Tensions rise as US lawmakers work to get crypto provisions into end-of-year bills
U.S. lawmakers are still vying to throw in crypto-related measures into end-of-year legislative packages, though industry sources say more action will likely happen in 2024.
While Republican House Speaker Mike Johnson’s approach to a spending measure may mean there will be no larger “omnibus” bill where several measures can be thrown into at the end of the year, some crypto provisions may still end up in other end-of-year bills.
The National Defense Authorization Act could include an amendment from Sens. Cynthia Lummis, R-Wyo., Kirsten Gillibrand, D-N.Y., Roger Marshall, R-Kan., and Elizabeth Warren, D-Mass., that would require regulators to set up examination standards for financial institutions engaged in crypto activities while also requiring the Treasury Department to come up with recommendations to Congress on crypto mixers.
The amendment is still in flux, Sen. Lummis told reporters on Thursday at the Blockchain Association Policy Summit.
“I hear rumors, and that’s all they are, that it may get caught up into some other negotiations and I don’t know whether it’s going to survive,” Lummis said. “But we should know more early next week.”
‘Good compromise’
The proposed amendment is something the crypto industry can accept, said Cody Carbone, vice president of policy for the Chamber of Digital Commerce. The crypto industry is less keen on a bill from Sen. Warren that aims to crack down on the use of crypto for money laundering and sanctions evasion in part by extending know-your-customer requirements to miners and wallet providers.
“We just don’t want to create new standards and burdens on some of these players in the ecosystem that aren’t relevant, which is what Warren’s bill would do for miners and validators who don’t work with customers,” Carbone said. “So we think this is a good compromise.”
One bill that Carbone said he would like to get added to the NDAA is the Financial Technology Protection Act, which creates a working group with representatives from several federal agencies including Treasury to combat terrorism and illicit financing.
“We’re hopeful and we’ve been advocating for that to get added,” Carbone said.
Crypto provisions could also be included in a final appropriations package, such as one from Rep. Josh Gottheimer, D-N.J., which would allocate $3 million to the Treasury Department for research and to work with blockchain analytics firms to help combat terrorist financing, Carbone said. Others that are more partisan, such as Republican Rep. Tom Emmer’s provision to remove all funding from the Securities and Exchange Commission for crypto related enforcement actions, are unlikely to be included, Carbone said.
Tensions heat up
Rep. Patrick McHenry, R-N.C., chair of the House Financial Services Committee, has meanwhile been pushing to include crypto legislation into the NDAA, according to multiple news reports. His committee advanced a market structure bill and another bill that would regulate stablecoins on the federal level during the summer and is awaiting a full House vote.
“Those rumors are true, they are trying to push through either market structure or stablecoins, but the odds of that happening successfully are pretty rough but we’ll see,” said Ron Hammond, director of government relations at the Blockchain Association.
McHenry would still need buy in from Sen. Sherrod Brown, D-Ohio. Brown leads the Senate Banking Committee and has been critical of the crypto industry, recently calling for a crackdown.
Hammond said the stablecoin bill, which has a bit more of a buy in from top Democrats such as former House Financial Services Committee Chair Maxine Waters, D-Calif., could potentially slide into the NDAA. Odds are slim of getting either bill included in the NDAA, but the stablecoin provision is the more likely of the two given concerns around Tether’s alleged use in illicit finance, Hammond said.
McHenry also went so far as to threaten to block bipartisan banking policy in the NDAA, including a bill introduced by Brown to combat the fentanyl crisis, this past week, according to Punchbowl News. The market structure and stablecoin bills are essentially McHenry’s babies, the Chamber of Digital Commerce’s Carbone said, though said it’s likely that the industry could see a “more dedicated legislative effort in 2024.”
“These bills are definitely a priority for him and I think that we’re seeing is that they are more of a priority than anyone expected,” Carbone said. “These are his babies and he is really dedicated to moving them so I think it makes sense that he is going to look for any vehicle possible to pass them.”