DC is that they equate FTX with the entire crypto industry.”
The meltdown could initiate “once-in-a-decade legislation” and there are already solid regulatory framework submissions such as the Lummis-Gillibrand bill. The bipartisan bill addresses agency jurisdiction, stablecoin regulations, banking, crypto taxes, and interagency coordination.
Hammond said the first few months of Congress would focus on FTX, though stablecoin regulation will also be a priority.
“Smaller bills like stablecoins and spot market regulation have a chance of moving this year, but will likely need to wait till the dust settles on FTX both in the courts and the congressional hearings.”
The battle lines will be split between pro-crypto Chair of House Financial Services Patrick McHenry and anti-crypto Chair of Senate Banking Sherrod Brown, who took the extreme measure of suggesting a ban on crypto last month.
There are also proposals to regulate crypto from the Agriculture Committees, which advocate for the Commodity Futures Trading Commission (CFTC) to oversee regulations.
Hammond also said it’s likely that Congress will tackle new topics this year such as nonfungible tokens (NFTs), decentralized autonomous organizations (DAOs) and decentralized finance (DeFi), which have seen increased interest due to enforcement actions last year.
On the upside, he concluded crypto has a “strong bench in D.C. and continues to poach talent from other industries on the advocacy, lobbying, and policy front.”
A group that formerly numbered less than a dozen people from CoinCenter, Coinbase, the Blockchain Association, and a few other groups “has now become a network of 100+ policy experts,” which is a reason for optimism, he added.
Related: Four legislative predictions for crypto in 2023
On Jan. 4, Ripple CEO Brad Garlinghouse also said he was “cautiously optimistic” for 2023. He added that no bill is perfect and pursuing one shouldn’t stall congressional progress in developing a regulatory framework.