House Republicans this week took up a trio of bills that would help establish federal rules of the road for cryptocurrency, handing the industry a major win and fulfilling President Trump’s campaign promise to boost digital currencies in the United States.
All three bills would effectively put a government seal of approval on an industry that has long been met with skepticism from Washington, and would help cement cryptocurrency’s transformation from a scandal-ridden technology experiment to a mainstream financial and commercial instrument.
The crypto industry poured well over $100 million into getting pro-crypto politicians elected last year, and has thrown its weight behind the legislation, mounting an intensive lobbying campaign to win bipartisan support for the measures.
Here’s a look at what each would do.
Regulate stablecoins
The so-called Genius Act would establish a regulatory framework for stablecoins, a type of digital currency that is pegged to the value of the U.S. dollar.
Stablecoins are often seen as a sort of bridge between crypto and traditional currency. They are designed to avoid the wild and much-publicized fluctuations in value of some popular cryptocurrencies like Bitcoin.
Proponents of the legislation have argued that the bill would help modernize America’s financial system and break down the barriers between existing financial markets and cryptocurrency. Opponents argue it is overly lax and fails to prevent abuses or protect consumers.
Many Democrats also have warned that the bill lacks strong anti-corruption provisions to prevent fraud and money laundering. They pressed unsuccessfully to include provisions that would prevent Mr. Trump and his family from continuing to profit from cryptocurrency.
That issue galvanized some lawmakers after a Trump-affiliated crypto firm secured a deal to take $2 billion from a fund backed by the government of Abu Dhabi. It also became a wedge among Democrats when the Senate debated the bill last month.
But the legislation passed with bipartisan support, marking the first time the Senate had approved major cryptocurrency legislation. Passage in the House, which is expected on Thursday afternoon, would send it to Mr. Trump, who has promised to sign it.
Create a new regulatory framework for crypto
Legislation known as the Clarity Act is more expansive and faces a longer road to enactment. It would lay out a regulatory framework governing a vast universe of crypto assets.
In particular, the bill would shift power away from the Securities and Exchange Commission to police digital currency. The agency was central to the Biden administration’s enforcement actions against the crypto industry, arguing that digital currencies should be regulated like publicly traded stocks and bonds.
The Clarity Act, which is strongly supported by the industry, would push more control and oversight to the Commodity Futures Trading Commission, an agency perceived as being more friendly to crypto.
Proponents say the bill is needed to provide regulatory clarity to a young industry that has occupied an ambiguous space between agencies. Opponents, including many Democrats, argue that changing the S.E.C.’s role would allow the crypto industry to skirt critical financial regulations and leave consumers unprotected.
House passage of the bill, expected later Thursday, would send it to the Senate, where its fate is uncertain.
A ban on central bank digital currencies
A third bill would stop the Federal Reserve from issuing its own digital currency. Central banks in other countries have been exploring and experimenting with their own digital offerings, which are broadly known as central bank digital currencies — or C.B.D.C.s.
Unlike existing cryptocurrencies, a Fed-issued digital currency would be backed by the U.S. government. Cryptocurrency investors have long objected to the creation of a central bank digital currency, arguing that it would raise privacy issues for consumers.
Mr. Trump, fulfilling a campaign promise, issued an executive order earlier this year that bars federal agencies from developing a central bank digital currency. A group of ultraconservative House Republicans threatened this week to sink all three cryptocurrency bills because they wanted stronger assurances that the ban on C.B.D.C.s would be enacted.
Many Democrats oppose a ban on central bank digital currencies, arguing that they would help foster stability in crypto markets.
Representative Maxine Waters of California, the top Democrat on the House Financial Services Committee, has said that she believes an American C.B.D.C. would help build public trust for digital currencies, and that tying the Federal Reserve’s hands might allow other countries to promote their own digital currencies at the expense of the dollar.
The House is expected to pass the measure, which would send it to the Senate. As part of their deal with conservatives to allow the crypto package to move this week, House Republican leaders also committed to including its provisions in the annual defense policy bill, in hopes of ensuring it will be signed into law.
Michael Gold covers Congress for The Times, with a focus on immigration policy and congressional oversight.
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