Senate Hears Bipartisan Push for Digital Asset Regulation

The Senate Banking Subcommittee on Digital Assets held its inaugural hearing today, titled "Exploring Bipartisan Legislative Frameworks for Digital Assets." The event, chaired by Senator Cynthia Lummis (R-WY) and Senator Ruben Gallego (D-AZ), focused predominantly on stablecoin regulation, with witnesses including Tim Massad, Jai Massari, Jonathan Jachym, and Lewis Cohen.

Setting the tone, Senator Lummis expressed her intent to pass bipartisan legislation for Bitcoin and stablecoins, although the term "Bitcoin" was rarely mentioned during the hearing. Massad, a former CFTC Chair, emphasized the importance of monitoring stablecoin transactions and proposed extending the "regulatory perimeter" to address Anti-Money Laundering (AML) challenges. He suggested designing smart contracts to mitigate the risk of bad actors and requiring stablecoin issuers to aggressively monitor transactions.

Massari, Chief Legal Officer at Lightspark, highlighted the public nature of stablecoin transactions on blockchains and called for sensible regulation. She advocated for a common set of standards to govern stablecoin issuers, ensuring user confidence in their backing. Jachym, Global Head of Policy and Government Relations at Kraken, attempted to shift the focus to the Digital Asset Market Structure bill but received limited uptake. Cohen, a partner at Cahill Gordon & Reindel LLP, echoed concerns about the lack of regulatory certainty and the threat of litigation in the U.S. crypto industry.

Senator Bernie Moreno (R-OH) was the only participant to push back against the U.S. government's desire to overregulate digital assets, arguing that innovation should not be dictated by Washington. Throughout the hearing, subcommittee members asked witnesses about jurisdictions to model the U.S. digital asset regulatory framework after. Massad suggested looking to Europe and the MiCA framework, while Jachym pointed to states like Wyoming.

The hearing concluded with a consensus that bipartisan cooperation is essential for creating clear rules for the crypto industry. Jachym expressed relief, stating, "Bipartisan support for crypto policy is no longer a distant goal on the horizon."