Crypto Market Structure Talks Advance as SEC and CFTC Move to Align Rules

Remy: It is a big day for crypto on Capitol Hill in the next few hours. SEC Chair Paul Atkins and CFTC Chair Mike Selig will meet at a joint event. Looking to harmonize crypto regulation between the two agencies, and the Senate committee is holding a markup hearing on market structure legislation this morning. But even if there is progress on legislation, crypto industry progress might be delayed by DC politics yet again, just like in October of last year. And that is because another potential government shutdown is looming.

Joining me to weigh in on this Thursday morning is Kristen Smith, president of the Solana Policy Institute. Good morning, Kristen. Thank you so much for joining me. So I understand that you'll be trekking through the snow in the nation's capital. tell me what your expectations are for today's events in DC.

Kristen: We have a lot of exciting events happening here in Washington, DC. I mean, I think the fact that we have the Senate Agriculture Committee moving forward on the market structure bill is very positive. As we've discussed, this is the legislation that needs to go through two different committees. So the Senate Banking Committee has not yet held their, what we call a markup, to add amendments and make changes to the bill. But the Senate Agriculture Committee is moving forward today, so we don't expect this to be too contentious. I think this portion of the bill. There are not many outstanding issues, so we hope that it will be fairly smooth and that the legislation will be able to successfully pass through the committee later today. But as you mentioned, that's not the only thing we have.

The SEC and the CFTC are doing a joint event this afternoon where they're going to announce their harmonization initiative. You know, these two agencies both regulate different kinds of markets, and they have different statutes that authorize the authority that they have. And oftentimes that means that different companies have to register with both the CFTC and the SEC, and there are often duplicative regulations, etc..

So what they're trying to do is to work together to figure out when there's something that's duplicative, to no longer have that apply, and when there's something that's conflicting to explain how best to use that. And so. This should be something that really helps propel the use of blockchain technology in all markets, but also the crypto market.

So a very exciting day. But yes, it is very cold here and there's a lot of snow on the ground. So it takes a while to get from point A to point B.

Remy: Kristen, I am sure you've been having many discussions with different stakeholders. So what are you hearing when it comes to discussions on market structure, the Clarity Act and also this battle between exchanges and banks over stablecoin rewards and also the GENIUS Act?

Kristen: The Clarity Act is a landmark piece of legislation, and it covers many different topics in many different areas. And it is a complex thing to get to get written. But I've been incredibly impressed by how much progress that both you know, the House earlier this year and now the Senate is in the process of doing right now. I think one of the bigger issues out there is the fact that there is a clash going on right now between crypto companies, these sort of third party platforms that want to offer rewards to customers who hold stablecoins, and the banks who are worried about deposit flight. And so there are discussions going on, in fact, next week, on Monday at the White House. The White House is working to convene relevant crypto and banking stakeholders to try to see if there's some sort of compromise on this issue. But, you know, I would say this is how the process works, right? As the legislation advances, you know, ideas are put forth and, you know, different stakeholders have an opportunity to weigh in with their members of Congress and their senators and, and try to figure out the best way to craft this. So I think there's a lot of momentum. I think this is a high priority for the White House. It's a high priority for the Senate. And, you know, they're going to take these issues one at a time and continue to work through them until they get to the point where they have something that can can get to the president's desk.

Remy: Finally, Kristen, we have about 60s here, but tax season is fast approaching here on the U.S.. So what's going on regarding crypto tax policy in D.C.?

Kristen: Outside of market structure legislation, the House, in particular the Ways and Means Committee, has expressed interest in moving a crypto specific tax bill. I think there's some items, particularly around the treatment of staking rewards that that the IRS could unilaterally act on.

But I think Congress is also looking to take a more comprehensive approach and tie up any loose ends for the parts of the crypto ecosystem that don't have clarity when it comes to tax treatment of their assets So very exciting time. Lots of issues happening across different meeting rooms across Washington right now, but making a lot of progress. And I think it just shows that, you know, this is the technology that's here to stay and that the regulatory clarity that we need is on the way.

Remy: Kristen, always great talking to you. We look forward to speaking with you again after you attend these events. So thank you so much for sharing your insights and as always, your perspective.

Kristen: Great to see you, Remy.