Despite the rocky start to crypto policymaking this year, for the moment it appears that US policymakers are making progress on the legislative and regulatory fronts. The White House is starting new discussions on the performance of stablecoins with representatives of the banking and crypto industries.
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the narrative
The Senate Agriculture Committee voted to advance market structure legislation, the White House is directly involved in resolving performance issues, and the SEC and CFTC have again attempted to get cryptocurrency regulation underway. What we don’t know yet is how quickly these discussions will lead to changes in the Senate Banking Committee’s version of the market structure bill, or even how far apart the different groups are.
Why is it important
The year is still young, but lawmakers appear to be making progress on market structure legislation. Let’s see what happens in February.
breaking it
The White House is calling a meeting of representatives from the banking and crypto industries to start a conversation about the performance and rewards of stablecoins. The parties involved so far are largely made up of representatives of business organizations and lobby groups, although a handful of companies also appear to be sending representatives of their political teams.
The parties are likely to discuss what they might be willing to agree to on the performance issue, and could form the basis of future negotiations as the Senate Banking Committee renegotiates the bill.
Of course, performance rewards were just one of many remaining areas of disagreement; There are still anti-money laundering and know-your-customer provisions that apply to decentralized finance (DeFi), whether regulators will be required to have a quorum of bipartisan commissioners, and whether ethics provisions will apply to the president (and other lawmakers). Banking Committee members have not yet indicated whether they are making any progress on some of these issues. A margin hearing still appears likely to take place in the coming weeks, but it is unclear when.
Another factor that complicates the situation is the Federal Reserve. President Donald Trump announced his intention to nominate former Federal Reserve board member Kevin Warsh as his candidate to succeed current Chairman Jerome Powell. The Banking Committee will run that confirmation process, which will likely take precedence over cryptocurrency legislation when it escalates.
The Senate Agriculture Committee, which was working on its own version of the bill to address the commodity regulation aspect, did not go out of its way to make the job of its banking counterpart on partisan issues easier.
The committee held an hour-long hearing on Thursday to debate a handful of proposed amendments to its version of the crypto market structure bill that ended with the bill advancing on a party-line vote. At the beginning of the hearing, Democrats said they supported the legislation broadly but wanted a bipartisan bill.
At the hearing, brief as it was, lawmakers voted against the proposed amendments, and committee Chairman John Boozman said the Banking Committee had proper jurisdiction over several of the proposals.
The SEC and CFTC, for their part, are not waiting for Congress to get its act together. Paul Atkins and Mike Selig, the agencies’ respective presidents, held a joint conference Thursday (along with a joint appearance on CNBC and an op-ed on Fox News). Among his statements about “harmonization” in rulemaking, Selig announced that he was directing the commodities regulator to participate in formal rulemaking on prediction markets and tokenized collateral.
This year’s backdrop remains the upcoming elections. Fairshake, one of the cryptocurrency-focused super political action committees (super PACs) powered by cryptocurrency companies, announced that it has just under $200 million ready to deploy this year, a sum that lawmakers will likely keep in mind as they continue to work on legislation. It remains to be seen whether the money cannon will overcome their concerns about the bill.
Monday
- The White House is calling a meeting between representatives of the banking and crypto industries to discuss the performance and rewards of stablecoins in crypto market structure legislation.
Wednesday
- 15:00 UTC (10:00 am ET) The Financial Stability Oversight Council, represented by Treasury Secretary Scott Bessent, will present its annual report to the House Financial Services Committee.
Thursday
- 15:00 UTC (10:00 am ET) The Financial Stability Oversight Council, represented by Treasury Secretary Scott Bessent, will present its annual report to the Senate Banking Committee.
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