Don’t Tread on My Crypto

The fact that different projects would have different demands from crypto legislation felt somewhat predictable. Different business models have different needs. 

But what I didn’t expect? After years of asking for legislation to codify which crypto tokens are securities or commodities, some in the industry are saying “not so fast.” 

2008’s calling, and it wants the government to step off crypto’s back. 

A Market Structure Bill by August? Why Some Crypto Traders Want Congress to Slow Down

Pushback is mounting against a market structure bill from outside D.C., despite the White House’s urging to charge ahead. 

Some crypto traders and investors are meeting with regulators in the hopes that they can convince the U.S. Securities and Exchange Commission (SEC) to clarify its views on crypto regulation before Congress is able to pass a market structure bill, according to three sources familiar with arguments between crypto industry players. 

The hope amongst these investors is that the SEC under incoming Chair Paul Atkins may provide less restrictive guidance than Congress would impose in legislation setting rules of the road for crypto trading. They also believe that getting regulatory clarity from the government is less urgent than it was under the Biden administration since, in recent months, the SEC and Department of Justice seem less hostile. 

A 180 From the SEC

Recently, the SEC has issued guidance to say that stablecoins and memecoins, which it defines as tokens “inspired by internet memes, characters, current events, or trends,” are not securities. It also issued guidance on disclosure requirements in the instances where crypto assets are securities, though guidance stopped short of clarifying which tokens are securities in the first place. Atkins, who has a record from when he was a commissioner at the SEC for favoring light-touch regulation, is expected to be sworn in in the coming days. 

“Now that Gary Gensler is gone, there’s this thought that ‘maybe we shouldn’t move too fast’ because, in a perfect world, they would not be regulated,” one source explained. 

Read More: Solana’s New Lobbying Group Wants the $58 Billion Blockchain to Be Its Own Champion

A Lost Cause

However, two lobbyists and one Senate Banking committee staffer said these investors' hopes for the SEC to act independently of Congress are a lost cause, due to Congress’ eagerness to act and the deference Atkins has projected to Congress when it comes to regulating the industry. The House Financial Services and Agriculture committees are rumored to already be drafting a market structure bill, with the Senate Banking and Agriculture committees preparing to follow their lead. However, all of this is likely to still come after the passage of stablecoin bills, which have not yet been voted for on the floor. 

House Financial Services Committee Chairman French Hill also said at a recent industry summit that a market structure bill would be unveiled very soon, while House Financial Services Digital Assets Subcommittee Chair Bryan Steil organized a hearing on market structure legislation last week. White House crypto liaison Bo Hines, meanwhile, told Fortune that President Trump was "adamant" about passing both stablecoin and market structure legislation by August. 

Read More: Congress Bickers Over Whether to Bail Out Stablecoins

‘The Apex of Crypto’s Power’

According to the Congressional staffer, these investors are making a mistake to not think ahead to how much SEC guidance could change in the coming years and again become hostile towards crypto under another presidential administration. “What they don’t understand is the regulatory pendulum swings back and forth and the political pendulum swings back and forth,” they explained. “We are kind of near the apex of crypto’s power because of, frankly, all the money that was spent on the election and the fact that their favorite candidates got elected. But this moment in time will not last.” 

Atkins promised members of Congress during his confirmation before the Senate Banking Committee to “work with my fellow commissioners and Congress to provide a firm regulatory foundation for digital assets.” Though he did not specifically say that he expects Congress to provide regulation prior to issuing clarifying guidance at the SEC, his statements signal a much more collaborative attitude than his predecessor Gary Gensler, who often argued that existing regulations were satisfactory for regulating crypto, and that he did not need additional guidance in the form of a Congressional bill. 

Related content:

• Should Victims of Crypto Fraud Get Repaid at Current Prices? DOJ to Investigate

• Solana’s New Lobbying Group Wants the $58 Billion Blockchain to Be Its Own Champion

• Solana Policy Institute Hires One of DC’s Most Powerful Lobbyists