Crypto Legislation Won’t Be Sexy, Senators Say — But It’s Needed Soon

Lawmakers of both parties say crypto legislation won’t be “sexy,” nor “a crowd-pleaser” — but remains a near-term focus

Though the idea of crypto regulation is not “sexy” — nor something to frame a re-election run around — timely attention to the industry’s quick-moving developments is crucial, senators said Wednesday. 

A bipartisan effort to put guardrails in place is especially critical after the collapse of crypto exchange FTX, Sen. Thom Tillis, R-N.C., said during a panel hosted by the Bipartisan Policy Center, adding that the time to act is now. 

“I do think FTX was an inspiring moment in a certain way that it is something we need to do,” the Republican lawmaker said. “The last thing I would want to do on my watch in this Congress is have something at the scale of FTX occur again.” 

The collapse of the crypto exchange in November has been followed by enforcement actions by the SEC and other regulators against various players in the space. Such measures are being taken in part due to the absence of comprehensive legislation, industry participants have said.

The recent fall of Silvergate, Silicon Valley Bank and Signature Bank — which many have said go beyond crypto issues — has inevitably led to even more eyeballs on the industry. 

Read MoreIs Crypto To Blame for Silvergate’s Fall? Industry, Politicians Disagree

“When you have one crisis, the risk of something really bad happening in Congress goes up exponentially,” Tillis said. “When you have a couple in a reasonably short period of time, the risk goes up even more so.”

With Democrats controlling the Senate and Republicans holding a majority in the House of Representatives, Tillis and Sen. John Hickenlooper, D-Colo., who joined the Wednesday event, said a thorough, bipartisan approach to crypto regulation is the only way forward. 

“This is not going to be a crowd-pleaser or an applause line at any of the red-meat circuits that we go on,” Tillis said of a potential crypto bill. “If we arrive at a good bi-partisan place, it will be sound regulation that addresses a lot of the exposures that we see now.”

Added Hickenlooper: “A lot of this stuff that’s not sexy — and is not going to get you on cable news — is the bread and butter.”

The senators’ comments come after Hickenlooper called on the SEC to better regulate the crypto industry in an October letter to Chair Gary Gensler. The senator said at the time that no coordinated regulatory framework creates uneven enforcement and can hurt investors. 

The first congressional crypto-focused hearing of the year, held last month, gave little insight into the direction lawmakers could take from a policy perspective.

Still, Tillis said he would work with Hickenlooper, as well as Sens. Cynthia Lummis, R-Wyo., Kirsten Gillibrand, D-N.Y., and others in an effort to get crypto legislation passed, which has long been a moving target in the US.  

Lummis and Gillibrand introduced the Responsible Financial Innovation Act in June and said earlier this month that a revised version of the proposed law would land on Senate desks in mid-April.

As Congress works on crypto regulation, Tillis said the industry should engage with his office..

“What I don’t really tolerate and have any patience for is the sniping around the edges from groups that…don’t want to be included in scope,” he said. “This is something that needs to be done, and we want it to be fair and we want it to be sustainable.”