What’s next after the House passed bill outlining a crypto regulatory framework: CNBC Crypto World

What’s next after the House passed bill outlining a crypto regulatory framework: CNBC Crypto World

today it’s deadline day for a decision from the SEC on a spot ether ETF the House of Representatives passes a crypto Market structure Bill marking the industry’s most significant legislative accomplishment in Congress and Alex Thorne head of research at Galaxy weighs in on the historic move from the house and the sec’s pivot on ether [Music] ETFs welcome to cnbc’s crypto world I’m TAA mckel major cryptocurrency is mixed this morning ahead of an expected decision from the SEC ons spot ether ETFs today Bitcoin fell nearly 35% to $68,000 Ether climbed more than 1% and salana meantime dropped nearly 5% to $172 okay let’s talk about the two big stories we’re watching today the first ever crypto regulation bill passed in the House of Representatives yesterday despite opposition from SEC chairman Gary gendler while there was a strong showing from house Democrats who voted yet for the financial Innovation and technology for the 21st century act the Biden Administration put out a policy statement yesterday saying it opposes the legislation notably though the president did not say he’d veto the bill outright a signal that he’d likely sign it if it makes it through Capitol Hill Congressman Patrick McKenry who is the chairman of the financial services committee joined cnbc’s squawkbox this morning to discuss the House’s passage of the crypto bill this should serve as a wakeup call we had two-thirds of the House Representatives vote in favor of clarity for crypto uh it it creates a legal framework giving the SEC a proper role and the cftc a proper role uh rather than the conflicting set of regulatory actions uh uh that those two agencies have taken over the last 10 years Congress settles it settles the dispute it settles what is a digital asset gives a legal framework for uh trading and the purchase of those assets and I think it’s an important thing uh you know this was a vote that included 71 Democrats across the ideological spectrum that should be the wakeup call uh to the Senate that should be the wakeup call to the administration and um in sound policy so that’s uh that’s the the message today and the outcome of that vote yesterday is that uh the Senate needs to take action so we have legal Clarity and so we can catch up to the rest of the world uh and be competitive in the world digital assets coinbase CEO Brian Armstrong took to X to react to the passage saying the development is a quote resounding win in in the house for Clear crypto rules and that sensible regulation of crypto just took a big step forward the other big story we’re watching is the impending decision from the SEC on spot ether ETFs today is the deadline for the SEC to answer vanex application for an exchange traded product that would track the price of ether directly and while the SEC finally approved spot Bitcoin ETFs at the start of this year most experts thought the approval of an etherlink product was a long shot but that all changed this week a few days ago we got reports that the agency might might be changing its tune and was working with applicants on polishing their proposals although the agency declined to comment to CNBC about individual filings we also saw amended filings from most of the asset managers to remove staking from these ETFs reportedly in the hopes of appeasing the agency the momentum in favor of approval only picked up throughout the week as five members of Congress sent a letter to SEC chair gendler in it they urged him to approve the proposals in line with the approval of Bitcoin ETFs earlier this year and to that point even Gensler himself reportedly said the agency had to Pivot in its thinking around spot crypto ETFs after the grayscale court ruling last year all right to talk about both of these big headlines I caught up with Alex Thorne head of research at Galaxy digital he weighs in on The house’s passing of a crypto Market structure Bill and he discusses why the SEC has seemingly changed its tune on ether ETFs ahead of a decision so it’s been a big week newswise for crypto and it seems it seems like there is this political the shift in the political tide for crypto um aside from the EFS that seems to really be the big story for the week and I am wondering if you can just catch me up to start on what has changed and where we are now yeah hey Tania thanks for having me I think it is a big week there is a shift that has clearly occurred I think actually the ethereum ETF story may be part of that bigger political shift that’s happening let’s take it back two weeks ago the house passed this uh bill that would overturn SEC staff accounting bulletin 121 and it had 21 Democrats uh that voted in the house and then that went to the Senate last week and the Senate uh passed it 6038 or so with 12 Democrat caucusing members so 11 Democrats and one independent also voting to overturn including uh Senate Majority Leader Chuck Schumer so that that sent a very strong message this was not a you know 21 Democrats in the house that’s not that many um but with a majority leader and and and 12 Democrats voting in the Senate um in the face of what was an explicit White House veto threat that sent a pretty strong message and I would say it’s it’s interesting too because that Sab 