Former Governor Cuomo: U.S. Digital Asset Rules Vulnerable to Political Changes Without Congressional Legislation

[Mexico City = Shim Young-jae, Special Correspondent] The regulatory framework for digital assets (virtual assets) in the United States should not rely solely on actions by the executive branch and regulatory agencies, and bipartisan legislation is needed that can be maintained regardless of election outcomes. Former New York Governor Andrew Cuomo pointed out that while the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have introduced new regulations using their existing authority, the lack of congressional passage of a market structure bill makes them vulnerable to political changes.

According to Cointelegraph, Cuomo stated in an op-ed on the 6th (local time), "Companies should not have to guess whether the rules that exist today will survive after the next election," arguing that Congress needs to prepare bipartisan legislation that clearly approves digital asset activities.

"Stop the CLARITY Act, SEC and CFTC Fill the Gap"

Cuomo argued that digital assets are already changing the U.S. financial system, and the core question is not whether the industry will continue to grow, but whether the U.S. can create clear and sustainable rules for it.

He assessed that the U.S. currently lacks such rules.

According to Cuomo, the CLARITY Act aimed to establish a nationwide regulatory framework for digital assets and clarify the roles of federal agencies such as the SEC and CFTC.

Cointelegraph reported that the U.S. House of Representatives passed the CLARITY Act last year, but Congress has yet to send the related bill to the President.

Cuomo explained that after the bill did not progress in the Senate last month, the SEC and CFTC began to fill the legislative gap left by Congress.

He noted that the two agencies are actively introducing rules that significantly change market structure, such as proposing a new federal regulatory framework for digital asset trading platforms and specific regulatory measures for certain digital assets.

However, he pointed out that such regulations rely on the existing authority of the agencies rather than a new market structure law enacted by Congress.

Cuomo argued that while this could create new market opportunities in the short term, it would be difficult to achieve the sustainability of new laws.

"Rules Created Amid Congressional Opposition... Vulnerable to Political Changes"

Cuomo also noted that the process of regulatory agencies creating new rules is intertwined with political opposition in Congress.

He argued that some rules may be politically vulnerable from the outset because they were pushed through despite opposition from Congress.

Cuomo mentioned the possibility of the Democratic Party controlling one or both chambers of Congress after the midterm elections. He cited prediction markets and current election trends as evidence, but noted that this outlook is not a confirmed result.

The op-ed cited a poll indicating a 64% chance of the Democrats gaining control of the Senate.

Cuomo explained that if the majority party in Congress changes, there will be many means to check the actions of regulatory agencies.

He stated that Congress could utilize the procedure requiring agencies to submit new rules before implementation, limit the budgets of agency programs, or pass laws that overturn agency actions.

He also explained that Congress could use the Congressional Review Act to repeal certain regulations or pressure the executive branch and regulatory agencies through investigations, subpoenas, and public hearings.

Mentioning Experience from the Clinton Administration... "Do Not Underestimate Congressional Oversight"

Cuomo referenced his experience working at the U.S. Department of Housing and Urban Development (HUD) during the Clinton administration.

He recalled that after the Republican Party took control of the House and Senate in the 1994 midterm elections, congressional oversight of HUD intensified.

He noted that budgets were used as a means of pressure and that Congress utilized various institutional means to limit the powers of the executive branch.

Cuomo argued that based on this, Congress should not underestimate its power to restrict regulatory activities if it determines that the executive branch has overstepped.

He predicted that the Democrats might seek to prove claims that the corruption of the Trump administration and the actions of regulatory agencies were intended to benefit specific individuals or political sponsors.

However, Cuomo noted that regardless of the legitimacy of such claims, they could lead to political oversight.

"Companies Should Not Decide U.S. Investments Based on Which Party is in Power"

Cuomo identified regulatory uncertainty as the biggest problem in U.S. digital asset policy.

He argued that while private technological innovation and reasonable government regulation should be harmonized, ambiguity remains due to the lack of progress on the CLARITY Act.

Cuomo assessed that this situation is negative for companies, investors, consumers, and the U.S. economy as a whole.

He stated that it is undesirable for companies to decide to expand their business or invest in the U.S. based on which party controls Washington. Instead, he emphasized that laws should clearly define what actions are legal, what is prohibited, which agencies regulate what, and how rules are enforced.

"Europe and Singapore Have Established Regulatory Frameworks"

Cuomo compared the digital asset regulatory environments in the U.S. and other regions.

He cited the European Union's Markets in Crypto-Assets (MiCA) regulation and Singapore's Payment Services Act as examples.

Cuomo evaluated that Europe and Singapore are providing certainty to market participants and setting standards by establishing regulatory frameworks.

He argued that the U.S. should not allow political deadlock to determine the future of financial innovation. He emphasized that the next Congress should prioritize bipartisan legislation that clearly approves digital asset activities in the U.S.

Activities on the OKX Board... Disclosures of Interests

Cuomo served as the Governor of New York from 2011 to 2021. Previously, he was the Attorney General of New York and the Secretary of the U.S. Department of Housing and Urban Development.

He is currently active on the board of the digital asset exchange OKX.

According to Cointelegraph, he also serves as co-chair of OKXICE, a joint venture established by OKX and Intercontinental Exchange (ICE) for tokenized financial products and digital native financial products.

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