JPMorgan Chase CEO Jamie Dimon did not hold back his negative views on cryptocurrency during a recent Senate hearing. Dimon expressed his opposition to crypto, including Bitcoin, and even suggested that it should be shut down if he had the power. In addition, Dimon, alongside seven other bank CEOs, called for crypto companies to adhere to the same anti-money laundering regulations as traditional banks.
Despite the strong stance of these banking executives, lawmakers in Washington are still far from establishing clear regulations for the crypto industry. However, the recent surge in Bitcoin prices is largely driven by optimism surrounding the potential approval of a spot-based Bitcoin exchange-traded fund (ETF) by the Securities and Exchange Commission (SEC). This would be a significant development for companies like BlackRock and Fidelity, who are eager to enter the crypto market through regulated investment products like ETFs.
While bank CEOs emphasize the need for consistent rules across the financial sector, the outlook for major crypto legislation passing through Congress in the near future is uncertain. The crypto bills suffered another setback when Representative Patrick McHenry of North Carolina, a strong advocate for the industry, announced that he would retire at the end of next year. As the former chairman of the House Financial Services Committee, McHenry had the power to introduce legislation supporting the crypto industry, although pushing it through to approval proved challenging.
Some analysts suggest that McHenry may be more motivated than ever to leave a lasting impact before his departure. They believe that he might be willing to make deals and negotiate to create a comprehensive legislative package that would secure his legacy in the crypto space. In a note on Wednesday, TD Cowen analyst Jaret Seiberg wrote, “It is now or never for the chairman. That provides him an incentive to cut deals to create a legacy-sealing package before he departs.”
As the debate surrounding crypto regulation continues, the crypto industry eagerly awaits clarity and certainty from lawmakers in Washington. While the road to establishing comprehensive rules for the crypto ecosystem may be long, recent developments suggest that progress may be on the horizon.
The Future of Crypto Regulation
The fate of two bills designed to regulate stablecoins and crypto brokerages hangs in the balance. Spearheaded by McHenry, these bills aim to establish guidelines for companies like Coinbase Global. Coinbase has been actively lobbying in Washington D.C., expressing concerns about complying with existing, outdated securities laws.
Although these bills may pass the House, they currently lack sufficient support from Democrats in the Senate and the Biden administration, making it unlikely for them to become law. As we look ahead to 2024, the approaching election further diminishes the likelihood of major legislation being prioritized over campaigning and fundraising.
For crypto companies, this means they will continue to operate under the current system for the next year, hoping that the next Chair of the House Financial Services Committee, who assumes office in 2025, shares McHenry’s determination to get things done.
In the meantime, the primary concern for companies like Coinbase is whether they can successfully navigate an SEC crackdown under existing regulations. In June, the SEC filed a lawsuit against Coinbase for allegedly operating as an unregistered securities exchange. The company is vigorously fighting this case, and oral arguments are scheduled for January 17th to determine its course.
Nevertheless, previous instances of uncertainty have not hindered crypto rallies. Unfortunately, it seems that the industry will continue to face a legal cloud in the foreseeable future.