While the crypto industry has taken a huge downturn over the last month, you wouldn’t necessarily know it from the optimism in DC. On Tuesday, some of the nation’s top lawmakers, regulators and crypto lobbyists convened in downtown Washington for the annual DC Blockchain Summit, which has existed since 2016. Speakers compared the rise of crypto to that of the internet, the iPhone, and even the airplane, with Senator Cory Booker joking that if today’s regulators presided over the 1900s, “Orville and Wilbur Wright would have never gotten off the ground.”
Over 800 people attended the summit which proved there were many cryptocurrency supporters on the Hill. It also showed that formal processes exist to normalize and grow the crypto industry. The summit had many key messages.
The bill was introduced by two senators who are well-known for their efforts to promote crypto adoption.
The unlikely pairing of Kirsten Gillibrand, Cynthia Lummis is Cynthia Lummis: Cynthia Lummis from Wyoming and Cynthia Gillibrand are progressive New Yorkers. On Wednesday they gathered to discuss the Responsible Financial Innovation Act, a crypto bill that they have co-authored.
The bill largely aims to hand jurisdiction of crypto to the Commodity and Futures Trading Commission (CFTC), which has traditionally been more favorable toward crypto—as opposed to the U.S. Securities and Exchange Commission (SEC). At the moment, the two agencies are jostling for control over crypto’s regulation, along with a slew of other governing bodies. Lummis said the bill’s goal is to “take a light regulatory touch.” “We don’t want to over-regulate because innovation is ahead of us even as we speak,” she said onstage.
Gillibrand promised to publish the bill next month. She said she hopes the bill will go to a vote in the next Congress or the next. “I’m very optimistic,” she said. Lummis called the collaboration an “open and happy and positive process… this subject is not partisan.”
Others are riding also for crypto.
Steve Daines (R MT) and Cory Booker(D-NJ), were two of the senators that showed up on their own. Booker paused on the podium to acknowledge the horrors of Texas shootings. He said that he hopes crypto will provide financial inclusion opportunities for those in marginalized communities. “People of color look at big financial institutions for what their history shows them to be: discriminating against vulnerable communities,” he said. “It’s no surprise the African Americans and Latinos are turning to a world that is a decentralized world, that they hope will be a more level playing field.”
Representatives Tom Emmer, Darren Soto and Stephen Lynch also appeared via recorded videos to cheer on the conference and pledge that they would fight for crypto’s national adoption. Soto said that blockchain could “help solve some of the most complex problems facing the United States.” Meanwhile, there’s plenty of activity on the Hill around crypto: Christy Goldsmith Romero, a CFTC commissioner, said there were 42 bills currently being worked on in congress that impacted digital assets in some way.
One regulator was rebuffed.
The summit saw one exception: Michael Hsu was the acting director of the Office of the Comptroller of the Currency. It regulates the national banks and might play an important role in the future regulation of stabilitycoins. In a short statement onstage, he lambasted the “hype” driving crypto and pointed to “deep vulnerabilities” in the system. Hsu pointed to the recent hacks of bridges between blockchains; the contagion risks shown by the impact of UST’s collapse on the larger market; and the lack of clarity around digital ownership.
“The industry has grown too fast and suffers from a hype-based, ‘shoot, ready, aim’ approach to innovation and value creation,” he said. “The OCC will continue to take a careful and cautious approach to crypto in order to ensure that the national banking system is safe, sound, and fair.”
Continue reading: The Real Reasons Behind the Crypto Crash, and What We Can Learn from Terra’s Fall
SEC members are in a internal conflict.
Gary Gensler from the SEC, who had spoken out against crypto the previous few years was one of the key targets. Perianne Boring, the founder and president of the Chamber of Digital Commerce, which hosted the summit, called the SEC “number-one blocker to this industry” onstage. Hester Peirce (the SEC’s commissioner) joined her criticism. She is much more friendly to crypto than Gensler. Peirce was a Trump appointee and predates Gensler who was a Biden appointee at the SEC.
At a panel about regulation and innovation, Peirce spoke out against what she felt to be the SEC’s heavy-handed tactics against crypto. “We’re taking an enforcement-first approach where we should be taking a regulatory-first approach. I think we’ve got the balance wrong right now,” she said.
Comprehensive legislation regarding cryptography may not be passed for several years.
The summit was full of excitement, but the diversity of views, bodies, and conflicting efforts means that crypto legislation could take years to pass. Gillibrand said that her and Lummis’s bill will have to go through oversight hearings on four different committees, each of which has a long agenda to get through. And while President Biden released an executive order on digital assets in March, the order won’t produce direct legislation, but more than a dozen reports on crypto’s potential benefits and dangers.
“We don’t expect significant policy changes this year,” Boring said onstage. “This will be a multi-year process.”
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