US legislative negotiations on market structure legislation appear to be persistent but disputed.
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The story
Political work around digital assets seems to be in a bit of a limbo as the US government shuts down throughout its second week. There are signs that legislators continue to prepare details of market structure legislation that industry desperately wants in the hope that it will cement the roles of Securities and Exchange Commission, Commodity Futures Trading Commission and determine how Crypto Industry will be dealt with by US rules. To this end, Democrats suggested certain rules regarding decentralized funding (DEFI) that members of the crypto industry were quickly and high against.
Why it matters
The industry is still waiting to see what kind of market structure legislation eventually goes out of Congress. Senators’ negotiations appear to have gotten ugly – at least in public – based on reporting this week.
Breaks down it
Some Senate Democrats put together a proposal for regulating decentralized funding (DEFI), which essentially deals with any project that works with clients in the front end, must register with a federal regulator and be treated as a broker. Any DEFI project not aimed at income generation would be “sufficiently decentralized” and therefore not subject to regulatory supervision.
It also contains a provision that means that developers have no legal responsibility for how their open source projects are used, provided they do not benefit from the technology.
The Crypto industry was not excited about this proposal. Leaders, both lawyers and lobbyists claimed that the proposal would damage the defi segment in the crypto industry and push it back immediately.
The proposed defi rules, first reported by Punchbowl News and Politico, apparently mark another point in violation of Republicans and Democrats working on the bill. According to Politico, it seems that the parties are far apart where chairman of the Senate Bank Committee Tim Scott is pressing for Democrats to accept a Markup hearing before continuing to negotiate languages and democrats who want more input into the actual text of the legislation.
As a reminder, any market structure bill needs bipartisan support to get through the Senate, and last month a group of 12 Democrats who are most likely to vote for the bill is a list of priorities they will see before they would support the legislation.
It is possible that the Defi proposal is stronger than it should be like a negotiating tactic and can be watered down.
A markup was originally scheduled for September 30 and was pushed late last month to October 20, but it seems that this date may also be in doubt.
Several people I talked to this week say they are more pessimistic that the market structure legislation can happen before spring, pointing to both the ongoing government’s shutdown and the lack of visible movement from legislators preparing the bill.
As Coindesk reported last week, while shutdown is not a good sign of market structure negotiations, there is still time for the industry to really need to worry about whether this bill will happen in 2025 or not.
Wednesday
Thursday
- DC FINTERCH WEEK DAY 2 (I moderate a panel; say hello if you’re there!)
- PGP’s DC Privacy Summit
If you have thoughts or questions about what to discuss next week or any other feedback you would like to share, feel free to e -mail me at [email protected] or find me at bluesky @nikhileshde.bsky.social.
You can also participate in the group interview at Telegram.
See you next week!
