Cryptocurrency Stocks Drop 4% as House Blocks Key Legislation

The U.S. House of Representatives' "Cryptocurrency Week" faced a setback on Tuesday as Republican conservatives successfully blocked the progress of three cryptocurrency-related legislative measures, including the stablecoin bill. This development led to a decline in related concept stocks, with Circle, a prominent stablecoin issuer, experiencing a significant drop of over 4% in its stock price.

The procedural vote, which took place in the afternoon, ended with 196 votes in favor and 223 votes against, with 13 Republican representatives casting their votes against the measures. The opposition was driven by a combination of political disagreements and dissatisfaction with the actions of their colleagues in the Senate. The blocked legislation included measures aimed at providing clearer guidelines for stablecoins, which are cryptocurrencies pegged to the value of a stable asset, such as the U.S. dollar. The stablecoin market has grown rapidly in recent years, with Circle's USDC being one of the most widely used stablecoins.

One of the Republican representatives from Georgia expressed that the reason for voting against the measures was to bundle the stablecoin bill with two other legislative measures—a market structure bill and a bill prohibiting the Federal Reserve from issuing a digital currency. However, the House leadership did not agree to vote on this amendment. The representative emphasized that the stablecoin bill did not reflect the executive order issued by the on January 23, which clearly stated the prohibition of central bank digital currencies.

Another Republican representative from Maryland, who is the chairman of the conservative group "Freedom Caucus," stated that the group's members believe that the CBDC should be completely eliminated, but the current rules do not allow for such action. A Republican representative from Ohio, who voted in favor of the procedural rule but opposed the stablecoin bill, expressed frustration with the lack of respect shown by the Senate towards the House's efforts. The representative hoped for a plan that would make the "Cryptocurrency Week" truly focused on cryptocurrencies.

The Federal Reserve has no intention of issuing a CBDC, and the Chairman has repeatedly emphasized the need for clear authorization from Congress. If the three bills are merged, it could potentially cause a split among Republican representatives. Even if the House passes the "three-in-one" cryptocurrency bill, the Senate would still need to review it, which could result in significant delays.

The latest market information suggests that the House may attempt to vote again later on Tuesday. If the vote passes, debates on cryptocurrency legislation could begin immediately, with a final vote expected later in the week. The setback in the legislative process has sparked discussions among industry experts and stakeholders about the potential impact on the cryptocurrency market. Some analysts suggest that the delay in regulatory clarity could lead to increased uncertainty and volatility in the market. Others argue that the failure to pass the legislation does not necessarily mean the end of regulatory efforts, as lawmakers may continue to work on the bills in the coming months.

The decline in concept stocks following the vote highlights the sensitivity of the cryptocurrency market to regulatory developments. Investors and market participants closely monitor legislative actions, as they can significantly influence the direction and stability of the market. The recent events underscore the importance of regulatory clarity for the growth and adoption of digital currencies. The outcome of the vote also raises questions about the political dynamics within the House of Representatives. The successful obstruction by Republican conservatives indicates a divide within the party on the issue of cryptocurrency regulation. This division could complicate future efforts to pass legislation related to digital currencies, as lawmakers from different factions may have differing views on the appropriate regulatory framework.