Moody's Investors Service said if the U.S. does not implement comprehensive digital asset regulations, companies and investors might look to other jurisdictions that have those guidelines in place. Moody's report came shortly after lawmakers held a hearing to discuss the draft of a bill that would fill in regulatory gaps for the digital asset industry.
"Failure to reach bipartisan agreement and to advance digital assets-specific legislation could make the United States (Aaa stable) comparatively less attractive for both firms and investors, particularly in a context where many other jurisdictions are moving forward with comprehensive rules," Moody's Investors Service said.
On June 13, the House Financial Services Committee held a hearing titled "The Future of Digital Assets: Providing Clarity for the Digital Asset Ecosystem," during which lawmakers and crypto experts discussed the recently released Digital Asset Market Structure Discussion Draft.
Moody's wrote of the hearing, "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." Some Democratic lawmakers expressed concerns that the discussion draft does not go far enough to protect consumers and prevent criminal activity, Moody's said. Moody's wrote that members of the House Financial Services Committee believe "clarity" is needed to address "inconsistencies" between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), which "have not always agreed on which digital assets should be considered securities, and which should be treated as commodities, as demonstrated in their recent actions against Binance."
The SEC filed a lawsuit against Binance, the largest crypto exchange in the world, in June, accusing the company of violating securities laws, while the CFTC sued Binance in March, alleging that the exchange violated CFTC regulations, NPR reported.
Binance highlighted the need for regulatory clarity in its response to the SEC's lawsuit, writing in a blog post, "Unfortunately, the SEC’s refusal to productively engage with us is just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry.”
The blog post said that the SEC’s actions are “surprising” in that they undermine the role of the U.S. as a global leader in financial innovation. “Digital asset laws remain largely undeveloped in much of the world, and regulation by enforcement is not the best path forward,” the post said. “An effective regulatory framework demands collaborative, transparent, and thoughtful policy engagement—a path the SEC has abandoned.”
Although House Financial Services Committee members expressed disagreements over provisions of the discussion draft, Moody's said that "the recent legislative effort clearly indicates that US policymakers regard digital assets as a pressing concern, particularly in the wake of the recent enforcement actions against digital asset services providers led by the SEC... However, the path toward bipartisan agreement looks highly uncertain, and a lot more debate is to be expected in Congress."
