Galaxy CEO Mike Novogratz anticipates that a significant crypto market structure bill will be approved in the coming weeks. This optimism arises from a notable bipartisan commitment among lawmakers, despite some existing disagreements regarding stablecoin regulations.
The expected compromise on stablecoins may not completely align with the interests of the crypto industry. However, it is crucial for fostering growth within the sector under a clearer regulatory framework.
During a recent discussion on CNBC’s Squawk Box, Novogratz underscored the serious intent from both Democratic and Republican senators to finalize an agreement. He believes that this prevailing bipartisan interest will ultimately push the bill through.
A central area of contention revolves around interest payments associated with stablecoins. Large banks have been actively lobbying against provisions that could potentially lead to a significant withdrawal of deposits. Novogratz remarked that traditional banks offer minimal interest rates compared to what stablecoins might provide, raising the specter of deposit flight.
Moreover, he highlighted that restrictive regulations could entrench dominant players in the market, making it tougher for new, compliant stablecoins to emerge. To foster innovation and global acceptance, he emphasized the necessity of integrating some incentives or yields into stablecoin mechanisms.
Despite recognizing that the forthcoming compromise might not be ideal for the crypto landscape, he expressed a sense of urgency in passing the bill to pave the way for industry growth.
As the Senate Banking Committee was scheduled to review the bill this week, discussions were abruptly halted due to opposition from some legislators. Coinbase, a leading player in the crypto sphere, withdrew its support, reflecting broader concerns about reduced regulation oversight and restrictions on interest-like rewards.
The impact of stablecoin incentives is a growing concern among banks, with warnings from financial leaders suggesting that the introduction of such rewards could siphon vast sums, potentially up to $6 trillion, from the banking system.
Senate Democrats plan to take the opportunity to engage with the crypto industry again to resolve these lingering issues as the discussions resume shortly.