The cryptocurrency industry doesn't need Dodd-Frank-like legislation, said Ripple Chief Legal Officer Stuart Alderoty as lawmakers in Washington barrel toward trying to pass a bill that would regulate that sector at large.
"Dodd Frank was reactive to a crisis," Alderoty said Thursday during a conference hosted by the Psaros Center for Financial Markets and Policy at Georgetown University, and said crypto legislation should instead be "proactive."
The Dodd-Frank Act is a federal law passed in 2010 as a response to the 2008 financial crisis. It bolstered oversight and regulation of the financial industry, in part through creating the Consumer Financial Protection Bureau and the Financial Stability Oversight Council, to root out risks and protect consumers.
Lawmakers in Washington are working quickly to pass legislation, writing rules for the cryptocurrency industry at large. The House passed a bill over the summer that would designate how the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission will regulate crypto and also requires digital asset firms to provide retail financial disclosures and segregate corporate and customer funds. A Senate Banking Committee version of the bill has different components, including a term "ancillary assets" to shed light on which digital assets are not securities. Both chambers would need to agree on one bill, and later get the president's signature, to pass into law.
Senate Banking Committee Chair Tim Scott has said he wanted to get something done on that legislation by the end of the month, but that now is likely to be pushed back in part as a government shutdown looms. The Senate Agriculture Committee would also need to vote on a crypto market structure bill.
Market structure is complicated, Alderoty said.
"I'm all for market structure, that's smart legislation, but what we don't need is a Dodd-Frank for crypto at this stage," Alderoty added.
