Drama in U.S. Congress over Speaker of the House leaves crypto legislation on pause

Prospects for a more permanent U.S. House speaker are not looking up, which could kick cryptocurrency legislation further down the road.

The race between Rep. Steve Scalise, R-La., and Jim Jordan, R-Ohio, is tight, as House Republicans gather on Thursday to see if there could be enough votes for Scalise. 

"The general consensus from many folks that we're talking to is that this does not seem like it's going to get solved this week," said Ron Hammond, director of government relations at the Blockchain Association. 

Rep. Patrick T. McHenry of North Carolina became temporary Speaker of the House last week after former Speaker Kevin McCarthy of California was ousted following a power struggle with a faction of lawmakers including Rep. Matt Gaetz of Florida. McHenry has been very friendly with the crypto industry and leads the House Financial Services Committee — a key panel for getting those bills across the finish line.

The temporary speakership leaves McHenry still holding on to his position as chair of the House Financial Services Committee, but he won't be doing much, including work on crypto bills, until a permanent Speaker is chosen. 

McHenry could get certain powers to be able to legislate, Hammond said. The priority would be on bills to assist Israel as violence erupts in the area , and to avert a government shutdown next month.

"Those are definitely the priorities, and there is a very big push both publicly and within the government itself that the House especially needs to get their act in order because there are very pressing matters," Hammond said. 

Crypto on the sidelines

Two bills just advanced out of McHenry's 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. 

"For crypto bills in particular, with the pressing situation ahead of us, it doesn’t seem like a.) now is the right time to bring up any crypto bills and b.) It’s probably not going to result in good votes if they bring it up now just given the very hyper partisan tensions right now," Hammond said. 

In the meantime, as McHenry is temporary speaker, his staff could help push forward bills or could delegate House Financial Services Committee Vice Chair French Hill, R-Ark., to take the charge. Hill has also been friendly toward crypto and has said he would work with lawmakers on a regulatory framework. 

While the House is in disarray, the Senate could eventually take the lead, Hammond added. 

"If the House doesn't get their act in order, the dynamics shift back to the Senate and that's a lot harder to map out," Hammond said. 

In comes Emmer 

The Minnesota Republican and Majority Whip is reportedly vying for House Majority Leader. Rep. Tom Emmer of Minnesota has introduced legislation in the past few years, including the Securities Clarity Act, which would create a new definition for tokens that exist in the in-between of commodity and security. Emmer has also been staunchly against central bank digital currencies and introduced a bill last month to prohibit the Federal Reserve from issuing a CBDC directly to individuals. 

There is largely a pause on deciding a House majority leader until a House speaker is chosen, Hammond said.

"It is a crowded race and Emmer does have a lot more favor with a lot of members. But as we’re seeing now, anything can happen," Hammond said.

When asked how long the House will be without a speaker, Hammond said a new speaker could be in place in the next two to three weeks, if he had to give a prediction.