📅 February 2 | According to the investment bank TD Cowen, crypto legislation in the United States could remain stalled indefinitely if the president doesn't personally intervene to force an agreement between two sectors that, in theory, should want the same thing, but which are now more divided than ever.
📖The analysis comes from Jaret Seiberg, director of TD Cowen's Washington research group, who noted that the meeting convened today by the White House crypto czar, David Sacks, with banking groups, crypto associations, and Coinbase, revolves around the most contentious point of the bill: how stablecoin rewards should be handled.
Banks warn that allowing crypto platforms to offer returns without clear limits could drain deposits from the traditional banking system, particularly affecting community banks. From the crypto side, companies like Coinbase maintain that this issue was already discussed during the negotiations of the GENIUS Act, passed last July, and that it is now being used as an excuse to stifle competition.
However, Jaret Seiberg argues that the real debate is not whether platforms will be able to pay returns, because he considers that inevitable, but rather when they will be allowed to do so and under what level of regulatory oversight they will have to operate.
From a banking perspective, stablecoins don't yet pose a real threat to deposits until they become more widely used, and in the meantime, they compete more directly with money market funds.
But the problem doesn't end there. Jaret Seiberg warns that a division exists within the crypto industry itself. For years, legal ambiguity has acted as a barrier to entry, benefiting certain established players.
Clear legislation would allow banks, brokers, and large regulated institutions to enter the market more forcefully, increasing competition for current players.
Added to this is an even greater obstacle: Democratic support in the Senate. For the project to move forward, it would need at least 10 Democratic senators, who would demand stricter protections for investors, tougher anti-money laundering regulations, and severe rules on conflicts of interest that many crypto companies would prefer to avoid.
Topic Opinion:
The biggest barrier to crypto legislation is not regulatory, but political and strategic. There are players within the ecosystem itself who aren't in such a hurry for complete clarity, because the current ambiguity also benefits them. And on the political front, the reputational cost for Democrats of supporting a law that might appear favorable to interests close to Trump is increasingly high.
💬 Do you think Trump will actually intervene to unblock the crypto law?
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