JPMorgan
Chase CEO Jamie Dimon minced few words when asked at a Senate hearing on Wednesday what to do about crypto’s uses for illegal activity like terrorism, drug trafficking, and ransomware attacks.
“I’ve always been deeply opposed to crypto, Bitcoin, etc.,” Dimon said. “If I was the government, I’d close it down.”
Dimon and seven other bank CEOs also said that crypto companies should be required to abide by the same anti-money-laundering rules as banks.
For years, Dimon has disparaged Bitcoin and other cryptocurrencies even as he’s said blockchain technology—the ledger system that powers most coins—has value. In 2017, the CEO said governments would “crush” Bitcoin one day, and that people “stupid enough to buy it” would ultimately “pay the price.” At the same time, JPMorgan has moved forward with its own blockchain business, called “Onyx,” to tokenize other financial assets.
Yet for all the talk of regulating crypto, lawmakers in Washington are seemingly no closer to writing rules for the crypto ecosystem.
Indeed, the recent rally in
Bitcoin
is being fueled by hopes that the Securities and Exchange Commission will imminently approve a spot-based Bitcoin exchange-traded fund—a potentially big win for companies like
BlackRock,
Fidelity that are eager to expand into crypto through regulated products like ETFs.
While bank CEOs want crypto to abide by the same rules they must follow, the chances of major legislation getting through Congress aren’t great in the near-term.
The latest blow to crypto bills came with the announcement from Rep. Patrick McHenry (R., N.C.) this week that he’s planning to retire at the end of next year. McHenry has been one of crypto’s staunchest advocates, and his post at the helm of the House Financial Services Committee gave him the power to put forth industry-favored legislation, if not to push it to the finish line.
In an attempt to cement his legacy, some analysts say McHenry might be more motivated to get something done. “It is now or never for the chairman. That provides him an incentive to cut deals to create a legacy-sealing package before he departs,” wrote TD Cowen analyst Jaret Seiberg in a note on Wednesday.
The two bills McHenry has helped spearhead would set guardrails around so-called stablecoins and crypto brokerages like Coinbase Global.
Coinbase
has undertaken a lobbying push in D.C. in favor of the bill that would impact market structure, arguing it’s unclear how the company can comply with existing, decades-old securities laws.
Yet even if the bills passed the House, neither has enough support among Democrats in the Senate or the Biden administration to become law. That’s unlikely to change next year, and their prospects may only get worse as the 2024 election approaches and major legislation gets sidelined by campaigning and fundraising.
What that means for crypto companies is that they’re likely to operate under the current system for the next year and hope that the next chair of the House Financial Services Committee, taking office in 2025, shares McHenry’s drive for getting something done.
If any crypto-related provisions have had any momentum, it’s been the push by Sen. Elizabeth Warren (D., Mass.) and others to increase the requirements of crypto firms and protocols so as to combat money laundering and terrorist financing. Warren has co-sponsored related legislation with bipartisan backing—and some policy analysts think there’s at least some chance it could be tacked onto a must-pass defense bill this month.
In the meantime, the more pressing issue for firms including Coinbase is whether they can successfully thwart an SEC crackdown under current rules. The SEC in June sued Coinbase, alleging that it operated as an unregistered securities exchange. The company is fighting the lawsuit, and oral arguments on whether the case should proceed are scheduled for Jan. 17.
If judges agree with Coinbase or other crypto firms that the SEC lacks the authority to pursue much of the crypto industry, that could be an impetus for Democrats to come to the table and hash out a deal with McHenry and other Republicans. The better bet is that the court cases drag on for years or provide muddied guidance.
Uncertainty hasn’t stopped crypto rallies before. For the foreseeable future, a legal cloud will continue to hang over the industry.
Write to Joe Light at [email protected]
Read the full article here