Despite a rocky start to cryptocurrency policymaking this year, it appears U.S. policymakers are indeed making progress on legislation and regulation. The White House is launching new discussions with representatives from banks and the crypto industry about stablecoin yields.
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narrative
The Senate Agriculture Committee voted to advance market structure legislation, the White House became directly involved in addressing yield concerns, and the SEC and CFTC recommitted themselves to advancing cryptocurrency rulemaking. We don’t yet know how quickly these discussions will lead to changes in the Senate Banking Committee’s version of the market structure bill, or how large the gaps actually will be between the different groups.
why this is important
The year is still young, but lawmakers appear to be making progress on market structure legislation. Let’s see what happens in February.
break it down
The White House is convening a meeting of cryptocurrency and banking industry representatives to start a conversation about stablecoin yields and rewards. Participants so far consist mainly of representatives from trade organizations and lobbying groups, although a handful of companies appear to have sent representatives from their policy teams.
The parties are likely to discuss what compromises they are willing to make on the yield issue, potentially laying the groundwork for further negotiations when the Senate Banking Committee resumes negotiations on the bill.
Of course, earnings incentives are just one of many areas of glaring disagreement. Anti-money laundering and know-your-customer provisions applicable to decentralized finance (DeFi) remain, as does whether regulators will require a quorum of bipartisan commissioners, and whether ethics provisions will be enforced against the president (and other lawmakers). Banking committee members have not said whether they have made any progress on some of the issues. A fare increase hearing still seems likely to take place in the coming weeks — it’s just unclear when.
Another complicating factor is the Federal Reserve. President Donald Trump has announced his intention to nominate former Federal Reserve Board member Kevin Warsh as his candidate to succeed current Chairman Jerome Powell. The Banking Commission will run this confirmation process, which may take precedence over crypto legislation when it is launched.
The Senate Agriculture Committee is working on its own version of a bill to address commodity regulatory concerns, but it’s not doing enough to make the Banking Committee’s job easier on partisan issues.
The committee held an hour-long hearing on Thursday to debate some proposed amendments to its version of the Cryptocurrency Market Structure Bill, which ultimately advanced on a party-line vote. Democrats said at the start of the hearing that they broadly support the legislation but want a bipartisan bill.
Although the hearing was brief, lawmakers voted down the proposed amendments, with committee Chairman John Bozeman saying the Banking Committee had appropriate jurisdiction over several of the proposals.
For their part, the SEC and CFTC are not waiting for Congress to act. On Thursday, Paul Atkins and Mike Selig, the presidents of their respective agencies, held a joint meeting (while jointly appearing on CNBC and commentating on Fox News). In a statement on rulemaking “coordination,” Selig announced that he was directing commodities regulators to engage in formal rulemaking for prediction markets and tokenized collateral.
The backdrop this year remains the upcoming election. Fairshake, one of a group of crypto-focused super political action committees (super PACs) driven by cryptocurrency companies, has announced it is preparing to deploy nearly $200 million this year, funding that lawmakers may keep in mind as they move forward with legislation. It remains to be seen whether the money cannon will outweigh their concerns about the bill.
on Monday
- The White House is convening a meeting between cryptocurrency and banking industry representatives to discuss stablecoin yields and rewards in cryptocurrency market structure legislation.
Wednesday
- At 15:00 UTC (10:00 AM ET), the Financial Stability Oversight Council, represented by Treasury Secretary Scott Bessant, will deliver its annual report to the House Financial Services Committee.
Thursday
- At 15:00 UTC (10:00 AM ET) the Financial Stability Oversight Council, represented by Treasury Secretary Scott Bessant, will present its annual report to the Senate Banking Committee.
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