121 thing is a relatively Arcane accounting thing that caused Banks problems with cusing crypto um what we’re seeing now with this new this new bill that passed the house fit 21 which we’ll talk about I know much more sweeping con consequential um thing but so you had those votes in the face of the White House veto threat so some defections from the Democratic side voting for this Pro crypto legislation you also had former president Donald Trump explicitly saying if you like crypto you should vote Trump now his campaign is accepting cryptocurrency donations and again explicitly calling out Senator Elizabeth Warren and saying that she may have been raising a quote anti-crypto Army well we’re raising a crypto Army so it’s become a political issue at the presidential race now and you also had a Harris poll that was uh commissioned by the blockchain Association and digital currency group also two weeks ago that showed 20 % of Voters in swing States consider cryptocurrency to be a significant issue in the election um you’ve got several large crypto packs that are pouring money into a lot of these elections um and then of course abruptly now you had I think it was abrupt you have the ethereum ETFs apparently about to perhaps launch um and after you know months of radio silence so it seems like a lot of things sort of happening at once now 71 Democrats now voting for this fit 21 bill that’s a significant defection the White House didn’t threaten to veto that so it seems like the political strategy from the Democratic Leadership is changing and that has I think all of the cryptocurrency world uh feeling more politically engaged and effective than really ever before let’s go back to the EF that you just mentioned we are all waiting on the first decision um by the SEC who has the first uh uh decision deadline coming up for one of the eth ETFs um and like you said I think it was abrupt the consensus broadly was that this was not likely to be approved and now that has completely flipped so um and as you also sort of alluded I think that this is part of the broader political story so there is a lot of speculation in the market right now based on what we do know um why might that be that we had that abrupt uh you know change in Cadence from the SEC and the potential uh ETF issuers why might that be and and how do you think that this fits into the broader political the broader story yeah it’s hard to know uh the specifics of the sec’s thinking on this but you know we can definitely confirm um you know from our end uh and talking to the issuers really nobody thought this was going to happen there had been no back and forth uh with the issuers on their S1 filings if you recall from last fall There Was You Know months of back and forth many amendments filed comments sent back and forth between the issuers and the ETFs right that took several months that was like October November December um and none of that had been happening so you know the question I think it was totally reasonable to expect them to be denied if you couple that with the sec’s various enforcements and litigations and arguments they’ve been making and Well’s notices supposedly sent to Unis Swap and consensus and their case against coinbase and right in a variety of these statements it seemed that the commission was very hostile to ethereum and perhaps was even preparing to call ethereum itself a security and unregistered security um they never actually have made that case by the way they were that you know chair Gensler was criticized by Pat McKenry the chair of the house Financial Services committee for refusing to say whether or not ethereum was a security right but they never actually they haven’t argued themselves in court cases that it is but there was this prevailing uh view that the SEC was hostile to ethereum and that coupled with the lack of Engagement with issuers is why no one really expected these to happen right now um so then I mean what caused the shift I mean we were there was Bloomberg and others and CNBC all reported on Monday that now the the SEC frantically reached out to issuers and said actually get us back these comments like in a day and so that that’s the type of behavior that that suggests that they’re planning now to approve at least this first sort of piece of it this 19 B4 filing which is the exchanges asking for permission to list the products like any public company uh ETFs have to have a registration statement go effective those are the S1 so those will probably take uh a little longer so I don’t think we’re going to see an ethereum ETF launch like tomorrow or next week um and actually become tradable on an exchange but um you know there’s a debate about how assuming that if they if they pass the 19 b4s or approve them which we expect will happen today on Thursday um then you know it’s pretty inevitable we think that they do eventually start Fring and there’s some debate about how long that might be I mean I’ve heard between two weeks and two months it could take it’s not clear exactly because we haven’t seen any back and forth between the issuers let’s talk about fit 21 so break down the significance of this bill for me this is the one that was passed last night in the house um and many are hailing as a huge victory for crypto it’s of course the one that specifies when crypto falls under the purview of the SEC versus the cftc um so explain the significance for me and