US banks may need regulatory clarification over the crypto industry, says a former Commodity Futures Trading Commission (CFTC) official, arguing that they are at risk of falling into the world.
Regulatory Uncertainty Could Leave US Banks Behind
On Sunday, Chris Giancarlo, former chairman of the CFTC, discussed key policy reversals under the Trump administration that have driven crypto innovation in the US, including the much-anticipated market structure bill.
In an interview on Scott Melker’s The Wolf Of All Streets podcast, a former CFTC official confirmed that the landmark stablecoin law enacted last July, the GENIUS Act, was an “appetizer” for crypto regulation, while the market structure bill, also known as the CLARITY Act, represented the main dish but has become the “hard part.”
In context, the CLARITY Act has been stalled for nearly two months after the Senate Banking Committee published its draft of the bill in mid-January. Many policies, including the main restrictions on stablecoin issuers, were criticized by crypto leaders, leading to a long-term fight between banks and the digital asset industry.
Giancarlo confirmed that banks need more regulatory clarity in the crypto industry, arguing that they will be reluctant to invest in new technologies without clear rules, and their plans will be removed.
Banks, however, cannot afford regulatory uncertainty. Their general advisors tell their boards, you can’t invest billions of dollars in this (…) unless you have the certainty of control. (…) Banks need this clarity because they need to build this. They need to be at the forefront, not on the watch behind this establishment.
On the contrary, the crypto industry will continue to build and innovate in other areas. “They are risk takers. They will build it here, or they will build it abroad,” asserted the former chairman of the CFTC.
If the CLARITY Act is passed, Giancarlo believes that leaders of financial regulatory agencies, such as the Securities and Exchange Commission (SEC) and the CFTC, will likely establish the necessary regulations to oversee the industry.
“They will not have the support of the law that makes it work forever or at least in the next cycle of the president, but he will make it work for now. Now, does that give the industry the certainty they want? No. And who needs that certainty more than the banks? Crypto does not need it. They are even under the hand of Gary Gensler,” he added.
Are Crypto Regulation Profit Opportunities?
Giancarlo emphasized that the regulation of digital assets has become a political issue, with Republicans against Democrats, and traditional finance (TradFi) against decentralized finance (DeFi) and new technologies.
The former CFTC official also noted the challenges of regulatory time, asserting that “If we couldn’t be at a worse time, we’re in an election year.” At this time, politicians are focused on the upcoming midterm elections, he elaborated, and “everything that happens in Washington (…) is about getting voters to the polls.”
Last month, Treasury Secretary Scott Bessent urged lawmakers to pass the pending bill this spring. He acknowledged the efforts of a bipartisan working group to advance the legislation, stressing that Democrats are open to working with Republicans.
He also warned that the chances of reaching a deal could collapse if Democrats gain control of the House of Representatives in November, given the Biden administration’s tough policies on the industry.
Despite the delay, Giancarlo believes the odds are 60-40 in favor of passing the law, saying there is “a lot of good in the bill for all parties” and its importance is recognized by all parties.
“I think there is a recognition that this is a new financial structure and America, our financial institutions are the best financial institutions in the world. We need to modernize that. We need to use this technology,” he concluded.
The total crypto market capitalization is at $2.31 trillion in the one-week chart. Source: TOTAL on TradingView
Featured image from Unsplash.com, Chart from TradingView.com
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