Moody’s credit ratings agency’s investors’ service has stated that in the absence of support from US legislators from both political parties for legislation that concentrates on digital assets, investors and companies may seek alternative crypto-friendly jurisdictions.
Moody’s report on June 20 highlighted significant disparities in how Democrats and Republicans have approached legislation pertaining to cryptocurrencies in the United States. The report specifically drew attention to conflicting language in a bill concerning stablecoins and another bill aimed at implementing a comprehensive framework for digital assets. The disagreements among lawmakers revolve around determining whether regulation of stablecoins should be under federal or state jurisdiction and addressing consumer protection concerns following the bankruptcy of several cryptocurrency firms in 2022.
According to the report, there is a consensus on the necessity of consumer protections and a unified structure for digital assets. However, Democrats and Republicans differ in their approaches to achieving these goals. Failure to come to a bipartisan agreement and to progress with legislation tailored towards digital assets may result in the United States being less attractive to firms and investors. This is especially significant in a situation where numerous other jurisdictions are making progress with comprehensive regulations.
Moody’s has highlighted the divergent perspectives held by Republicans, typically represented by House Financial Services Committee Chair Patrick McHenry, and Democrats, usually represented by ranking member Maxine Waters, on the subject of digital assets. Both parties expressed their individual concerns regarding this matter during a hearing on the future of digital assets held on June 13. However, Moody has observed that the gathering has uncovered even more pronounced political discord regarding the establishment of a regulatory framework for cryptocurrencies.
“Some Democrats expressed fears that the proposed bill may have adverse implications for consumer protections and fraud prevention. […] The path toward bipartisan agreement looks highly uncertain, and a lot more debate is to be expected in Congress.”
Numerous cryptocurrency companies have expressed their dissatisfaction with the lack of regulatory guidance from U.S. legislators. As a result, some of these firms are considering relocating to other countries for better prospects. For instance, executives at oinbase">Coinbase, who are currently based in the U.S. and are dealing with a lawsuit from the Securities and Exchange Commission, visited the United Arab Emirates in May to investigate the possibility of using the region as a potential “strategic hub.”
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