Patrick McCarty, an adjunct professor at Georgetown University Law Center, joined Cheddar News to discuss how a new crypto bill could shake up the blockchain.

Patrick McCarty, an adjunct professor at Georgetown University Law Center, joined Cheddar News to discuss how a new crypto bill could shake up the blockchain. "I think there's a very good chance that Congress will act," he noted.

How Might Crypto Regulations Change the Industry

Well, joining us now to discuss this is Patrick McCarthy, a junk adjunct professor at Georgetown University Law Center. Patrick, thanks so much for joining us this morning. Welcome to the show. What is this new crypto bill targeting self custody wallets actually aim to do? Um Thank you for having me appreciate that. Um What it intends to do is basically make sure that the crypto exchanges are very, I guess open about any money longer, they're gonna make sure that in fact things are covered and it's following what all other financial institutions are supposed to do today Now, Patrick, of course, there's been lots of pushback from crypto advocates about this. So what is the industry perspective on this bill? Um Well, I think it's there's a lot of them are not gonna be happy about it, but I think they're also probably starting to look at the fact that with the F. D. X. Collapse, that in fact there's going to be more regulation and that's going to bring them into the mainstream of the financial services world, which I think is gonna be good for crypto long run, you know, obviously F. T. X. Has been the major headline in crypto as we've seen the crypto space more broadly kind of meltdown. Now, we have some news out of finance that has folks concerned. So what is the potential fallout for the industry from all of this meltdown in terms of regulation, You know, beyond perhaps this bill that we're discussing right now, What else could we see? Um Well, I think there's a very good chance that Congress will act. Um even though Senator Warren has introduced a bill, we're a long way from basically having that enacted into law. I expect to see the SEc and the CFTC um as well as Vincent do a lot of things regulatory lee to basically try to um close gaps that are seen and that's going to happen early next year. That's my view of that. You know, what did we kind of learn about the structural issues in the crypto space from the F. T. X. Scandal? Like what sorts of gaps that you kind of mentioned have been identified, that regulators might need to kind of fill here. Um Well, one of the big things is that that the crypto world tries to collapse most of the functions that the exchange has into one bucket. Um That's not the way that traditional um futures and securities exchanges operate. They normally separate the brokering from the clearing and from the custody part of it. I think that's one of the biggest issues is that um Crypto had basically said this is this is going to help lower costs and make things more simple and straight and direct. Um But it presents problems from a conflict of interest point of view. Um The sec has said that they would really prefer that everything be separately regulated each one of these services. So, um we'll see what the debate turns into, but traditional finance has been more segmented than what KryptoS market structure is supposed to be. Now, Patrick, I want us to go back to something I mentioned earlier. Finance. It did resume customer withdrawals for its stable coin after announcing a brief halt. What's going on at finance? Is the company in trouble? Should people be worried? I think this is just a flow over from what happened with F. T. X. As opposed to finance being in trouble itself. They seem to be very sound, financially, at least that's what I'm understanding. Um There have been a lot of withdrawals but I think that's just a natural follow on to what happened with F. T. X. And people wanting to see if they can get their money out. So that that would be my thought in that area. Alright, Patrick, thank you so much for joining us this morning and breaking down such a difficult space. That's Patrick McCarthy, adjunct professor at Georgetown University Law Center.