There have been a lot of cryptocurrency hearings and events in Washington over the years. Particularly in recent months, as the administration works to make good on its ambitions to make the U.S. the crypto capital of the world.
With bipartisan support for a clear crypto regulatory framework and key industry figures on board, for a hot minute, it looked as if this would be the week that some of that talk got transformed into action. But, it wasn't to be.
Democrats, angered by huge deals made by crypto companies close to President Donald Trump, voted against one bill and refused to even join the discussion on another.
Here's what you need to know.
1. Crypto legislation may take longer than first thought
There were two big pieces of crypto legislation on the docket last week. The GENIUS Act, which would introduce stablecoin controls, and the Market Structure Bill, which would be the backbone of digital asset regulation. Both were due to move forward, and both stalled.
The Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act, aims to create a framework for stablecoins in the U.S. It would give consumers bank-like protections for what are bank-like services, while also creating an environment where stablecoins can grow.
The Digital Asset Market Structure Bill builds on previous efforts to create a comprehensive framework for digital currencies. That includes clarity around the responsibilities of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
The 48-49 vote on the GENIUS Act fell short of the 60 votes needed to move forward in the Senate. In the House, several Democrats walked out of the joint hearing that would have moved the Market Structure Bill forward, taking away the unanimous consent it needed.
There's still life in both pieces of legislation. But the bills will have to contend with much stronger political headwinds than was expected a few weeks ago. It isn't clear how long that will take. House Financial Services Committee Chairman French Hill told The Ripon Society he wanted to get them both on to Trump's desk by Aug. 1. Indeed, Alex Thorn, managing director of Galaxy Digital, posted on X that a new version could be introduced as early as next week.
2. $TRUMP may have some unexpected consequences
Trump's embrace of everything crypto could backfire. According to Bloomberg, Trump and his family have about $1 billion in crypto-related projects.
For example, there's the $TRUMP meme coin, which, per The Washington Post, has cost tens of thousands of new investors dearly. Chainalysis estimates that the coin issuers have made more than $320 million in fees. Trump's promise to host a dinner for the 220 top $TRUMP holders has further incensed opposition.
Then there's World Liberty Financial -- a crypto firm with strong ties to Trump's family. Bloomberg says a Trump affiliate receives 75% of the firm's net revenue. In early May, an Emirati investment firm committed to investing $2 billion into its stablecoin project via the Binance crypto exchange.
These connections and more have prompted accusations of "crypto corruption" and questions about conflicts of interest. A letter from Democratic Senators Jeff Merkley and Elizabeth Warren goes as far as suggesting that stablecoins could be used "as an avenue to profit from foreign corruption." Democrats want to see restrictions on public officials participating in stablecoin businesses included in the GENIUS Act.
The fact that Democrats are using Trump's crypto business to delay the long-awaited legislation is frustrating for crypto executives. Capital Island Venture's Nic Carter told The Hill, "It's like a completely unnecessary own goal."
3. Stalled legislation didn't stop Bitcoin topping $100,000
In many industries, a sizable setback on key legislation would almost certainly weigh on prices. Not crypto. This speculative -- and at times hype-driven -- world rarely reacts to long-term problems. As such, last week's delays didn't stop Bitcoin (CRYPTO: BTC) from soaring back above $100,000 for the first time since February on news of a U.S.-U.K. trade deal.
Even so, Bitcoin's strong price does not mean investors can ignore issues around legislation. After all, optimism about a crypto-friendly administration is part of the reason Bitcoin is flying high. Some delays are to be expected. But longer delays -- or worse, flawed legislation -- would be cause for concern.
Those who follow crypto have seen what happens when cryptocurrency exchanges are allowed to operate unchecked (remember FTX). And consumers lose money when stablecoins run rampant and collapse (that would be Terra LUNA). Carefully considered regulation is what will bring cryptocurrency out of the Wild West and into the mainstream.
The legislation that gets passed in this administration will shape cryptocurrency's evolution in the coming decades. Investors ignore it and its progress at their peril.
SOURCE: https://finance.yahoo.com/news/3-key-takeaways-washingtons-latest-094500326.html
