Moody’s Report Highlights Regulatory Uncertainty’s Negative Impact on US Crypto Market

Moody’s, a renowned credit rating agency, has released a report suggesting that the absence of a unified and politically independent regulatory approach to cryptocurrencies will diminish the attractiveness of the United States to both companies and investors. The Block, citing the Moody’s report, highlights that while there is a common understanding regarding consumer protection, Republicans and Democrats diverge in their views on regulating the digital asset market.

One notable proposal mentioned in the report is the comprehensive market structure bill put forth by House of Representatives Chairman Patrick McHenry. This bill aims to redefine the legal status of cryptocurrencies, shifting them from securities to commodities. During the hearing on this proposal, former congresswoman Maxine Waters expressed her concerns about potential shortcomings in consumer protection.

Another topic of discussion among officials was a new version of the stablecoin regulation bill. Moody’s analysts caution that the proposed regulations could result in increased regulatory arbitrage and have a detrimental effect on consumers. The agency also warns that segregating stablecoin issuers into banking and non-banking categories, each overseen by a different authority, may lead to regulatory fragmentation and create a risk imbalance for issuing companies.

Notably, in June, US Treasury Secretary Janet Yellen urged Congress to promptly pass legislation on cryptocurrencies, emphasizing the need for clear regulatory guidelines in the rapidly evolving digital asset space.