The long-awaited CLARITY Act, which should finally determine how the American crypto market is regulated, is once again on pause. After postponing a crucial Senate meeting, Democrats are now reaching out to the crypto sector again in an attempt to revive stalled negotiations.
Senate takes step back after last-minute postponement
On Wednesday evening, a planned discussion of the bill in the Senate Banking Committee was canceled at the last minute.
This happened after Coinbase, a major American crypto exchange, withdrew its support. CEO Brian Armstrong called the law “worse than the current situation” and said he would rather see no law than a bad one.
What is the CLARITY Act?
The CLARITY Act is an American bill that should establish clear rules for the crypto market. The law should determine which regulator will be in charge of crypto, especially the division of powers between the SEC and the CFTC.
The proposal was developed in the Senate in recent months, after years of legal uncertainty and lawsuits against crypto companies. The goal is to create fixed rules for trading, issuance and supervision of crypto assets.
Without Coinbase, a lot of support disappeared. At the same time, it appeared that several Democrats, and also some Republicans, had difficulty with the latest version of the proposal. Even without Coinbase’s withdrawal action, a majority were unsure.
Yesterday was mainly a day of regrouping. Behind the scenes we looked at how the conversations could get started again.
Meeting again with the crypto sector on Friday
According to insiders, Senate Democrats will organize a call with representatives from the crypto sector on Friday. Members of both the Senate Committee on Banking Affairs and Agriculture will join us. Lobby groups and interest groups from Washington are also participating.
A hot topic is again the ban on returns on stablecoins. Stablecoins are cryptocurrencies that are pegged to fiat currencies such as the dollar and often pay interest or rewards.
Banks have been lobbying against such rewards for some time, out of fear of competition. Previous versions of the CLARITY Act prohibited this, much to the dismay of crypto companies.
The Senate Banking Committee has postponed its consideration for the time being. The Agriculture Committee is still formally scheduled to discuss further on January 27, although additional support is also needed there.
Uncertainty weighs on crypto sentiment
The political unrest is immediately felt on the market. Sentiment in crypto took a big hit today. The Crypto Fear & Greed Index fell by 12 points to 49, a neutral position.
A day earlier, the meter was still on ‘greed’, for the first time since October. That day, the Bitcoin price also reached a peak of almost $98,000, after a strong increase of more than 7 percent in two days.
Source: https://newsbit.nl/cryptowet-blijft-hangen-amerikaanse-senaat-zoekt-vandaag-contact-met-de-sector/
