The cryptocurrency bill’s definitions around decentralized finance (DeFi) are the greatest obstacle to progress on the crypto market structure legislation, the analysts said, according to the report. The debate centers on the definition of the point at which decentralized protocols, software and developers become regulated service providers, per the report.
The debate over stablecoin rewards remains a sticking point but may be easier to solve, the Citi analysts said, according to the report. Possible compromises include time-limited yield and alternative incentive structures, per the report.
It was reported Thursday (Jan. 29) that the U.S. Senate Agriculture Committee voted to push forward its version of legislation that would create a nationwide regulatory framework for cryptocurrencies, but the strictly party-line outcome raised doubts about whether the measure can survive a vote by the full Senate.
In addition, progress in the Senate Banking Committee has been more difficult. That panel is working on related legislation that has become the center of an intense lobbying battle between banks and crypto companies over the issue of stablecoin rewards. This dispute has slowed momentum for a broader crypto market structure bill.
PYMNTS reported Thursday that the crypto bill’s provisions addressing securities regulation fall under the Senate Banking Committee’s jurisdiction and will need to be merged into a final package. That reconciliation process will test whether harmonization can survive partisan and jurisdictional divides.
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That report also said the White House’s crypto council will host closed-door talks with banking and cryptocurrency executives on Monday (Feb. 2) to address the stalled crypto legislation. The meeting has a particular focus on interest and rewards paid on dollar-pegged stablecoins, reflecting growing concern that stablecoin policy could derail broader reform.
The PYMNTS Intelligence and Citi report “Chain Reaction: Regulatory Clarity as the Catalyst for Blockchain Adoption” found that blockchain’s next leap will be shaped by regulation; that evolving guidance is beginning to create the foundations for safe, scalable blockchain adoption; and that implementation challenges continue to complicate progress.
