Interview for the media
Updated: November 25, 2024
Last week, I was invited to give a commentary on crypto regulation for an online independent media outlet. This was my first time talking to a reporter, so I reached out to my colleague and advisor, who does PR for our school. However, I was told to keep it cool and professional and not to express any political stances (wise advice for any communication). In addition, the reporter can use anything mentioned in the interview for the article; there is no erase button.
So, I went on and reviewed the crypto legislation tracker that lists all crypto-related bills and current status. There are a total of 73 bills, companions to bills, and drafts proposing the regulation for crypto. All legislative initiatives can be grouped into three main streams: (1) enabling (59%, or 43 initiatives), (2) forbidding (27%, or 20 initiatives), and (3) definitive (14%, or 10 initiatives).
The first category of enabling initiatives represents bills that induce the action of a non-prohibitive nature, e.g., starting with words such as “provides,” “directs,” “establishes,” “requires,” etc. Overall, such bills direct the further study of digital assets or establish certain responsibilities of the extant or created governing bodies, e.g., S. 1578 or H.R. 8275.
The second category of forbidding initiatives represents bills that directly prohibit a certain activity, e.g., starting with words such as “prohibits.” The two most popular types of initiatives prohibit the creation of the CBDC (S. 3801 (Companion to H.R. 5403) or prohibit government employees from owning crypto, e.g., H.R. 2678.
The third category of definitive initiatives represents bills that have a clarification or definition of terms. E.g., H.R. 238 “expresses that it is the sense of the House of Representatives that proof-of-work mining used for cryptocurrencies such as Bitcoin is important to the United States' ability to achieve its energy and economic goals.” These acts are weakly enabling as they contribute to building clarity about the terms’ definitions.
So, overall, the current landscape of crypto legislation looks nascent and not ripe compared to the state of the crypto industry. It does not impede the industry from active development; however, the longer there will be no clarity for the actors, the more damage will possibly done to the players, including investors.
Furthermore, the unripeness of the crypto legislation did not impede the legalization of crypto-native enterprises in the US. The Coinbase IPO in 2021 was a real marker of “making it” in the US for a company handling crypto. Moreover, there are multiple examples of crypto exchanges that obtained the MSB (money services business) license from FinCEN as early as 2021.
Nevertheless, my point is that despite the companies finding a way to establish themselves with the financial regulator (SEC and FinCEN), the legislators were not in a rush to recognize their distinctive characteristics (as firms dealing with the decentrally controlled assets for once) and vote on act tailored specifically to their purpose in about 3+ years (at least since 2021). Reasons for lingering may be of a dual nature (political and technical), however, compared to other domiciles (Switzerland), such prolonged decision-making in the past does not indicate a quick law-making in the next 4-5 years.
Other interesting statistical details from the crypto tracker
There are a total of 73 bills, companions to bills, and drafts proposing the regulation for crypto, 44 House- and 30 Senate-initiated. The leading states by sponsorship are FL (8), NC (7), TX (5), and WY (5); other states have 4 or fewer initiatives sponsored. Representatives or senators from 29 US states have sponsored the bills; other states lag in leading the crypto regulation. A total of 47 representatives and senators sponsored bills related to cryptocurrency, including 31 unique Representatives (7% of the US Congress) and 16 unique Senators (16% of the US Senate). 15 initiatives passed the initiating body (House or Senate) and 46 - are currently referred to the initiating body (House or Senate).