Congress Tackles Cryptocurrencies, Bitcoin Falls

Congress Tackles Cryptocurrencies, Bitcoin Falls

In Congress, Democrats and Republicans hold drastically opposing opinions on cryptocurrency. Democrats made a case for wide “guardrails”. They did this to safeguard consumers and investors during a Congressional hearing on Wednesday. Democrats alleged that the markets have grown riddled with manipulation, fraud, and “stablecoin” tokens that might disrupt the broader financial system. 

Rep. Don Beyer, the chairman of the Joint Economic Committee, referred to this issue in a statement and said that the mainstreaming of digital assets is building the groundwork for a massive influx of capital into this sector. He warned that yet crypto-assets continue to create significant consumer protection issues. He referred to the retail investors duped in the recent Squid Game token as an example for higher caution.

Latest fluctuations in the crypto market 

Bitcoin continued to decline on Thursday, losing more than 2% and reaching a low of $58,283. Bitcoin is presently trading significantly below its November 10 highs of $69,000.

Ether, meanwhile, was down 0.4% at $4,134. Other cryptocurrencies fared worse, with Solana down 4%, Dogecoin down 5.4 percent, and Shiba Inu down 10.9 percent. Beyer encouraged Congress to enact the DigitalAsset Market Structure and Investor Protection Act, which he introduced this summer. The 58-page bill includes measures that would classify some cryptos as securities and subject them to SEC inspection, as well as a wide definition of digital assets as commodities that the Commodity Futures Trading Commission would supervise.

Beyer also wants the Treasury Department to adopt guidelines for stablecoins, which are tokens meant to keep their value constant at $1, claiming that they pose systemic financial dangers. According to him, stablecoins should be subject to capital reserve and liquidity criteria similar to those imposed on bank deposits and money market funds. He also wants to outlaw stablecoins currently on the market if they don’t get official permission.

The Biden administration is already working on laws to monitor the tokens. They also released relatable suggestions to govern the business, so Congress may not need to act on stablecoins.

Republicans on the panel did not share this opinion. Sen. Mike Lee, R-Utah, encouraged Congress to let the technology develop. He said that one-size-fits-all legislation is worrisome, especially when it’s targeting bitcoin and other cryptocurrencies and that it should be avoided. Lee warned that strict laws would drive firms researching blockchain technology abroad. Congress should use a soft touch when enforcing existing rules.