US crypto legislation could stall amid Republican leadership drama

Rep. Patrick T. McHenry's shift to temporarily cover one of the most powerful U.S. leadership seats could waste precious time needed to move cryptocurrency bills closer across the finish line.

McHenry, who took over the position of Speaker of the House on Tuesday with a deafening gavel bang, could hold the spot for a week — or much longer. He doesn't seem to have even wanted the post to begin with, preferring to lead the House Financial Services Committee in getting bills, including crypto, out the gate.

His focus will now likely be shifted after former Speaker Kevin McCarthy, R-Calif, was ousted on Tuesday following a power struggle with far-right lawmakers including Rep. Matt Gaetz, R-Fla. 

"Of course he has gotten dragged into this fight whether he likes it or not," said Ron Hammond, director of government relations at the Blockchain Association. 

Two bills just advanced out of his committee in July and are awaiting a full House vote before being passed to the Senate. One bill would regulate stablecoins, while the other takes a comprehensive approach at creating a regulatory framework for crypto; even with an eventual House vote, they would still need to garner support in the Senate, which could prove to be tough. 

"Those bills are just sitting there and we really can’t do anything to move the needle here, we just have to wait for the general politics to play out and then get back to legislating, which is the unfortunate situation,” Hammond said.

The House was supposed to be out of session this week and next, but Hammond pointed out that no new hearings have been scheduled. 

"We’re kind of in a standstill now," he said. 

A screeching halt

Behind the scenes, lawmakers are now jockeying for support to become the next Speaker of the House. A closed door call or conversation with the Republican party is expected to happen on Oct. 10, with a possible general floor vote the next day.

"A lot can mess that up, but right now that's the plan, is that in a week from now we will have a new speaker,” Hammond said, noting the process could drag on if a vote doesn't occur. 

“Basically, until a House member is chosen as Speaker, the House's work activity comes to a screeching halt," said John Aughenbaugh, associate professor at Virginia Commonwealth University. That means typically no subcommittee committee hearings or votes, he added.

McHenry won't lose his position as House Financial Services chair, but he won't be doing much, including work on crypto bills, until a permanent Speaker is chosen, Aughenbaugh said.

Front runners

Rep. Steve Scalise, R-La., is the current frontrunner for the speakership, though his health could come into question, the Blockchain Association's Hammond said. Scalise was reportedly diagnosed with blood cancer in August. 

"Everyone thinks he is going to make a full recovery, but of course the speaker job is no easy job," Hammond said. 

Scalise hasn't really dipped his toes into crypto, Hammond added. 

Crypto friendly House Majority Whip Rep. Tom Emmer, R-Minn., is the second runner-up. Rep. Gaetz, who had a heavy hand in knocking McCarthy out, reportedly said Emmer would "make a great speaker."

"At the end of the day, we want to make sure we just get the House together so we can move these bills along because we're just wasting floor time here," Hammond said.