Crypto Legislation Faces Challenges in the U.S. Congress
Posted October 5, 2023 at 5:58 pm EST
The current U.S. Congress is faced with the task of handling some of the most significant crypto legislation to date. A new bill proposed by Republican committee chairs Patrick McHenry and Glenn Thompson aims to establish a comprehensive framework for the roles of the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) in regulating digital assets. While the bill faces challenges, its introduction is a promising sign that regulatory clarity may be on the horizon.
Key to the progress of crypto legislation in Washington are lawmakers who can influence policy. Rep. Patrick McHenry, the Republican Leader, presides over the House Financial Services Committee (HFSC), which is responsible for much of the House’s financial policy. McHenry has spearheaded several major crypto-related initiatives, including stablecoin packages and the Financial Innovation and Technology for the 21st Century Act (FIT Act), which is set to head to the House floor soon.
However, the FIT Act faces obstacles in the Democratic-led Senate, where Sen. Sherrod Brown controls the schedule as the chair of the Senate Banking Committee. Brown has shown no interest in picking up the crypto markets bill, and his Republican counterpart, Sen. Tim Scott, has largely avoided mentioning crypto in hearings. The retired Sen. Pat Toomey has predicted that no action will be taken on crypto within the Banking Committee this Congress due to Brown’s reluctance to support it.
Sen. Debbie Stabenow, who led the charge for the Digital Commodity Consumer Protection Act last Congress, has called for greater federal oversight of the crypto industry. However, the recent collapse of a major cryptocurrency exchange, FTX, has had a significant impact on the momentum of any crypto-related legislation in the Senate Agriculture Committee, which Stabenow chairs.
Rep. Tom Emmer, a long-time advocate for crypto, has been actively promoting legislation to provide regulatory certainty for blockchain entities. As the majority whip, Emmer’s support adds momentum to the bills he sponsors. He is also a co-sponsor of the FIT Act.
Rep. Glenn Thompson, who inherited legislative proposals for crypto exchanges to register with the CFTC from his predecessor, has now become the formal sponsor of the FIT Act. The Agriculture Committees, which Thompson is part of, are supportive of expanding the authorities of the CFTC. However, the Agriculture Committees do not have as much influence over crypto legislation as the HFSC or the Senate Banking Committee.
Overall, the progress of crypto legislation in Congress is facing challenges. While key lawmakers like McHenry and Thompson are leading efforts to provide regulatory clarity, they face opposition from committee leaders such as Brown, who have shown little interest in supporting crypto-related bills. The outcome for crypto legislation remains uncertain, and it will require significant effort to sway the leaders in order to move forward with comprehensive regulation.