- Traditional banks clash with crypto firms as new regulations loom on Capitol Hill.
- Wall Street's giants push back against crypto's legislative wins, fearing destabilization.
- Get Discounted Real-Time Trade Alerts For a Volatile Market (Labor Day Special)
An escalating lobbying conflict is unfolding in Washington as traditional banking entities and cryptocurrency companies vie for regulatory favor. The contention revolves around the Republican party’s initiative to implement new regulations for digital assets.
What Happened: The crypto industry has enjoyed several lobbying victories since President Donald Trump‘s return to office, including the first legislative revamp of digital asset regulations. With Republicans set to pass a second, more extensive bill to strengthen the crypto market, Wall Street factions are voicing their concerns.
Traditional financial institutions are apprehensive that some of the proposed crypto-friendly reforms could upend their business models and threaten financial stability.
According to a report by the Politico, there are worries that lenders could experience a deposit flight, as customers shift to more leniently-regulated crypto products.
The lobbying tussle has intensified this month, with bank trade associations urging lawmakers to modify an already-signed crypto law that Congress adopted in July. This has triggered opposition from the crypto industry.
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Organizations like the American Bankers Association are now pressuring senators to amend the law when they consider a second, larger crypto market structure bill next month, reports the outlet.
They aim to prohibit all crypto companies from offering yield to customers who hold stablecoins and repeal a section of the law that they argue allows state-chartered uninsured depository institutions to operate nationwide without adequate supervision.
On the other hand, crypto firms, which had lobbied for years for a stablecoin bill, assert that the matter is settled. The GENIUS Act “is settled law,” Summer Mersinger, CEO of the Blockchain Association, a leading industry trade group told Politico.
Why It Matters: The outcome of this lobbying battle could significantly impact the future of financial regulations in the United States.
The clash represents a broader struggle between traditional financial institutions and emerging fintech companies over the control of financial systems and consumer trust.
The decisions made in Washington could set a precedent for other countries grappling with similar issues, potentially shaping the global financial landscape.
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