Crypto Market Legislation Faces Delays Amidst Interest Payment Debate
In the dynamic world of digital assets, legislative progress is often slowed by complex debates. A recent development centers around U.S. Senator Cynthia Lummis, a prominent supporter of cryptocurrencies in Congress. She is currently holding back the anticipated crypto market structure bill due to reservations about revisiting a specific provision from the newly enacted GENIUS Act. This provision restricts stablecoin issuers from offering interest payments, a contentious point in the ongoing legislative discussion.
Divided Opinions on Crypto Interest Regulations
The controversy over stablecoin interest payments has created a rift among lawmakers. Senator Lummis is firm in her stance against modifying the stablecoin bill’s interest language, despite pressure from both parties. The banking industry contends that the current legislation inadvertently allows crypto exchanges to offer rewards, equivalent to paying interest. In a statement to the press, Lummis emphasized, “I believe we should not alter the stablecoin bill. We have sufficient challenges with market structure as it stands.”
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Meanwhile, the crypto sector is actively campaigning to preserve the existing stablecoin rewards policy. Those opposed to crypto interest are urging lawmakers to tackle this issue within the new market structure legislation, which aims to set forth comprehensive rules for managing digital asset markets. Senator Bill Hagerty of Tennessee, a proponent of the stablecoin bill, noted the intricacy of the crypto interest issue, acknowledging, “This matter demands significant attention from my colleagues. At present, everything remains uncertain.”
Confrontations Between Crypto and Banking Sectors
The Senate Banking Committee, led by Republicans, recently revised a draft of the market structure bill, with Chairman Tim Scott aiming for progress by the end of September. Unfortunately, the deadline was missed, primarily due to disagreements between banking and crypto advocates over stablecoin interest and the bill’s stance on decentralized finance (DeFi).
A faction of Senate Democrats, supportive of cryptocurrency, suggested amendments to the bill, which faced opposition from Republicans and the crypto industry. These Democrats advocate for maintaining the prohibition on interest or yield payments by stablecoin issuers, whether directly or indirectly through affiliates.
Chairman Scott seems to be giving precedence to the Democrats’ concerns over those of Republicans concerning crypto exchange rewards. As his spokesperson, Jeff Naft, pointed out, Scott has deferred a markup of the bill to grant Democrats additional time to engage with the legislative text.
Lawmakers remain cautious in forecasting when the committee might finalize a consensus for a markup. Senator Lummis commented, “Securing a date for a markup is our goal.” When queried about potential dates, she responded, “Once we reach agreement on a date for the markup.”
The impending partial government shutdown adds another layer of complexity to advancing the bill. Democrats have expressed a preference for settling the bill’s base text before moving forward with a markup.
Massive Outreach by Crypto Advocates
The crypto community is urging swift legislative action on market structure this year. Mason Lynaugh, community director for Stand with Crypto, emphasized, “The Senate must act decisively to pass market structure legislation. Congress has a chance to establish America’s leadership in the global crypto industry, achievable only through effective market structure laws.”
The group reported dispatching over 320,000 letters from more than 160,000 participants to Senate offices in recent weeks, appealing to lawmakers to dismiss a new anti-consumer initiative from the banking industry aimed at abolishing stablecoin rewards.
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