Cryptocurrency is at last having its 'Dodd-Frank Moment'. Events in recent years such as the collapse of Terra’s algorithmic stablecoin and the demise of crypto exchange FTX have pushed the lawmakers to act rather than study the sector. Earlier this month, the US Representatives Maxine Waters, D-Calif., and Patrick McHenry, R-N.C. introduced draft legislation on stablecoins. The US SEC Chairman, Gary Gensler, expressed his support for this draft legislation, understanding the importance of guardrails to prevent undermining of the $100 trillion global capital market.

This draft legislation got further momentum when the European Union Parliament passed the Markets in Crypto Assets (MiCA) regulation with overwhelming support. This framework has provided clarity in certain areas of the sector and is likely to enable crypto companies getting more access to banking services.

It has become evident that the digital currency space race has encouraged many countries around the world to come up with regulation to support blockchain-based financial services.

Driven by the increasing need for regulation and the need to tackle anomalies that may go unchecked, Dante Disparte, the policy lead and chief strategy officer of USDC stablecoin issuer Circle, believes that 2023 will be the breakthrough year for crypto legislation. He noted that the US has regulated the market through situations and the same will happen in the cryptocurrency market too.

Disparte further stated that in the next five years, the blockchain-based financial services supporting daily payments activity, like stablecoins, will live under central bank oversight. Chris Perkins, President of Web3 investment firm CoinFund and a member of the CFTC Global Markets Advisory Committee, expressed a similar view, saying that stablecoin legislation in the US could come first. He further noted that it could help in reinforcing the US dollar as the global reserve currency.

What is certain is that for a market like cryptocurrency to flourish and meet its full potential, it needs greater federal regulatory clarity. It should become an exporter of this innovation around the world, creating a floor and harmonizing those standards. This pathway to legislation in the United States is now increasingly becoming evident, pushing participants in the cryptocurrency sector to aspire for the best.



Other News from Today