Crypto Assets Regulatory Bill Encounters Setback in the U.S. House of Representatives

This week was seen as an important moment for the Crypto Assets industry in Washington, but it took an unexpected turn. On Tuesday, three highly anticipated Crypto Assets regulatory bills failed to pass in a procedural vote, with the results showing 196 votes in favor and 223 against. This outcome surprised many, as the industry had previously expected these bills to pass smoothly.

It is worth noting that 13 Republican representatives voted against the procedural motion to block the debate and advancement of this decision bill, alongside Democrats. This means that unless the House passes the relevant rules of procedure again, these bills, which carry the hopes of the industry, will not be able to enter the substantive debate stage.

The stalled encryption legislation proposal includes three bills that are crucial to the industry:

1. Stablecoin Regulatory Bill: Aimed at providing a clear regulatory framework for stablecoins, it is seen as key to unlocking broader institutional adoption.

2. Digital Asset Classification Act: Aims to clarify the classification rules for digital assets, specifying which assets should be regulated as securities by the U.S. Securities and Exchange Commission and which should be regulated as commodities by the Commodity Futures Trading Commission, in order to end the long-standing regulatory uncertainty that has plagued the industry.

3. Central Bank Digital Currency (CBDC) Restriction Bill: This proposal aims to limit the Federal Reserve's creation of central bank digital currency, reflecting some legislators' concerns about government control over digital currency.

These bills are seen as the cornerstone of the United States establishing a comprehensive and predictable regulatory framework in the digital assets space, which could bring much-needed certainty to the market, attracting more capital and innovation.

The most eye-catching aspect of this vote is undoubtedly the opposition stance of 13 Republican congressmen. Among them, Marjorie Taylor Greene from Georgia publicly explained her position on social media. She stated that the stablecoin regulation bill failed to include a ban on central bank digital currencies, and the Speaker did not allow related amendments to be submitted. Greene emphasized that Americans do not need a central bank digital currency controlled by the government.

House Speaker Johnson is in a dilemma. After the failed vote, he stated that Republicans "are still in dialogue, answering questions," trying to appease and garner support from these conservatives. However, he also admitted that bundling all three bills into one "big package" is not feasible. This reflects the strategic predicament faced by Republican leadership in balancing the demands of different factions within the party and ensuring legislative viability.

After the news of the failed vote broke, stocks related to Crypto Assets fell sharply: the stock price of a stablecoin issuer dropped over 7%, a crypto exchange fell over 4%, and the stock price of a digital asset company also decreased by 2%.

House Speaker Johnson has announced plans to restart procedural voting on the Crypto Assets bill on Wednesday local time. The Louisiana Republican told reporters that the party is still "engaged in ongoing communication to address lawmakers' concerns" and emphasized that "these Crypto Assets bills are a shared priority of the White House, the Senate, and the House."

Despite setbacks, some industry analysts remain optimistic about the future of the legislation. A policy analyst pointed out in a report to clients: "We are likely to vote on the rules in the House again tomorrow (Wednesday). If that doesn't happen tomorrow, it may be delayed until next week." He further stated that he still expects the House to pass the stablecoin regulatory bill.

The CEO of a certain industry association is also confident about the final passage of the bill. He pointed out on social media that the best way to address the prohibition of CBDCs is through the stablecoin regulation bill: "If lawmakers are interested in banning CBDCs and competing with digital currencies issued by other countries, then the way to do that is through the stablecoin regulation bill and allowing the private stablecoin market to thrive in the U.S."

This setback confirms a reality: in Washington, even agendas strongly promoted by the top may fall victim to the subtle power balance within the party. When technological innovation encounters political maneuvering, the "compliance path" of Crypto Assets is destined to be fraught with challenges.