U.S. Crypto Legislation Gains Momentum Amid Industry Push and Regulatory Gaps

Former Congressman Patrick McHenry and ex-CFTC Chair Rostin Behnam agree that the time is now for comprehensive U.S. crypto legislation, despite the immense work ahead. Speaking at Georgetown University’s Psaros Center for Financial Markets and Policy, McHenry emphasized the opportunity presented by key lawmakers like Senator Tim Scott and Representative French Hill to advance crypto regulation meaningfully.

McHenry, now advising a16z, underscored the need for clear legal frameworks over patchwork regulatory approaches. He advocated for proactive legislation to prevent anti-crypto regulators from stifling innovation. He pointed to the Financial Innovation and Technology for the 21st Century Act (FIT21) as a legislative cornerstone, anticipating a "wicked hot summer for legislating."

Stablecoin policy is another major front. McHenry noted that new stablecoin bills in both chambers mirror last year’s proposals and flagged an emerging rivalry between USDC issuer Circle and offshore giant Tether (USDT). Both firms are lobbying hard in Washington, particularly over how foreign stablecoins should be treated under U.S. law. McHenry believes a balanced compromise for Tether is possible, one that acknowledges its global dollar-denominated role without excluding it from U.S. markets.

Behnam, meanwhile, highlighted the regulatory void, stating that the crypto industry continues to grow without cohesive federal oversight. Reflecting on his tenure, he cited a lack of alignment with former SEC Chair Gary Gensler, which hindered progress. Behnam also warned that even once laws pass, implementation will take time, as market and banking regulators will need over a year to write enforceable rules.

While Congress moves toward establishing a clearer crypto regulatory structure, both speakers cautioned that legislative success is only the beginning of a longer, complex rulemaking process.