Galaxy CEO predicts passage of crypto bill close to compromise on stablecoins
Key Takeaways
- Galaxy CEO Mike Novogratz predicts that the cryptocurrency will pass in weeks, due to bipartisan interest despite disagreements about the provisions of the stablecoin.
- Compromise to stablecoins is expected, which may not fully satisfy the crypto industry but will make the sector grow.
Share this article
Galaxy CEO Mike Novogratz expects the crypto market structure bill to pass in a few weeks, along with stablecoins that may not fully satisfy the crypto industry but will allow the sector to develop and grow under regulatory clarity.
Speaking on CNBC’s ‘Squawk Box’ this morning, Novogratz said that despite ongoing disagreements about stablecoin provisions, there is real bipartisan interest in reaching an agreement from both Democratic and Republican members.
“I think the bill will be done in the next few weeks,” Novogratz said during the interview. “The members of the Democratic Party really want to do something. The members of the Republican Party really want to do something.”
The founder of Galaxy has identified stablecoin interest payments as a sticking point, where banks are lobbying for offers that could trigger a flight of deposits.
“If you go to JP Morgan right now or Bank of America or any of the big banks, you put money into a savings account, you get about 11 points or one point,” Novogratz said. “They are worried that stablecoins can have a deposit flight.”
He pointed out that banks use public banks as a shield to protect their borders, and said that consumers can now move to neobanks that offer better rates if deposits are a real problem.
Novogratz noted that overly restrictive regulations could entrench existing exchanges, making it difficult for new sync coins to compete, and stressed that other incentives or benefits would be needed to spur innovation and global adoption.
“If you don’t allow some interest or some method of generating interest in stablecoins, you will continue this dominance when Tether has the majority of stablecoins overseas,” Novogratz noted.
“I think there will be consensus on this. I don’t think it will be good for crypto, but I think it will be good,” he said. “We have to pass this bill so that we can move forward, and the industry can start growing.”
Banks and crypto firms clash over stablecoin rewards as Senate crypto bill hits roadblocks
The bill, which aims to regulate the crypto industry and provide transparency to the market structure, was scheduled for a markup by the Senate Banking Committee this week. However, the hearing was canceled at the last minute after some lawmakers objected to key provisions, and Coinbase withdrew its support.
Coinbase CEO Brian Armstrong cited concerns about the latest draft, including a reduced role for the CFTC and restrictions on crypto companies offering interest-like rewards on stablecoins.
https://twittercom/brian_armstrong/status/2011545247105355865?s=20
After the cancellation of the markup, Senate Democrats will resume negotiations with the crypto industry on Friday to address the unresolved issues.
Banks are concerned that allowing stablecoin rewards could divert hundreds of billions from deposits.
Bank of America CEO Brian Moynihan warned in this week’s payment that up to $6 trillion could leave the US banking system if stablecoin issuers pay interest.
