Moody's warns US lawmakers about the potential departure of major crypto businesses.
The crypto landscape may lose its appeal to US crypto companies and investors if lawmakers fail to reach a mutual agreement on digital asset regulations, states credit rating agency Moody's investor service.
Moody's report, released on June 20th, underscores the significant variance between the Democrats and Republicans in handling legislation aimed at digital currencies, particularly in terms of a comprehensive digital assets framework and a stablecoin-oriented bill.
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The primary issues involve the decision on whether stablecoin regulations should fall under federal or state jurisdiction and the need for customer protection following a slew of crypto firm bankruptcies in 2022. The report emphasizes:
Despite agreement on the need for consumer protections and for a harmonized framework for digital assets, Democrats and Republicans hold different views on how to achieve these objectives.
On top of that, Mood's addressed the main issue, which could "render the United States less attractive to firms and investors." In particular, Moody's investor service noted:
Failure to reach bipartisan agreement and to advance digital assets-specific legislation could make the United States <...> comparatively less attractive for both firms and investors, particularly in a context where many other jurisdictions are moving forward with comprehensive rules.
Moody's report references the contrasting views on digital assets between Democrats, frequently represented by ranking member Maxine Waters, and Republicans, often represented by House Financial Services Committee Chair Patrick McHenry. Both expressed their unique concerns at a June 13th meeting discussing the future of digital assets. However, according to Moody's, the meeting unveiled more intense political disagreements over creating a crypto framework.
Concerns were voiced by some Democrats that the proposed bill may sabotage consumer protections and fraud prevention measures. The report quoted:
The path toward bipartisan agreement looks highly uncertain, and a lot more debate is to be expected in Congress.
Several crypto firms have criticized US lawmakers for their vague regulatory guidelines, hinting that relocating to other countries might benefit their operations. Executives from Coinbase, a US-based firm currently involved in a lawsuit with the Securities and Exchange Commission, visited the United Arab Emirates in May to consider the region a potential strategic center.
The report from Moody's brings to light the urgent need for bipartisan cooperation in the US to develop comprehensive and clear guidelines for the burgeoning crypto industry. Without it, the US risks losing its competitive edge in the global crypto market.
