One day this newsletter will no longer cover cryptocurrency market structure legislation. But now is not that time.
You’re reading The State of Crypto, a CoinDesk newsletter focusing on the intersection of cryptocurrency and government. Click here to sign up for future editions.
narrative
The Senate Agriculture Committee released a draft of a new cryptocurrency market structure bill last Wednesday.
why this is important
The bill, like the Banking Commission bill, seeks to reshape the federal regulatory framework to define how regulators like the Commodity Futures Trading Commission and Securities and Exchange Commission regulate cryptocurrency markets. Once again, the question is whether it will survive a markup hearing, let alone the full Senate.
break it down
The new draft naturally focuses more on the Commodity Futures Trading Commission and how it regulates digital commodities. The Agriculture Committee is expected to produce a more bipartisan outcome that, if not be easy to pass with a markup, would at least be less controversial than the Banking Committee draft.
The first sign of trouble came earlier this week, when many told CoinDesk’s Jesse Hamilton they were concerned the bill would be too partisan to pass in the Senate.
Those concerns seemed to be confirmed when Sen. John Boozman, the committee’s Republican chairman, acknowledged “fundamental policy differences” in a statement thanking Sen. Cory Booker, the lead Democratic negotiator on the bill.
“While it’s unfortunate that we were unable to reach an agreement, I’m grateful for everyone’s cooperation to make this legislation better,” he said in a statement. “It’s time for us to introduce this bill, and I look forward to next week’s increase.”
Late Friday, Democrats (and some Republicans) introduced a number of proposed amendments that will be debated on Tuesday. As a reminder, markup is where lawmakers debate provisions in a bill and amendments to those provisions. Senators will then vote on the amendments and then on the bill itself.
A preliminary look at the new text suggests lawmakers can at least agree on issues such as whether the CFTC will have a bipartisan quorum of commissioners to govern the agency — a section that had been debated in previous discussion drafts.
“Congress deems that, prior to the implementation of this Act, the Commodity Futures Trading Commission – (1) shall be sufficiently constituted… to nominate not less than 2 Commissioners, in consultation and coordination with the ranking minority members, prior to the appointment,” one section reads.
Other parts may be more controversial.
Like the banking version of the bill, the text contains provisions for legal protection for developers. One of the committee members is Sen. Chuck Grassley, R-Iowa, chairman of the Senate Judiciary panel, who wrote to the Banking Committee last week saying such provisions fall within his committee’s jurisdiction.
Much of the bill appears to be good for the crypto industry as a whole. As of press time, no one has expressed significant concerns about the text or its potential impact on cryptocurrency businesses.
All of this leaves next week’s hearing in uncertain territory.
One person following the situation said the amendment would likely have bipartisan support, allowing the bill to move forward on a bipartisan basis, even if it does not have support from both parties in its current form.
The threat of primary challenges funded by cryptocurrency PACs like Fairshake is also likely to persuade Enough Democrats voted for the bill to give it a sizable edge when it reaches the Senate floor.
There’s also a chance the bill will advance purely out of partisanship, which would make things more difficult in the Senate.
Or it might not move forward (as I noted last week, this won’t be the end of the bill).
For good measure, the Senate Banking Committee likely won’t return to market structure for weeks, either. Earlier this week, multiple people told CoinDesk that the White House and committee members wanted the cryptocurrency industry and banking lobby to address stablecoin yield issues before resuming efforts.
All this remains to be seen.
Some other things to watch for next week:
A massive snowstorm appears to be heading toward the East Coast, while a very cold snow/ice storm will hit the Midwest and South/Southeastern United States. The storm is expected to begin Saturday night and continue into Monday morning. The Senate was on recess last week, which meant many members were in their home states. Blizzards are known to disrupt flights.
One person following the process told CoinDesk that the hearing may need to be postponed if senators on the Agriculture Committee are unable to fly back in time for Tuesday’s hearing.
A spokesperson for the commission did not respond to a request for comment on a possible delay.
More urgently, another critical deadline is looming: The U.S. government is set to run out of money on Friday. The House rushed a funding package Thursday and sent it to the Senate, where it still needs to vote. This may also cost oxygen and time next week.
Tuesday
- At 15:00 UTC (10:00 AM ET) the SEC and CFTC chairs will hold a joint discussion to discuss how well they work together on regulation.
- At 20:00 UTC (3:00 PM ET) the Senate Agriculture Committee is scheduled to hold a markup hearing on its version of cryptocurrency market structure legislation.
If you have any ideas or questions about what I should cover next week, or if you have any other feedback you’d like to share, please feel free to email me: [email protected] Or find me at Bluesky @nikhileshde.bsky.social.
You can also join group conversations on Telegram.
See you next week!
