Negotiations among US lawmakers over a market structure bill appear to be underway, but there is much debate.
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As the US government shutdown enters its second week, policy work around digital assets appears to be at a bit of a standstill. There are signs that lawmakers are continuing to hammer out the details of a market structure bill that the industry hopes will strengthen the roles of the Securities and Exchange Commission and the Commodity Futures Trading Commission and establish how the crypto industry will be treated in U.S. regulation. To this end, Democrats proposed certain rules regarding decentralized finance (DeFi), which members of the cryptocurrency industry quickly and loudly opposed.
why is it important
The industry is still waiting to see what market structure legislation ultimately passes through Congress. According to reports this week, the senators’ negotiations appear to be getting ugly — at least publicly.
break it down
Some Senate Democrats have put together a proposal to regulate decentralized finance (DeFi), essentially requiring projects that work with customers on the front end to register with federal regulators and be treated as brokers. DeFi projects that are not intended to generate income are “fully decentralized” and therefore not subject to regulatory oversight.
It also includes a clause that says developers are not legally responsible for how open source projects are used unless they profit from the technology.
The cryptocurrency industry was not thrilled with this proposal. Executives, lawyers, and lobbyists alike quickly withdrew the proposal, claiming it would harm the DeFi sector of the cryptocurrency industry.
The DeFi regulation proposal, first reported by Punchbowl News and Politico, appears to be a new point of contention between Republicans and Democrats working on the bill. According to Politico, there appears to be a significant gap between the two parties, with Senate Banking Committee Chairman Tim Scott asking Democrats to agree to an increase hearing before continuing language negotiations, and Democrats seeking further input on the bill’s actual language.
As a reminder, the market structure bill would need bipartisan support to pass the Senate, and last month a group of 12 Democrats most likely to vote yes on the bill created a list of priorities they would like to see before supporting the bill.
DeFi offers are unnecessarily strong negotiating tactics and can be watered down.
The price increase was initially tentatively scheduled for September 30th and was pushed back late last month to October 20th, but that date also appears to be in doubt.
Several people I spoke to this week were more pessimistic about the chances of a market structure bill becoming law by spring, citing both the continued government shutdown and the lack of visible movement among lawmakers drafting the bill.
As CoinDesk reported last week, while the shutdown does not bode well for market structure negotiations, there is still time before the industry needs to really worry about whether this bill will materialize in 2025.
Wednesday
Thursday
- DC Fintech Week Day 2 (I will be moderating the panel, so please come say hi!)
- PGP’s DC Privacy Summit
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See you next week!