A rare hearing between two committees in the U.S. House of Representatives on Wednesday is the latest sign of growing momentum for digital asset legislation.
The House Agriculture and Financial Services Committees will hear testimony on regulatory gaps for digital assets in the U.S., with an eye towards creating new law explicitly for governing trading platforms and stablecoins. The unusual collaboration comes as policymakers try to put action to broad consensus that more rules are needed for crypto and stablecoin companies in the U.S.
A number of high-profile firm failures, starting last May with the Luna-Terra crash, months of policy work, and years of lobbying lend some urgency to the effort. So does a quirk of the calendar in which the House and Senate Agriculture Committees will spend most of their time later this year on reauthorizing billions in agricultural and food programs run by the federal government, due to expire in October.
As opposed to a number of other issues debated in the halls of Congress, crypto has yet to become a fully entrenched or partisan issue, giving efforts to craft new policy on a bipartisan basis chance of becoming law in a narrowly divided government.
“This is a town where people very much like to fight over turf, and where egos can sometimes get in the way of progress,” said Rep. Dusty Johnson, R-S.D., chair of the Agriculture Committee’s panel with jurisdiction over digital assets during a hearing last month. “That cooperation is a testament to the importance that both Chairman McHenry and Chairman Thompson, as well as teams on both sides of the aisle have had, to getting things done on digital assets this Congress.”
Wednesday’s hearing will be the next indication as to how effective that turf-sharing could be.
Stop. Collaborate and Listen.
After a quiet few months to begin this Congress, talks around new legislation for digital assets became more public in recent weeks.
Republicans Patrick McHenry and Glenn ‘GT’ Thompson have made a point to work together due to the unusual overlap between their committees on crypto; the Financial Services Committee oversees capital markets and the Securities and Exchange Commission, while the Agriculture Committee maintains power over the Commodity Futures Trading Commission, which regulates bitcoin and ether futures.
CFTC Chair Rostin Behnam also told a Senate committee in March that stablecoins fall within his agency’s jurisdiction in the absence of legislation telling them otherwise, creating another area of disagreement around digital assets between the commodities regulator and the SEC, and lending more urgency to Congress sorting out the issue.
House Financial Services Committee Republicans already introduced a fresh draft bill on stablecoins late last month to advance conversations beyond where they stalled on new rules for the payments assets.
Wednesday morning’s joint hearing will focus on regulatory gaps for cryptocurrencies, with an eye towards building around existing rules and ideas rather than starting from scratch.
Witnesses include former CFTC Chair Tim Massad, now a Harvard fellow, New York Stock Exchange Chief Operating Officer Michael Blaugrund and Kraken Chief Legal Officer Marco Santori, among others.
Industry advocates have become cautiously optimistic that digital asset legislation has a better chance than most other bills to pass Congress and become law with President Joe Biden’s signature this year.
Several more hearings related to crypto are expected this summer, and McHenry told The Block last month that the Treasury Department has once again engaged with him and his staff on stablecoins after reaching an impasse last year.
But whether Senate Banking Committee Chair Sherrod Brown, D-Ohio, whose committee also has jurisdiction, will agree to act on a bill if it passes the House remains to be seen. The Ohio Democrat is a crypto skeptic who told The Block he would defer to SEC Chair Gary Gensler’s views on the topic but he and his staff have engaged more on cryptocurrency policy so far this Congress, in part because of the epic implosion of the industry, highlighted by FTX’s high-profile collapse.
One industry advocate tracking the bills, who asked for anonymity in order to speak freely, said that his enthusiasm varied from week-to-week. But he felt optimistic when reached on Tuesday.
“It’s going to be a pretty busy summer,” said the lobbyist, though he added, “We’ll see if Senate Banking ever has that markup.”
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