WILLIAM BRANGHAM: It is a big week for the crypto industry, as Congress could pass a series of bills that would be the first to regulate this booming business.

Cryptocurrencies are a form of payment and an asset class which are created, used, and stored electronically.

They do not rely on any bank or government for their value.

Our Lisa Desjardins explains.

LISA DESJARDINS: Two key bills are up for vote.

The GENIUS Act regulates stablecoins.

What some see as the least risky digital assets because they're backed by real-world assets like dollars.

That would mean mainstream banks could increasingly use stablecoins.

The other bill, the CLARITY Act, regulates digital currency and assets overall, splitting oversight between the Securities and Exchange Commission and the Commodities Futures Trading Commission.

To help us understand what this legislation would do and its impact, we're joined now by two guests.

Patrick McHenry is the former chair of the House Committee on Financial Services and is now an adviser to financial companies, including some investing in crypto.

And Hilary Allen is a professor of law at American University and author of "Fintech Dystopia."

Thanks to you both.

Chairman McHenry, I want to start with you.

Basically, everyone wants regulation of this industry.

You helped write the CLARITY Act when you were in Congress, an initial version of it, to spark innovation.

But this is a very fast-moving industry, trillions of dollars at stake.

And it's confusing to a lot of Americans, as well as increasingly tied to our economy.

My question to you is, how does this bill make sure that the industry stays in check?

FMR.

REP. PATRICK MCHENRY (R-NC): Well, first, it defines, what is a digital asset?

Right now, you have the innovators or fraudulent actors defining what they call a digital asset or a cryptocurrency.

We need clarity under federal law.

The Europeans have it, the Japanese have it.

Most countries around the world have already defined this thing that's been around for 15 years.

And the United States is a follower here, not a leader in regulating digital assets.

So we need clarity of what it is.

We need a means of exchange, just like we have with securities, just like we have with commodities.

And we need a rules-based regime of how these things will be regulated.

That's what the CLARITY Act does, and it is a great first step in us regulating this innovation.

LISA DESJARDINS: Hilary, you're not a fan of digital currency and assets as they stand right now.

And you actually see this legislation as dangerous.

Why?

HILARY ALLEN, American University Washington College of Law: Well, to say this was unregulated beforehand, I think it mischaracterizes the issue.

Most crypto assets fit within the traditional securities law framework, and most stablecoins fit within the traditional banking law framework.

There's been a choice not to enforce those laws and instead put in place these lighter-touch regimes that legitimize the crypto assets by giving them a patina of regulation, but actually leave the American public worse off than they were before under the existing regulatory regimes.

LISA DESJARDINS: You heard that, Mr. Chairman.

Is this a patina of regulation that actually sort of just leaves a lot of loopholes for the industry?

FMR.

REP. PATRICK MCHENRY: No, we had four years of the Biden administration trying to kill cryptocurrency and crypto generally, and were unsuccessful at doing that.

They lost in the courts and the regulators were ineffective at ensuring consumer protections here.

So now Congress has to step in, provide rule of law and clarity under law, which has been lacking.

LISA DESJARDINS: Hilary Allen, what about those arguments that the U.S. is behind here in regulating this industry, that without more from Congress, that there will be further problems, both for the industry and for those any way connected to it, and that it's time to at least get something going here?

HILARY ALLEN: Well, to suggest that this law will create perfect clarity about the legal status of these assets, I think, is silly.

This law ties the definition of these assets to a moving target of a particular technology, which is going to evolve over time.

And in fact, we had a decent amount of clarity beforehand.

There was a degree of certainty that these crypto assets, including meme coins, were securities regulated through the investor protection regime that has stood us in good stead since the 1930s.

It's just not the clarity that the industry wanted.

LISA DESJARDINS: Chairman McHenry, we know the industry obviously has invested a lot in conversations about what this law should look like.

What to that argument that it is the industry that pushed the way this regulation ended up and did not want the SEC regulating it?

FMR.

REP. PATRICK MCHENRY: Well, the decision we made last Congress under my leadership in the House, the committee I chaired, was to actually give the Securities and Exchange Commission part of the powers.

Our attempt there was to bring clarity under law and make that divide between what is a commodity, what is a security, and what is a stablecoin and define it.

This seems like a sensible thing to do, whether or not you like the technology or hate it.

It should be separate from ideology and should just be a practical conversation, which it largely has been, a bipartisan debate on how to best regulate this thing that has been around for 15 years.

But the United States has been woefully behind in providing clarity under law.

LISA DESJARDINS: Just in our last minute or so, I want to ask both of you, what should people understand about this industry.

And starting with you, Hilary, you see risks.

HILARY ALLEN: I think you should know that this regulation or these laws are broadly deregulatory, not just for the crypto industry, but for traditional finance as well.

And they are taking us to the bad old days of the 1920s.

I think you should also know that most Americans do not own crypto, that most Americans have a vastly unfavorable opinion of crypto, and that this industry has absolutely driven this legislation.

And when we hear of bipartisan support, that bipartisan support is not coming because voters want it.

It's coming because vast amounts of money were expended by the crypto industry in the 2024 election cycle, 44 percent of all corporate expenditures on that election cycle.

LISA DESJARDINS: And Mr. Chairman.

FMR.

REP. PATRICK MCHENRY: This technology is here to stay.

Bitcoin is 15 years old.

Ethereum will be 10 years old at the end of this month.

This innovation is here to stay.

For those that are in opposition to crypto, they're howling at the moon for rising.

They're against technology and the deployment of new technology.

And what we're trying to provide here is a balanced approach so this innovation can happen here and can flourish here just like the Internet did; 1.0 and 2.0 happened because the United States got it right in regulatory policy and the deployment of that technology.

That's what's going to happen here with digital assets.

And this is going to be a great societal good over the long term and an innovation that will be powerful and helpful, especially in balancing the forces of artificial intelligence that is going to come to society very soon.

LISA DESJARDINS: Well, this was an exhilarating and important discussion.

Hilary Allen and Patrick and Henry, thank you to both.

HILARY ALLEN: Thanks for having us.

FMR.

REP. PATRICK MCHENRY: Thank you.