Cryptocurrency Rules Should Be Congress’ Focus, Key Lawmaker Says

A key member of the House Financial Services Committee wants to see lawmakers focus next year on oversight of the “muddied and fairly opaque” markets for initial coin offerings and trading digital tokens.

Representative Bill Huizenga, a Michigan Republican who could be a contender to lead the panel if his party keeps control of the House, said Congress needs to work with regulators to ensure cryptocurrency investors are protected. Agencies like the Securities and Exchange Commission or Commodity Futures Trading Commission could get power to oversee these markets with rules similar to those now governing stocks or currencies, he said.

A key challenge for lawmakers is figuring out how to classify digital currencies, Huizenga said in an interview in his Capitol Hill office on Thursday.

“Everyone’s trying to figure out whether it’s fish or fowl,” he said. “It turns out it might be a platypus. It’s kind of an unknown, or something sort of in between. How do we deal with that?”

Government officials are increasing their focus on scams tied to virtual currency offerings and the potential dangers to investors. While lawmakers from both parties agree something must be done to boost transparency and security in the marketplace, they are at odds over what form new oversight should take.

Huizenga, who leads the Financial Services subcommittee on capital markets, said he would make addressing those questions a top priority if he becomes chairman next year. He said he’d also look to address U.S. housing finance and the future of Fannie Mae and Freddie Mac, mortgage-market giants that have been under federal control since 2008.

Even though the midterm elections are still months away, Huizenga and other lawmakers have been jockeying for a shot at replacing the retiring Jeb Hensarling as head of the powerful panel responsible for overseeing Wall Street banks and the rest of the financial services industry. The current vice chairman, Representative Patrick McHenry of North Carolina would be the Republican front-runner, but he is expected to seek a position in House leadership — opening the door for others to compete for the committee post.

Representative Maxine Waters of California is in line to run the committee if Democrats take control of the House.

“She’s been pretty clear about some of the things that she wants to do,” Huizenga said of waters. “I would hate to see our committee turn into a pre-impeachment trial.”