- Lawmakers are returning to Capitol Hill this week.
- Across the pond, European politicians are gearing up for a hectic legislative year.
- Find out what’s at the top of crypto lobbyists’ agenda in the US and the EU.
Inbar here with this week’s edition of The Guidance, your guide to global crypto regulation.
Grayscale’s courtroom victory against the Securities and Exchange Commission to push forward its Bitcoin exchange-traded fund may have grabbed a majority of headlines last week, and for good reason.
The case meant another setback for SEC Chair Gary Gensler’s crypto crusade, following its partial loss against Ripple this summer.
As our markets reporter Adam Morgan McCarthy pointed out this week, the case also paves the way for the many spot Bitcoin ETF applications that have been filed by the likes of BlackRock and Fidelity in recent months — although their approval is no foregone conclusion.
The case also set the stage for a busy legislative season when lawmakers return from recess.
So let’s look ahead at the biggest stories to expect as the policy world returns to school.
Here is what’s on the top of the agenda for US and EU crypto lobbyists.
The US Congress has shot out a series of bills which could dramatically change crypto policy in the worlds’ leading economy. Plus, there’s a pile of lawsuits on the judicial table against actors like Grayscale, Ripple, Coinbase, and Binance.
For the Blockchain Association, the Financial Innovation and Technology for the 21st Century Act, or FIT, is the one to watch out for this season.
“This will be a monumental moment for the future of the crypto industry,” Ron Hammond, director of government relations at the Association, told DL News.
Although there have been other bipartisan bills, “the FIT Act is the first regulatory framework for digital assets to receive consideration by the entire House floor,” he said.
The bill will provide new trading rules for crypto exchanges, and make the Commodity Futures Trading Commission the main crypto regulator in the US, if approved.
That approval hinges on whether it can gain more Democrat support.
“A strong bipartisan vote could give the FIT Act legs in the Senate whereas a more partisan vote will likely cement this bill as ‘dead’ in the Senate,” Hammond said. “This fall will be telling for the future of crypto regulation in the United States.”
While the stablecoin and market structure bills are front of mind, for the DeFi Education Fund, Senator Elisabeth Warren and Senator Roger Marshall’s bill on anti-money laundering provisions for digital assets is the priority.
“What they propose to essentially do is make miners and validators financial intermediaries for regulatory purposes or software developers,” Miller Whitehouse-Levine, CEO of the Fund, told DL News. “So it’s highly problematic and certainly would kill the industry in the United States.”
But Whitehouse-Levine is hopeful because “everyone’s objective is the same, it’s just a matter of accomplishing how this objective is going to work.”
Across the Atlantic in Brussels, European advocates are also getting ready to tackle its policy challenges. First on the list: the Markets in Crypto-Assets regulations, or MiCA as it is more commonly known.
Yes, MiCA has passed all its legislative hurdles but before the EU’s landmark crypto framework comes into effect, there are still implementation rules for regulators to iron out.
So advocates are busy giving feedback to regulators.
One provision in MiCA sets thresholds on transactions made in stablecoins which aren’t denominated by the euro.
“This could disconnect European users and stakeholders from the currently used stablecoin environment,” Blockchain for Europe secretary general Robert Kopitsch told DL News. Stablecoins like Circle’s USDC, and Tether dominate the market, and EU regulators could limit their use. “That’s why proper interpretation of this clause is very important.”
Crypto assets’ environmental impact is also a topic of discussion regulators will seek feedback on in October. MiCA proposes to add warning labels on the sustainability of different assets.
“We want to push the idea that value generated from a given blockchain should also be taken into consideration,” said Tommaso Astazi, head of regulatory affairs at Blockchain for Europe. “If you can assess that value together with the impact on climate, you might have a more truthful assessment.”
A federal judge threw out class action lawsuit against Uniswap after rejecting that assertion tokens are covered by securities laws. The decision in the New York court could influence cases against other crypto firms, Kollen Post reported.
Post of the week
1/ Grayscale's victory over the SEC is *massive.*— Jake Chervinsky (@jchervinsky) August 29, 2023
It's very rare for a federal circuit court to find that an agency has violated the APA by acting arbitrarily and capriciously.
The DC Circuit just delivered a huge embarrassment for the SEC.
But the ETF isn't approved yet 🧵
Blockchain Association chief policy officer Jake Chervinsky posts about Grayscale vs SEC news.
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