Today, February 26, the United States Senate Committee on Banking, Housing, and Urban Affairs subcommittee on Digital Assets is hosting a hearing on “Exploring Bipartisan Legislative Frameworks for Digital Assets.”
This hearing comes after Donald Trump made cryptocurrency a central focus of his second term, creating a working group in one executive order that was tasked with submitting a report that will “recommend regulatory and legislative proposals.”
The Senate Digital Assets Legislation
The chairman for this subcommittee is Cynthia Lummis (R-WY), who has been a significant promoter of crypto. She recently introduced a new stablecoin bill, the so-called GENIUS Act, alongside Tim Scott (R-SC), Bill Hagerty (R-TN), and Kirsten Gillibrand (D-NY).
This bill purports to establish jurisdiction over stablecoin issuers who “issue a payment stablecoin in the United States.”
Payment stablecoins are described as “a digital asset” “that is or is designed to be used as a means of payment or settlement” and where the issuer “is obligated to convert, redeem, or repurchase for a fixed amount of monetary value.”
This would seem to exclude many existing stablecoins. Tether, for example, notes in its terms of service that it can “delay or suspend” the ability for users to redeem the token.
Circle, the largest United States-based stablecoin issuer, however, has terms that seem more compatible with this, noting that Circle “commits to redeem 1 USDC for 1 USD.”
Protos reached out to the offices of the Senators behind this bill to see if it would apply to Tether and for clarification on what “issue… in the United States” means in the context of the bill, and a member of the press team for one senator insisted on background that it would apply to Tether but was unable to provide additional clarification beyond that.
Read more: Crypto promises that Donald Trump must now live up to
Besides this stablecoin bill, the recent press conference that included David Sacks and many of these legislators also noted their intention to advance a market structure bill that will resemble the earlier FIT 21 bill.
This would significantly increase the Commodity Futures Trading Commission’s (CFTC) role in regulating the crypto market, thanks in part to an expansive definition of “decentralized.”
The witnesses
Witnesses for today’s hearing include:
- Lewis Cohen, Partner at Cahill Gordon & Reindell LLP
- Jonathan Jachym, deputy general counsel and global head of policy and government relations, Kraken
- Jai Massari, chief legal officer at Lightspark
- Timothy Massad, research fellow and director of digital assets policy project at Harvard University.
Cohen’s written testimony supports a legislative framework like the previous Responsible Financial Innovation Act that was introduced by Gillibrand and Lummis.
Jachym’s written testimony supports a significantly expanded role for the CFTC, noting that “legislation to grant the CFTC clear authority to regulate spot markets” will apparently help achieve “a durable approach for supporting innovation and protecting consumers.”
Stablecoin regulations are the primary focus for Massari, who notes her belief that “for stablecoins to support more mainstream payments use cases, users must be able to think of stablecoins as digital cash.”
Massad, a former chairman for the CFTC, also raised concerns about the potential jurisdictional issues over Tether in his written testimony, noting that neither the GENIUS Act nor the STABLE Act (which was introduced in the House) “has specific enforcement provisions” that allow these bills to deal with non-United States-based issuers like Tether.
He additionally raises concerns about FIT 21-style legislation, where he worries that “the ‘self-certification’ process is an invitation for abuse” and further notes that “the decentralization component of the test has metrics that hardly seem ‘decentralized’.”
Protos will be watching the hearing and providing updates as they occur.
