Crypto Quill

The chair of the U.S. House Financial Services Subcommittee on Digital Assets, Rep. French Hill (R-AR), has expressed his optimism about the prospects of passing crypto-related bills in 2024. He said he was pleased with the bipartisan support and the administration’s involvement in the crypto legislation.

Crypto Legislation Faces Timing Issues

Rep. Hill spoke at an event hosted by the Foundation for Defense of Democracies on Jan. 29, where he discussed the crypto legislation in the United States in the upcoming year. He said he was optimistic that the two key bills that the subcommittee passed in 2023 would come to fruition in 2024.

The two bills are the Financial Innovation and Technology for the 21st Century Act and the Clarity for Payment Stablecoins Act. The former aims to foster innovation and inclusion in the financial sector, while the latter seeks to provide a clear regulatory framework for stablecoins.

However, Rep. Hill also acknowledged the timing issues that could delay the crypto legislation. He said that there were many things on the congressional plate, and that timing was everything in politics. He said that he was navigating the situation with his colleagues and the administration.

CBDC Could Be Good for the Dollar

Rep. Hill also touched on the topic of central bank digital currencies (CBDCs), which he said could be beneficial for the U.S. dollar. He said that he supported a well-regulated and transparent payment stablecoin that converted fiat U.S. dollars into digital tokens. He said that such a stablecoin could be the buyer of the margin of the short-term treasury bills, which would be good for the dollar.

He also said that he did not recommend a CBDC as a business strategy, as he did not think that consumers or institutions would prefer it over the existing payment systems. He said that the U.S. dollar had a special position in the world, and that the U.S. needed to preserve its importance as the reserve currency.

He said that the U.S. could maintain its leadership in the global financial system by having a right regulatory system and an open capital market. He said that a USD-based stablecoin could be the right direction in the long term, but that the primary task of the subcommittee was to provide the right means for the tech innovations within the regulatory environment, not to lead them.

Crypto Regulation Expected to Increase in 2024

Rep. Hill’s remarks came amid the growing expectations of increased crypto regulation in 2024. Analysts predict that the rules will cover anti-money laundering and counter-terrorist financing risks, the conduct of companies operating in the crypto space, and supervisory actions concerning token sales.

The U.S. is not the only jurisdiction that is working on crypto regulation. The European Union is set to become the first major global jurisdiction to formally enact a broad suite of laws and regulations governing the crypto sector in 2024. The Markets in Crypto Assets Regulation, or MiCA, aims to establish uniform EU crypto regulation and provide legal certainty for digital assets beyond the scope of current EU financial services legislation.

Analysts also expect that the focus areas for 2024 will extend beyond the general trend of increased regulatory intensity. They anticipate that financial institutions will develop stronger risk management frameworks and enhance their capital and liquidity requirements to reflect the current economic climate. They also foresee that sustainability and environmental, social, and governance (ESG) factors will hold greater weight in international crypto regulation, with cybersecurity continuing to be a top priority as digital asset platforms remain in the crosshairs of hackers and scammers.