There will come a time when this newsletter will not be about legislation regarding crypto market structure. But this is not that time.
You’re reading State of Crypto, a CoinDesk newsletter that discusses the intersection of cryptocurrency and government. Click here to register for future editions.
the narrative
The Senate Agriculture Committee published its new bill on the structure of the crypto market last Wednesday.
Why is it important
This bill, like its Banking Committee counterpart, aims to reshape the federal regulatory framework to define how regulators like the Commodity Futures Trading Commission and the Securities and Exchange Commission will oversee crypto markets. And once again, the question is whether it will survive the marking hearing, much less the Senate floor.
breaking it
The new draft, naturally, focuses more on the CFTC and how it would regulate digital products. The Agriculture Committee was expected to produce a more bipartisan effort that, if not easily achieved by a margin, would at least prove less controversial than the Banking Committee’s draft.
The first sign of trouble came earlier this week, when several people told CoinDesk’s Jesse Hamilton that they feared the bill was partisan, putting its passage in the Senate at risk.
Those fears were apparently confirmed when Sen. John Boozman, the committee’s Republican chairman, acknowledged “fundamental policy differences” in his statement thanking Sen. Cory Booker, the top Democrat negotiating the bill.
“While it is unfortunate that we were unable to reach an agreement, I am grateful for the collaboration that has made this legislation better,” he said in the statement. “It’s time for us to move this bill forward and I look forward to the markup next week.”
On Friday night, Democrats (and some Republicans) presented a series of proposed amendments that will be debated on Tuesday. As a reminder, the markup is where lawmakers will debate the bill’s provisions and amendments to those provisions. Senators will then vote on the amendments before voting on the bill itself.
An initial look at the new language suggests that lawmakers were at least able to reach agreement on issues such as whether the CFTC will have a bipartisan quorum of commissioners to run the agency, a section that was previously under debate in the previous discussion draft.
“It is the sense of Congress that prior to the implementation of this Act, the Commodity Futures Trading Commission (1) is fully constituted… with not less than 2 of the Commissioners nominated, prior to such appointments, after consultation and coordination with the ranking minority member,” one section read.
Other sections may be more controversial.
Like the banking version of the bill, this text included a provision on legal protections for developers. One of the committee members is Sen. Chuck Grassley, the Iowa Republican who chairs the Senate Judiciary Panel and wrote a letter to the Banking Committee last week saying such provisions are within his committee’s jurisdiction.
Much of the bill itself sat well with the broader crypto industry. As of press time, no significant concerns have been expressed about the text or its potential impact on crypto companies.
All of that leaves next week’s hearing in an uncertain area.
It’s possible, one person following the situation said, that there will be bipartisan support for amendments that will allow the bill to advance on a bipartisan basis, even if the current form does not have bipartisan buy-in.
It is also possible that the threat of primary challenges funded by crypto political action committees like Fairshake persuade enough Democrats to vote for the bill that will have a comfortable margin when it reaches the Senate.
It’s also possible that this bill moves forward on a purely partisan basis, making things difficult in the Senate.
Or it might not move forward (which, as I noted last week, won’t be the end of the bill).
And, just in case, the Senate Banking Committee may not return to the market structure for a few weeks either. Several people told CoinDesk earlier this week that the White House and committee members wanted the cryptocurrency industry and banking lobby to resolve their issues over the performance of stablecoins before resuming the effort.
Everything remains to be seen.
Some other things to keep in mind for next week:
There appears to be a massive snow storm headed for the East Coast, and a ridiculously low temperature snow/ice storm headed for the Midwest and southern/southeast US. This storm is expected to start Saturday night and last into Monday morning. The Senate was out of session last week, meaning many of its members are back in their home states. It is known that snow storms can disrupt flights.
If senators on the Agriculture Committee cannot return in time for Tuesday’s hearing, that hearing may need to be postponed, a person following the process told CoinDesk.
A committee spokesperson did not respond to a request for comment on what a delay might look like.
What’s more pressing is that another key deadline is approaching: The US government will run out of funds on Friday. The House of Representatives rushed through a funding package on Thursday and sent it to the Senate, but the Senate still needs to vote on this package. That could also consume oxygen and time next week.
Tuesday
- 15:00 UTC (10:00 am ET) The chairmen of the SEC and CFTC will hold a joint discussion to talk about how good they will be at working together on regulation.
- 20:00 UTC (3:00 pm ET) The Senate Agriculture Committee is scheduled to hold a review hearing on its version of the crypto market structure legislation.
If you have any ideas or questions about what I should discuss next week or any other comments you would like to share, please feel free to email me at [email protected] or find me on Bluesky @nikhileshde.bsky.social.
You can also join the group conversation on Telegram.
See you next week!
