Author of Reintroduced Crypto Legislation Forecasts a ‘Scorching Summer’ in Congress

Two prominent figures in the U.S. cryptocurrency regulation landscape—former Republican Congressman Patrick McHenry and former Democratic Commodity Futures Trading Commission Chairman Rostin Behnam—acknowledged the significant legislative work that lies ahead in the crypto sector but emphasized that the current moment is crucial for action.

McHenry, speaking at an event by Georgetown University’s Psaros Center for Financial Markets and Policy, highlighted the opportunities presented by Senator Tim Scott, the chairman of the Senate Banking Committee from South Carolina, and Representative French Hill, the Arkansas Republican leading the House Financial Services Committee, to enact well-designed legislation for the industry.

He expressed the belief that now is the time to capitalize on these opportunities, arguing that effective laws would provide greater long-term protection than temporary regulations that lack legislative backing. “It’s essential to prevent unfavorable regulatory appointments that could hinder digital advancement,” he stated.

Last year, McHenry supported the Financial Innovation and Technology for the 21st Century Act (FIT21), which has served as a cornerstone for this year’s congressional discussions regarding crypto market frameworks. As an advisor to the investment firm a16z, he anticipated a particularly vigorous legislative season.

McHenry also played a crucial role in the previous year’s stablecoin legislation, which is currently being revisited in Congress. Despite similarities in proposed bills, he hinted at an emerging dispute between U.S. stablecoin issuer Circle (USDC) and global counterpart Tether (USDT) about the regulatory treatment of foreign issuers.

According to McHenry, both companies are eager to maintain their operations following Congressional action and actively seek to influence policymakers. He is optimistic about finding a balanced regulatory solution for Tether that would enable it to engage with U.S. investors.

He cautioned against dismantling an internationally recognized dollar-based product, suggesting it wouldn’t be a sensible outcome, although he acknowledged that negotiations among lawmakers might extend for several months. McHenry noted that discussions surrounding complex regulatory matters will eventually transition from technicalities to artful legislative action as lawmakers strive to translate concepts into law.

Meanwhile, the crypto sector continues to evolve with limited federal oversight. Behnam emphasized the resilience of the industry, stating that efforts to regulate trading and protocol development cannot halt the ongoing activities that have persisted for years.

He pointed to his challenges in aligning with former SEC Chair Gary Gensler to establish cohesive crypto regulations and warned those awaiting collaborative legislative changes that such laws would also need to be applied by existing regulatory bodies.

“It will take time,” he noted, referencing the pending market structure legislation, which may still be months away from realization. Following that, he highlighted the more challenging phase, as market and bank regulators would need to draft rules, a process that can take over a year, even under the best conditions.