McHenry addresses market structure around crypto

Patrick McHenry, chairman of the House Financial Services Committee, has announced that a series of joint hearings will be held in May to examine the market structure of digital assets in the United States.

Congressman McHenry, Glenn Thompson, Chairman of the House Agriculture Committee, French Hill, Chairman of the Digital Assets, Financial Technology, and Inclusion Subcommittee, and Dusty Johnson, Chairman of the Commodity Markets, Digital Assets, and Rural Development Subcommittee, jointly announced the move on April 27.

“Our committees are launching an unprecedented joint endeavor to enact and sign into law clear rules of the road for the ecosystem of digital assets. We must establish the proper balance between consumer protection and responsible innovation.” The joint statement read.

During a panel with crypto-friendly Senator Cynthia Lummis at the 2023 Consensus event on April 28, McHenry provided additional context for the upcoming hearings:

“We’re going to hold joint hearings when we return in May. This is going to be the first time we have had a holistic view for a house committee hearing around the regulation, our market structure around digital assets, and a holistic view of it.”

“What we plan to do over the next two months is to report out a bill that deals with the capital raising piece for digital assets, all the way through to how a product can go from a securities regime to a commodities regime, while also preserving our rights around products that are neither securities nor commodities.”

McHenry also emphasized that the purpose of the proceedings is to establish a bill that provides regulatory clarity to the cryptocurrency industry, which complements the work on the bipartisan bill being headed by Senator Lummis and Senator Kirsten Gillibrand.

The Responsible Financial Innovation Act, also known as the Lummis-Gillibrand bill, was introduced in the U.S. Senate in June 2022 and addresses, among other things, SEC and CFTC jurisdiction, stablecoin regulation, and crypto taxation.

The expansive bill has encountered delays, likely due to its complexity for senators unfamiliar with cryptography. Since then, Lummis and Gillibrand have revised the measure, and the next draft is expected to be released shortly.

“This is the work that Senators Lumms and Gillibrand did in the Senate, but this is our effort in the House,” he said.

Lummis, commenting on the revised measure, indicated that this version will likely place a greater emphasis on “national security interests,” such as cyber security.

“Some of the skeptics I’ve spoken with about digital assets are concerned that our legislation does not adequately address cybercrime.” He added.

Consequently, I anticipate that our legislation will include a more robust cybercrime provision. “I believe there will be provisions requiring certain registration […] so that businesses are appropriately regulated and vetted,” she said.