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Without support from U.S. lawmakers on both sides of the political aisle for digital asset-focused legislation, investors and companies may turn to other crypto-friendly jurisdictions without support from credit ratings agency Moody’s Investor Service.
In a June 20 report, Moody’s pointed to key differences in how Democrats and Republicans are handling cryptocurrency-focused U.S. legislation, specifically the competing language in the stablecoin bill and the bill aiming to provide a comprehensive framework for digital assets. Many of the questions between lawmakers are about whether regulation of stablecoins should be overseen at the federal or state level, and concerns consumer protection following the bankruptcy of many crypto companies in 2022.
“Despite agreeing on the need for consumer protection and an agreed upon framework for digital assets, Democrats and Republicans have differing views on how to achieve these goals,” the report says. “Failure to reach a bipartisan agreement and advance digital asset legislation could make the United States […] comparatively less attractive to both firms and investors, especially in a context where many other jurisdictions are implementing comprehensive rules.”
Related: Moody’s Downgrades Coinbase, Citing ‘Uncertain Amount’ of SEC Fees
Moody’s has pointed to competing views on digital assets between Republicans, often represented by House Financial Services Committee Chairman Patrick McHenry, and Democrats, often represented by senior member Maxine Waters. Both voiced their concerns at a June 13 hearing on the future of digital assets, although Moody’s said the meeting “revealed even stronger political divisions” over the development of a foundation for cryptocurrencies.
“Some Democrats have expressed concerns that the proposed bill could have adverse effects on consumer protection and fraud prevention.[…] The path to a bipartisan agreement looks very uncertain, and much more debate should be expected in Congress.”
Many crypto firms have already criticized U.S. lawmakers for their lack of regulatory clarity, suggesting that going outside the country might be in their interest. Executives at Coinbase, currently headquartered in the US and facing legal action from the Securities and Exchange Commission, traveled to the United Arab Emirates in May to explore using the region as a potential “strategic hub.”