Cryptocurrency Industry Proposes Solutions to End Legislative Impasse: Report
Digital asset firms have suggested expanding community banking institutions' involvement in stablecoin operations as legislative discussions in the Senate remain deadlocked on the controversial market structure legislation.
Digital asset industry players are purportedly presenting compromise offers centered around stablecoin yield provisions in a bid to revive momentum on the stalled cryptocurrency market structure legislation.
While the bill successfully navigated through the House of Representatives, it has encountered obstacles in the Senate amid ongoing discussions about whether entities issuing stablecoins should have permission to provide yields, with banking institutions contending this would create direct competition with and drain funds from conventional deposit accounts.
Unnamed individuals familiar with the matter informed Bloomberg that cryptocurrency enterprises are currently advancing fresh proposals, including granting community banking institutions an expanded position within the stablecoin ecosystem, as a strategy to facilitate the bill's passage through the Senate.
Additional suggested compromises under consideration include mandating that stablecoin issuers maintain their reserves at community banking institutions and providing assistance to community banks in launching their own stablecoin offerings via collaborative partnerships.
No deposit flight, says Senator
A gathering at the White House on Monday that brought together representatives from the cryptocurrency sector and banking organizations concluded without reaching a consensus.
Senate Banking Committee Chairman Tim Scott shared with Fox News on Wednesday that permitting cryptocurrency companies to distribute rewards represents a positive development, though they must refrain from marketing themselves as if they possessed bank status.
The fundamental point is that "there will not be a deposit flight. We're going to sit down with consumer banks, hopefully next week again, and have this conversation," he said.
"The good news is that both sides remain at the table [...] we're going to overcome those hurdles and make sure that America is the crypto capital of the world."
Bill still needs Senate approval
A Republican-authored draft version of the market structure legislation was unveiled by the US Senate Agriculture Committee in January, though it failed to secure backing from Democratic members.
Legislative representatives conducted a markup session on Jan. 29, which resulted in the bill progressing beyond the Agriculture Committee, however to achieve full passage and eventually move forward to President Trump for his approval, the legislation requires backing from a minimum of seven Democrats within the complete Senate.
The markup proposal from the Senate Banking Committee puts forward a more stringent interpretation of the bill, and reconciliation between both versions must occur before the legislation can move ahead.