It seems unlikely that the US Congress will pass stablecoin legislation or the Senate will approve the FIT21 crypto asset regulatory framework. This situation is related to Congress not being able to provide the required majority and priorities changing amid the busy agenda. The suddenly rising tension in the Middle East this week is keeping politicians very busy ahead of the US elections.
Rising Tensions in the Middle East
In the last two days, Israel and Lebanon started clashes on the border. There is a different situation between the two groups than seen before, and it has the potential to turn into a major war beyond border violations. On Tuesday, Iran fired 180 missiles against Israel; A few of these penetrated Israel’s “iron dome” missile defense system and reached the central and southern parts of the country.
Conflicts in the Middle East, as always, had a negative impact on risk markets and a positive impact on Gold. BTC price gradually decreased to $60,000 after the missiles. The impact of this escalating conflict on potential crypto legislation in the US is significant. While recent developments draw Congress’s attention to vital issues, cryptocurrencies remain in the shadows.
Congress’ Priorities
“Major national security debates tend to disrupt planned legislation,” commented Ron Hammond, Director of Government Relations at the Blockchain Association. D.FIT21 was previously passed by the House of Representatives, but this had to be approved by the Senate before Biden’s approval. Due to the busy agenda and holidays, the process still cannot be progressed. This law was designed to subject most crypto assets to the regulatory authority of the CFTC. It also paves the way for issues such as guidance for altcoins marked as securities to be included in the commodity class. However, as we stated above, it could not advance in the Senate; Names such as Senate Banking Committee Chairman Sherrod Brown and Senator Elizabeth Warren opposed the law due to its lack of anti-money laundering (AML) provisions.
Stablecoin legislation, on the other hand, has found much bipartisan support. Maxine Waters, the top Democrat on the Financial Services Committee, told an SEC Congressional hearing last week that a compromise must be reached before the end of the year. “I have strong confidence that we can reach an agreement that prioritizes strong protections for our citizens and strong federal oversight,” Waters said.
Jaret Seiberg, an analyst with TD Cowen’s Washington Research Group, said Monday he was “pessimistic” that both bills would move forward anytime soon. However, he added that stablecoin legislation is slightly more likely.
Even without rising tensions in the Middle East, Congress’ agenda is too busy to care much about cryptocurrencies. According to experts, issues such as inflation and border security take priority over cryptocurrency legislation. To increase the chances of cryptocurrency legislation being passed, it needs to be reconciled with high-priority legislation such as the SAFER banking law. said H. Joshua Rivera, general counsel of Blockchain Capital.
“Stablecoin law should definitely be considered in conjunction with other legislation. “The conflict in the Middle East is certainly not helping the prospects.”
Ron Hammond agrees.
“Congress has many agendas to address by the end of the year, and stablecoin legislation is among the potential issues.”
In summary, the possibility of cryptocurrency legislation passing is becoming weaker with the increase in conflicts in the Middle East. National security developments that create uncertainty in capital markets shift Congress’s attention to more pressing issues. This means that regulations regarding cryptocurrencies may be postponed for next year.
- The US Congress is unlikely to pass crypto legislation.
- Conflicts in the Middle East further reduce this possibility.
- National security developments disrupt regulatory efforts.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
