U.S. House to Discuss Bitcoin and Stablecoin Bills

The content of this bill has been significantly reduced compared to the Trump administration's past pledges, and the market generally perceives this discussion schedule as a positive signal.

The original intent of this bill was to reserve Bitcoin as a national strategic asset. However, the bill currently under discussion has shifted its focus from new Bitcoin purchases to utilizing existing confiscated virtual assets.

The Financial Committee's discussion is the first step towards the bill's passage, and further amendments and discussions are expected. This discussion is seen as an important indicator of the U.S. government's changing stance on Bitcoin and digital assets.

However, the current proposal has been amended to avoid injecting new budget funds.

The revised bill focuses on converting Bitcoin assets confiscated through crimes such as drug trafficking and terrorist financing into national strategic reserve assets. This is interpreted as an attempt to secure Bitcoin without direct government budget expenditure.

This change is seen as a compromise that reduces the government's financial burden while acknowledging the need for Bitcoin reserves. However, as it deviates from the large-scale new purchases of the initial pledge, discussions on the bill's actual impact are expected to continue.

The stablecoin circuit breaker, similar to that in the stock market, is a mechanism to temporarily halt trading when volatility intensifies, interpreted as a measure addressing concerns from the banking sector.

In the BRCA provision, the phrase protecting blockchain developers from criminal cases has been removed, which is expected to clarify the scope of developer liability. Additionally, a provision to strengthen public official ethics has been added, expanding discussions on preventing conflicts of interest for public officials related to digital assets.

This morning, Bitcoin prices saw a slight dip as Democratic lawmakers posted objections to the ethics provisions and the Clarity Act.

Democrats are raising issues on three points: public official ethics, blockchain developer issues, and stablecoin safeguards. They argue that the bill does not provide sufficient solutions for these problems.

Despite the Clarity Act already incorporating over 100 amendments, Democrats continue to demand additional changes. Yesterday's news reported that the bill had undergone many revisions, but Democrats remain unsatisfied.

To pass, the bill needs 60 votes in the House, and this persistent opposition from Democrats is expected to be a major obstacle in the voting process.

One of the main contentious points of the Clarity Act is the introduction of a stablecoin circuit breaker. This system is similar to temporarily halting trading in the stock market when volatility becomes excessive, aiming to enhance the stability of the stablecoin market.

Whether the circuit breaker is triggered will be decided by the Secretary of the Treasury in consultation with the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and others. Its application is limited to regional banks with total assets of less than $10 billion. It also includes regulations that restrict interest and profit payments if withdrawal damages occur.

Eight U.S. banking trade groups sent a letter to Republican lawmakers expressing their opposition to the stablecoin circuit breaker. They argue that if a circuit breaker is triggered, the problem has already occurred, making it a 'remedy after the fact' with insufficient preventive effect.

The banking industry also pointed out that the regulations limiting interest and profit payments are ineffective, stating that restricting interest after a problem occurs does not practically help remedy damages.

Even if stablecoin-related legislation explicitly prohibits interest payments, there are concerns that it could be circumvented under the guise of 'rewards.' As seen in cases like Coinbase Commerce, actual interest-like profits can be framed as rewards, leading to legal ambiguity.

If interest is framed as 'rewards,' like with Coinbase, an intermediate step requiring legal interpretation inevitably arises. Therefore, it is analyzed that completely prohibiting interest payments by law is realistically difficult.

Such structural limitations raise concerns that they could diminish the bill's effectiveness and create regulatory blind spots. Further discussion is needed to ensure legal clarity.

Previously, developers were also considered unregistered money transmitters, bearing both civil and criminal liabilities.

Discussions on the scope of developer liability were spurred by various cases, such as the prosecution of the Tornado Mixer founder, and this amendment reflects an intention not to treat developers as unregistered money transmitters.

This is interpreted as an attempt to establish a reasonable scope of liability without stifling developer activities, considering the characteristics of blockchain technology and the development environment.

Existing provisions created controversy by suggesting that code development related to crime could also be exempt from criminal prosecution.

The National Sheriffs' Association and others opposed this provision, arguing it makes it difficult to recover victim assets. Consequently, the direction has been shifted to allow criminal investigation of code development linked to crime.

While the criminal prosecution immunity clause has been deleted, civil protection remains. However, concerns are raised that small DeFi projects may still face criminal prosecution risks due to these changes.

In particular, small DeFi projects are expected to face restrictions on their activities.

Although dissatisfaction is expressed within the industry, due to past regulatory trauma, a cautious stance is maintained rather than open opposition. Concerns are raised that innovation could be hampered if the bill passes without clear guidelines from regulatory authorities.

They have each pointed out problems with the bill for different reasons and are now putting a halt to its passage.

Democrats are demanding even stronger ethics provisions in the Clarity Act. They argue that federal public officials, their spouses, and families should not benefit from digital asset-related businesses.

This involves demanding public officials limit digital asset issuance and transfer them to blind trusts, interpreted as an attempt to curb the Trump family's digital asset business profits. Democrats point out that it is inconsistent to allow stock investments by lawmakers but restrict only digital assets.

These demands for ethics provisions have emerged as a major political issue in the bill's passage. Discussions are expected to be active on how to resolve conflicts of interest for public officials related to digital assets.

There are concerns that the ethics provisions strongly demanded by Democrats could backfire on them. Like the case of Hunter Biden's min-coin issuance, Democrats are also not entirely free from digital asset issues.

In this situation, concerns are raised that if Democrats insist on excessive ethics provisions, it could become a political blunder in the future. This could lead to a double standard controversy regarding public officials' digital asset-related activities.

Therefore, Democrats' demand for stronger ethics provisions is expected to be a key issue not only in the bill's passage but also in future political debates. Measures are needed to ensure the bill's fairness and effectiveness while minimizing political burdens.

Democrats' demand for stronger ethics provisions has a positive aspect of enhancing integrity across public service but could lead to unnecessary controversy if used as a means of checking a specific political faction.