Thursday, January 13, 2022

2022 Congressional preview: China, insiders, and stablecoins remain likely topics

By Mark S. Nelson, J.D.

Despite the media emphasis on pandemic-driven stimulus bills and lawmakers’ wrangling over the Biden Administration’s signature Build Back Better Act, a small number of potent bills were enacted in 2021 that spotlighted alleged human rights abuses in China, supported the CFTC’s whistleblower program, and provided for the reporting of cryptocurrency transactions to the IRS. While it remains unclear if 2022, a mid-term election year, will produce significant securities-themed legislation, it is a good bet that Congress will remain focused on bills that would further curb China’s influence in U.S. markets, may address insider trading by federal judges and Fed officials, and could set the stage for government regulation of stablecoins.

Congressional interest in digital assets is perhaps exemplified by yesterday’s announcement that the Democrat and Republican leaders of the Senate and House Agriculture Committees have jointly written to CFTC Chair Rostin Behnam seeking more information on digital asset markets and the CFTC’s authorities (or lack of authorities) to regulate these markets. Previously, SEC Chair Gary Gensler has spoken of the need to close regulatory gaps in digital asset markets: “In my view, the legislative priority should center on crypto trading, lending, and DeFi platforms. Regulators would benefit from additional plenary authority to write rules for and attach guardrails to crypto trading and lending.”

As has become an informal tradition for Securities Regulation Daily, our editors review the year just ended and preview the year ahead on a number of topics, including Congressional activity. This year’s trio of securities law white papers emphasized Congressional activity and the growing field of environmental, social, and governance (ESG) investing and the emergence of special purpose acquisition companies (SPACs) as an alternative to the traditional IPO.

Our Congressional review, the third and final installment in our 2021 year-end reviews, emphasizes human rights, insiders, CFTC nominations and reauthorization prospects, competing frameworks for regulating stablecoins, and corporate tax provisions within the Build Back Better Act. In 2022, these and other topics are likely to remain prominent as the second session of the 117th Congress unfolds. However, an equally prominent trend may be the extent to which the SEC preempts Congressional action on some topics, as the agency may succeed in doing regarding its recently proposed reforms to the rules for Exchange Act Rule 10b5-1 trading plans. For those looking for a wrap-up of Congressional action on ESG investing and SPACs, see the links below to our white papers focused on those topics.

Lastly, those of us at Wolters Kluwer Legal & Regulatory U.S. take this moment not only to reflect on the year’s legal developments in securities law, ESG investing, SPACs, and Congress, but also to soberly remember the awful human toll that COVID-19 has exacted around the world, including upon those in our shared legal profession. We remember those who have been lost to the virus and think of those who have lost loved ones to the virus, as well as those who have been unable to visit loved ones because of renewed COVID-19 visitor restrictions at long-term care and other facilities. The wide availability of COVID-19 vaccines that were in short supply only a year ago now give hope that the months and years ahead may be brighter. From all of us, to all of you, we once again wish you and yours a safer, healthier, and happier New Year.

Please click the following link to read our most recent legislative analysis, Mark S. Nelson, J.D., 2022 Congressional preview: China, insiders, and stablecoins remain likely topics.

For more focused discussions of legislation regarding ESG investing and SPACs, see our other year-end white papers: