- New regulatory bodies
- While the legislation is still being developed
- The founders of the new subcommittee have lots of exciting plans
Now that Republicans control the House of Representatives, they have decided to organize a new congressional subcommittee which will regulate all matters related to digital assets. After the FTX collapse and its investigation, they believe that the U.S. Securities and Exchange Commission (SEC) does very little to prevent such crises.
New regulatory bodies
On January 12, Patrick McHenry, a Republican Congressman representing North Carolina, announced that a new Subcommittee on Digital Assets, Financial Technology and Inclusion will be established.
According to the congressman, there is a hole in how the House Financial Services Committee is structured. He also says that the Committee spends more resources on issues related to digital assets rather than the larger financial industry.
French Hill, a Republican Congressman representing Arkansas, will be the new subcommittee’s chairman and the entire committee’s vice-chairman. According to a press release, the subcommittee will provide “rules of the road” for federal regulators of digital assets and formulate policies to help underserved populations by promoting financial innovation.
“At a time of major technological advancement and change in the financial sector, it is our job to work across the aisle and promote responsible innovation while encouraging FinTech innovation to flourish safely and effectively in the United States,” French Hill commented in a statement published on January 12.
French Hill has experience when it comes to crypto policy initiatives. In 2021, he co-sponsored a bill, asking the Federal Reserve Board to analyze the potential impact of a CBDC (Central Bank Digital Currency). A report was later published, and Hill called it “important work.”
While the legislation is still being developed
The subcommittee is established during a period when the adoption of many crypto-related regulations is taking long time. For example, the Lummis-Gillibrand Responsible Financial Innovation Act was introduced in the Senate in June 2022, and quite recently, The Stablecoin TRUST Act was introduced by Patrick Toomey, former Republican Senator, during his final weeks in Congress.
Some Republican legislators have criticized the handling of digital assets by regulators. For example, Tom Emmer, a Republican Congressman representing Minnesota, publicly accused the SEC and its Chairman Gary Gensler of “regulation by enforcement”.
Experts believe that Republicans will use the 118th Congress to provide clarity in digital assets regulation. This is an objective supported both by representatives of government and the financial sector.
The founders of the new subcommittee have lots of exciting plans
McHenry spoke about the Committee working on digital assets regulation in December 2022 when he was appointed the committee’s chairman. He said that the Committee would seek “a comprehensive regulatory framework for the digital asset ecosystem.”
Alongside many other legislators, he criticized lack of regulation after the FTX meltdown. He claimed that an efficient regulatory framework could have prevented that crisis, helping the industry and numerous investors across the country to avoid problems.
“For years, I have advocated for Congress to develop a clear regulatory framework for the digital asset ecosystem, including trading platforms. It’s imperative that Congress establish a framework that ensures Americans have adequate protections while also allowing innovation to thrive here in the U.S,” McHenry commented in a press release.
McHenry also spoke about the option of working with companies such as Binance. He pointed out the company’s involvement in FTX’s collapse after its CEO Changpeng Zhao indicated his company’s move to sell its holdings of FTT and later abandoned its buyout of Sam Bankman-Fried’s bankrupt exchange.
“I look forward to learning more from FTX and Binance in the coming days about these events and the steps they will take to protect customers during the transition,” McHenry said.
