LAS VEGAS — The passage of cryptocurrency legislation would put the U.S. “back in the game” in terms of competing with other nations that have already crafted frameworks to oversee digital asset activity, Sheila Warren, CEO of the Crypto Council for Innovation, said during a panel at the Money20/20 conference in Las Vegas on Sunday.
“It’s critical to get these bills across the line,” said Warren, referring to a pair of House bills, the Financial Innovation and Technology for the 21st Century Act and the Clarity for Payment Stablecoins Act of 2023. Passage of these bills “would be a very strong signal that the United States is not only open for business to do business with this industry and its asset class, but also has a regime in place that makes it highly competitive,” she said.
With other international jurisdictions moving forward with their own crypto regulations aimed at providing guidance and clarity to the space, the U.S. is at risk of falling behind, Warren explained.
“No one’s waiting. The EU already has [Markets in Crypto-Assets Regulation], which has its own challenges, but remains one of the most comprehensive schemes that exist in the world,” she said. “Singapore, Hong Kong, the Middle East and the U.K. are moving very quickly.”
Regulatory clarity in the U.S. would help the crypto space better roll out products and services that are beneficial to consumers, said TaxBit CEO Lindsey Argalas, who also spoke on Sunday’s panel.
“I think many of us still have a lot of conviction around the power and the benefit of digital assets and this technology,” Argalas said. “If you think about improving customer experiences, financial inclusion or modernizing financial infrastructure, there’s a lot of benefit from the technology that right now is currently impeded by the fact that we don’t have clarity. Hopefully, we’ll continue to make good progress on [legislation].”
A set of guidelines on digital assets would also help firms scale their digital asset products, Argalas said.
“A lot of these organizations have a very good point of view on what they would like to do with the technology, and they’re experimenting with it, and they have hundreds of resources,” Argalas said. “It’s just that we need to pave the way for mass scale, and the legislation is absolutely required to do that.”
The fact that multiple crypto bills have been introduced in the wake of FTX’s collapse showcases that lawmakers believe the space will rebound, and that interest remains in the promise of digital assets, Warren said.
“We’re seeing this general recognition that the technology is here to stay,” Warren said.
Many crypto firms managed to weather the fallout from the collapse of FTX last year, demonstrating that consumers are still drawn to their services, Warren said.
“If you can survive the kinds of things that happened in 2022, including what I have called in the press, ‘the spectacular and ongoing implosion of [FTX founder] Sam Bankman-Fried and that cabal of folks,’ I think it’s a really clear sign that these asset classes and this technology has stickiness to it,” she said.
Despite the setbacks the space has experienced in the past year, a silver lining has been the crypto industry’s efforts to distance itself from FTX and bad actors, panelists said.
Those efforts made an impression on lawmakers, said Allison Behuniak, a staff director on the House Financial Services Committee’s subcommittee on digital assets.
“From a lawmaker and staff perspective, I think you saw the industry roll up their sleeves and say, ‘Now we need to differentiate ourselves from FTX,’” Behuniak said during the panel discussion. “That was the first time that you really saw a full-court press. Many members responded really well to it. Those that were interested in crypto and have been doing the work, they learned more because of what happened. For those that, perhaps it wasn’t their top priority, they had to make it their top priority.”
Lack of regulatory clarity on crypto in the U.S. hasn’t stopped some large firms from rolling out stablecoin projects. PayPal said in August it plans to launch a U.S. dollar stablecoin for payments and transfers. The company said the stablecoin will be available on its peer-to-peer app Venmo soon.
The digital payments pioneer said the stablecoin will reduce payments friction in virtual environments and generally bolster the use of digital assets.
Meanwhile, JPMorgan Chase, the nation’s largest bank, operates its own blockchain network Onyx and a private stablecoin, JPM Coin.
The interest that large players like PayPal and JPMorgan have in stablecoins is an encouraging sign, Argalas said.
“It’s a very big milestone for the industry to have these very large, responsible, heavily regulated players enter the space. And I think that’s a very good thing,” she said. “The stakes are much higher, because of the sheer scale and volume of these players. So I think the combination of these things certainly elevates the importance of getting legislation and the regulatory clarity in place.”