As U.S. Congress continues its crypto education at a measured pace, states race to explore the benefits of financial innovation.
Several storylines that had been long in the making dominated last week’s news cycle in the cryptocurrency policy and enforcement department. The Russian government has made another huge step on the path toward creating a tailored regulatory framework for digital assets, unveiling its consolidated view that crypto is to be treated as currency rather than swept under the rug of a blanket ban. While this movement in the direction of crypto’s formal legitimization is a welcomed development, a host of questions persists related to both the exact shape of the new regime and its enforcement.
The biggest enforcement story of the week, and of the year so far, goes even further back to the Bitfinex heist of 2016. In what goes to demonstrate the U.S. government’s prowess in following the money on a distributed ledger, the Department of Justice seized the record-breaking $3.6 billion worth of crypto reportedly siphoned out of the platform.
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It is the crypto-hearings season again
Both chambers of U.S. Congress continued their educational forays into various corners of the digital asset space that have become a fixture of late 2021. The Senate Committee on Agriculture, Nutrition, and Forestry has heard from Commodity Futures Trading Commission Chief Rostin Behnam, who sketched the boundaries of his agency’s mandate with regard to crypto assets and suggested that senators consider extending the CFTC’s regulatory authority.
Over at the Committee on Financial Services of the U.S. House, representatives were busy examining the President’s Working Group’s report on stablecoins from December 2021. Treasury Under Secretary Nellie Liang was there to field legislators’ questions on topics ranging from whether stablecoin issuers should be regulated like banks to the geopolitical implications of the spread of dollar-pegged private digital currencies.
States’ digital asset rights
A bill that Representative Jason Powell introduced to the Tennessee House of Representatives proposes to add cryptocurrencies and nonfungible tokens to the list of assets that the Volunteer State and its counties can invest in. A separate bill that Powell introduced on the same day proposes to form a study committee to examine the ways in which the state legislature can create a crypto-friendly environment in Tennessee.
A similar commission, with the mandate to investigate the current state of the digital asset industry and applicable laws, will be formed in the state of New Hampshire. Notably, the initiative comes not from a member of the state legislature but in the form of state Governor Chris Sununu’s executive order. Sununu cited New Hampshire’s “commitment to attracting high-quality banking and financial businesses” as the driver of the state’s interest in crypto.
Digital money in traditional politics
A lot has been said recently about the cryptocurrency industry’s growing presence in the halls of power in the United States. One of the hallmarks of this process is lobbying and campaign spending that digital asset firms undertake to promote their and the sector’s long-term policy goals. A study based on the data from the nonprofit Open Secrets documented this trend, revealing a 116% annual increase in crypto lobbying expenditure in 2021.
Another organizational tool for converting money into political influence is forming a political action committee (PAC) to pool funds in support of candidates or initiatives. With digital assets shaping up to be a hot topic in the 2022 midterm elections, expressively pro-crypto candidates have been popping up across the country in recent months. Come November, these politicians will be eligible for financial support from the newly registered Coinbase Innovation PAC.
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