then talk about next steps and where do we go from here this is a significant win um when and how does the industry advance from last night yeah the fit 21 Act is a very powerful and consequential piece of legislation it it it frankly is a sweeping overhaul and reform of how crypto is regulated crypto Capital markets particularly are regulated in the US and it provides significant Clarity on a on a number of issues it is a very like long bill with a lot of stuff in it I think um ranging from rules for token issuers on disclosures and investors on disclosures rules for Brokers and exchanges on safety and comingling of assets and a whole bunch of stuff and when you when as an issuer or a exchange type business you would be regulated by the SEC or the cftc whereas now it’s like to be honest not neither are really regulating as much right I mean it’s most you know crypto exchanges operate with money transmission licenses and uh the SEC currently says that they’re all national Securities exchanges because almost all cryptos are crypto asset securities according to the SEC this bill would very much clear that out and explain like when it is a security when it’s not a commodity that’s that’s Clarity that we should have in this country you have it in other jurisdictions like Europe and Hong Kong and Singapore they they’ve already done that stuff right so we we as a country if we want to maintain our lead in financial innovation in general should have Clarity here so that businesses and investors can both operate safely and with Clarity and have some certainty about what the rules really are um rather than sort of a regul regulation by enforcement or or even regulatory winds that shift with each Administration right it would be nice to have this codified in law so from a policy standpoint broadly speaking this or something like it I think is is very positive uh for crypto for investors for users for companies um in the US now this bill specifically like it’s a very it’s a giant piece of legislation right whether it all gets through or whether everything in it is good or bad it’s it’s it’s tough to say right but I would say we’re broadly supportive of efforts to do this type of stuff and the house financial services and agriculture committees have done so much work on this there’s lots of good stuff in there I think politically it’s very consequential it’s um you know and it’s think about this with with 71 Democrats including former speaker Nancy Pelosi voting in favor of this bill this is a strong signal that this is truly a bipartisan issue or at least the Democrats don’t want to seed it entirely to the Republicans and this is you know Donald Trump is raising money on crypto right now he’s they’re putting out statements saying that they want the crypto Army right so like the Democrats appear not willing to seed that ground which I think is very positive for the industry that they’re not willing to we don’t believe that cryptocurrency is a partisan issue and certainly don’t believe that it should be um we think that it helps it helps people it it gives Financial Independence and sovereignty it’s an upgrade to the financial system in general Bitcoin is an upgrade to the way money Works um and that shouldn’t be about one political party or another now whether it’s going to pass into law is a much more difficult question I think the Senate is unlikely to take this bill up at all I think instead what you’ll see if there is action that happens this year is efforts that have already been worked on in the Senate such as the lamus chill brand proposals um will sort of be rekindled and and they’re similar it’s it’s the same types of ideas right and then maybe the Senate would pass something that they have put their own touch on and then there’s a giant reconciliation process I I’d be surprised if we actually see that happen this year you have to recall that Congress is about to go on vacation for a lot of the summer and when they get back it’s going to be the height of campaign season right and there’s really not that much time left in the legislative calendar um and things it takes a lot of floor time to move any Bill through the Senate there’s going to be things that they have to pass you know budget related items and whatnot so there’s really not a lot of time here um so I I’d be surprised if if this fit 21 or something like it actually becomes law this year um but I would say like I said the politics of this are what is most interesting it does portend a sweeping um change in I think Democratic Leadership approach to this this industry okay that’s all for crypto world today we’ll be back again tomorrow and we’ll see you then

CNBC Crypto World features the latest news and daily trading updates from the digital currency markets and provides viewers with a look at what’s ahead with high-profile interviews, explainers, and unique stories from the ever-changing crypto industry. On today’s show, Alex Thorn, head of research at Galaxy Digital, reacts to the House passing a crypto regulatory framework bill. He also provides his expectations ahead of a decision from the SEC on spot ether ETFs.

Chapters:
00:00 – CNBC Crypto World, May 23, 2024
0:28 – Bitcoin fell
0:48 – The headlines
3:51 – Galaxy Digital’s Alex Thorn

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What’s next after the House passed bill outlining a crypto regulatory framework: CNBC Crypto World