U.S. Securities and Exchange Commission chief Gary Gensler is taking the lead in regulating the crypto industry, while Republicans have yet to propose any restraints on his authority.

With the 2024 campaign season approaching, and Democrats controlling the Senate, time is running out for GOP lawmakers to formalize their proposals.

Ron Hammond of the Blockchain Association acknowledges the Senate as a significant hurdle for potential legislation, Bloomberg reported.

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Despite legal challenges, the SEC continues to assert its jurisdiction over crypto and enforce strict rules for investor protection.

The agency has sued major crypto exchanges, causing uncertainty in the industry, and has impeded the establishment of a Bitcoin (CRYPTO: BTC) exchange-traded fund and sought greater control over stablecoins.

Crypto advocates argue that the SEC's approach exceeds its mandate, advocating for many tokens to be classified as commodities rather than securities.

Republican lawmakers Patrick McHenry and Glenn Thompson offer hope for regulatory relief with their proposal, which aims to differentiate digital assets as commodities or securities.

This could limit the SEC's discretion and shift oversight to the more flexible Commodity Futures Trading Commission (CFTC).

However, the CFTC warns of being a strict overseer based on past enforcement actions.

Under the McHenry-Thompson plan, a token's classification would depend on the level of decentralization of its associated blockchain network.

The proposal also allows assets initially considered securities to be regulated as commodities and calls for the SEC to adapt rules for crypto trading platforms.

The outlook for the legislation dims as Democratic Representative Maxine Waters expresses concerns and emphasizes the importance of collaboration, particularly with Treasury Secretary Janet Yellen and Gensler.

Waters believes that existing rules are sufficient and accuses digital-asset firms of noncompliance.

Lobbyist Alex Grieve predicts only a 20% chance of the legislation becoming law without substantial Democratic support.

The level of bipartisanship will determine the Senate's attention to the bill.

Meanwhile, the Senate Banking and Agriculture committees have been less involved, with only one combined hearing on crypto this year.

Senator Sherrod Brown, who chairs the Banking Committee, generally supports the SEC's current role but recognizes the need to address industry abuses and collaborate with regulators.

Despite the challenges, industry advocates remain hopeful, citing promising conversations between Republicans and Democrats.

Brett Quick of the Crypto Council for Innovation emphasizes the importance of inclusivity and modifications to the proposed legislation. Stablecoins present a potential area of agreement, as both parties view them as unregulated threats to financial stability.

Waters is willing to negotiate with Republicans on a stablecoin plan.

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