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Senator Vows to Revamp Crypto Regulation as Businesses Abandon US Market

2 mins
Updated by James Morales
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In Brief

  • In the past week, some of the world’s largest crypto firms have dramatically cut back their U.S. operations.
  • Blaming the regulatory environment, major players are retreating from the U.S. market and emphasizing international opportunities.
  • In light of widespread criticism of U.S. crypto regulation, Senator Cynthia Lumis is working on a new regulatory framework for trading digital assets.
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The past week has been a difficult time for the U.S, crypto space. Following the Securities and Exchange Commission’s (SEC) move to categorize a number of major cryptocurrencies as securities, the sector has been reeling from the consequences of that decision.

But without intervention from policymakers, there is little hope that the situation will improve. 

Stepping up to the challenge, Senator Cynthia Lumis has said she is working on “a regulatory framework that will allow individuals and companies to own and trade digital assets in America.”

Crypto Firms Turn Their Backs on U.S. Market

Trouble for the U.S. crypto sector started after the SEC announced its intention to take on Binance and Coinbase in lawsuits that accuse the two exchanges of selling unregistered securities. 

In the immediate aftermath of the news breaking, Coinbase stock plummeted 18%. And within days, Binance U.S. was forced to suspend USD deposits and withdrawals.

Without mincing words, Binance openly criticized the SEC’s approach to crypto regulation, calling the commissions tactics “aggressive” and promising to “fight for a path forward.”

Even prior to the SEC’s recent actions, the global crypto landscape had already begun reorienting itself to be less U.S.-focused.

For example, Asian hourly spot volumes have grown 30% in 2023 amid declining volumes in the U.S.

And it isn’t just cryptocurrency exchanges and traders that could gain from pivoting toward alternative markets.

On Saturday, Polygon Labs published a statement emphasizing its global outlook and the history of the Polygon Network outside of the United States. In a veiled reference to the SEC’s classification of its MATIC token as a security, the company stated that:

“The non-US market is the largest in the world, and we are grateful for all the thoughtful work being done on all aspects of this technology around the globe, including by regulators & policymakers.”

Cynthia Lumis: The “Crypto Queen” of The U.S. Senate

Against the backdrop of businesses pivoting away from the U.S. and a major crash in altcoin markets, one Republican senator is positioning herself as a potential savior.

In a tweet on Saturday evening, Senator Cynthia Lumis stated that she is working on “a regulatory framework that will allow individuals and companies to own and trade digital assets in America.”

Sometimes referred to as the “crypto queen” of the U.S. Senate, Lumis has previously worked on the bipartisan “Responsible Financial Innovation Act,” which she co-authored with the Democratic Senator Kirsten Gillibrand.

Unfortunately, Lumis and Gillibrand’s Bill appears to have stalled in a wave of post-FTX crisis apprehension and Washington procrastination. But the current market volatility and the very real threat of a mass exodus of businesses could be just what is needed to breathe new life into their efforts.

In an interview earlier this year, Lumis revealed that the two senators were working on a new and improved version of the Bill.

She added that the issue of determining what is a commodity and what is a security has been central to their latest efforts. Rather than leaving it to regulators to make such determinations, she suggested that “meatier” legislation could prevent the kinds of lawsuits that are currently hamstringing  the sector.

“We’re now proposing more statutory language, because […] Congress needs to and is ready to weigh in on some of those concepts,” she stressed.

Top crypto platforms in the US | February 2024

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James Morales
James is a London-based editor, writer and explorer of the cryptosphere who started his journalistic career writing about digital art before honing his craft as a financial technology reporter. From the latest innovation in digital assets to the evolution of Web3, he is perpetually fascinated by the technologies of decentralization.
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