Leading Senator Anticipates Progress on Delayed Cryptocurrency Legislation Within Days
Efforts to move forward with cryptocurrency market structure legislation in the Senate Banking Committee have been underway since a January markup was delayed.
According to US Senator Tim Scott, a potential breakthrough regarding a contentious stablecoin yield payments clause that has halted progress on cryptocurrency market structure legislation in the Senate could materialize within the coming days.
"I believe that this week we will have the first proposal in my hands to take a look at," Scott, the chair of the Senate Banking Committee that is working to advance the bill, said on Tuesday at a crypto lobby event in Washington, D.C.
"If that actually happens before the end of this week, and I think that it will [...] I think we're going to be in much better shape," he added.
Following the House's passage of comparable legislation in July, known as the CLARITY Act, the Senate has been pursuing advancement of its own variation of a cryptocurrency market structure bill that establishes regulatory approaches to the crypto industry.
Progress on the Senate's legislation has been delayed as banking industry representatives and cryptocurrency advocates continue negotiations concerning a clause within the bill that would prohibit third-party entities from providing yield payments on stablecoins.
Representatives from the banking sector contend that stablecoin yields offered by platforms like cryptocurrency exchanges represent a regulatory gap in the GENIUS Act, which prohibited yield payments directly from stablecoin issuers, and could pose risks to banking system stability by encouraging deposit outflows.
Given that stablecoin yield payments represent a widely used mechanism for exchanges to attract and retain users, cryptocurrency industry advocates have challenged these assertions and charged banking institutions with engaging in anti-competitive practices.
Additional provisions in legislation also advancing
According to Scott, the stablecoin yield question represents merely the "largest publicly celebrated challenge" within the bill, while additional matters under discussion encompass provisions concerning ethics, decentralized finance, and "who is carved in and who is carved out" of the rules.
"Those issues seem to pale in comparison to the rewards issue, but they're still very important outstanding issues that we are nibbling away at as we work on the more popular issue of rewards and yield," he added.
"We have made a lot of progress over the last probably 30 days or so," Scott said. "We're working on a lot of issues, but every single day it feels like the big momentum is finally on our side and we're heading in the right direction."
Due to procedural requirements, two separate committees are responsible for handling cryptocurrency market structure legislation in the Senate, given that the bill involves both the Securities and Exchange Commission and the Commodity Futures Trading Commission.
The Senate Banking Committee, which has oversight authority over the SEC, postponed a markup of the cryptocurrency bill indefinitely in January, whereas the Senate Agriculture Committee, which maintains oversight of the CFTC, successfully advanced its markup of the legislation to the Senate floor during that same month.