Washington, D.C. — Congress is racing to mainstream cryptocurrency without basic safeguards that protect consumers, investors, and the American economy. The Center for American Progress today released a new column warning that recent legislative efforts, including the GENIUS Act and emerging proposals for bitcoin, ether, and other crypto assets, would leave vast parts of the digital asset market less regulated than traditional banking and securities markets.
Congress is now considering broader crypto legislation, including the Responsible Financial Innovation Act and a proposal advanced by Sens. John Boozman (R-AR) and Cory Booker (D-NJ), that could weaken longstanding definitions of “security” and “commodity,” create unregulated versions of traditional financial products, and allow decentralized finance platforms to avoid the rules that apply to other market intermediaries. Without clear guardrails, CAP warns, Congress risks repeating past deregulatory mistakes that fueled financial crises.
“Crypto markets have shown time and again that without clear rules, consumers and the financial system pay the price,” said Alexandra Thornton, senior director of financial regulation at CAP and author of the analysis. “We already have proven systems for protecting investors and safeguarding markets. Congress should strengthen those protections as it considers how crypto fits into the financial system.”
CAP recommends that Congress:
- Apply the same investor and market protection rules to crypto firms that raise capital as apply in traditional securities markets, with clear SEC authority.
- Ensure that tokenized versions of securities follow the same rules as other derivatives on those assets.
- Require decentralized finance platforms to meet the same standards that apply to other capital market platforms.
- Close key gaps in the GENIUS Act, including by prohibiting affiliates of stablecoin issuers from offering yield-like products that could siphon deposits from community banks.
The analysis also details how crypto markets have become hubs for fraud, hacks, and illicit finance, which could intensify if large portions of the financial system migrate into less regulated digital markets. Without strong guardrails, capital could flow away from safer, established markets, increasing risks to households and the broader economy.
Read the analysis: “Congress Must Place Guardrails Around Crypto Markets” by Alexandra Thornton
For more information or to speak with an expert, please contact Christian Unkenholz at [email protected].