Last month, Rep. French Hill, who chairs the House Financial Services Committee, told CoinDesk that he expected the Clarity Act to ensure bipartisan consensus, that tokenization was the next major item on the agenda, and that crypto would continue to receive bipartisan support.
You’re reading State of Crypto, a CoinDesk newsletter that examines the intersection of cryptocurrency and government. Click here to subscribe to future editions.
The story
After stablecoins and market structure, tokenization is the next major focus of the House Financial Services Committee, Chairman French Hill told CoinDesk last month.
Why it matters
The House Financial Services Committee is one of the few groups in Congress that directly oversees federal regulators working on digital asset policy. He played a key role in advancing both the stablecoin-focused GENIUS Act and the market structure-focused Clarity Act. Hill has led the committee since former Chairman Patrick McHenry retired from Congress.
Break it down
The House of Representatives found a way to get bipartisan agreement on stablecoin sales practices, decentralized finance and ethics rules before passing its version of the Clarity Act, Hill said.
“These are all things that we successfully addressed in the House bill and got 78 Democratic votes in the House last year,” he said. “So I don’t see any reason why they can’t find consensus in the Senate on the House bill.”
Hill spoke with CoinDesk at the Digital Assets and Emerging Technologies Summit hosted by Vanderbilt University and the Blockchain Association in early April about a series of issues being considered by his committee.
He said the House bill’s Senate counterpart has begun adopting some details of the House version as lawmakers negotiate aspects of the legislation ahead of this month’s Senate Banking Committee review.
“I think the Senate relied a lot on the House’s work on FIT21 [the Financial Innovation and Technology for the 21st Century Act] of the previous Congress and the clarity in this Congress,” he said in April. “I think you see it very clearly in the Senate agricultural markup, I think you see it in the basic draft of many elements of the Senate bill.”
Senate negotiators kept their House counterparts “in the loop on the process,” he said, adding that he and Rep. Bryan Steil, who chairs the House subcommittee on digital assets, financial technology and artificial intelligence, were in contact with senators working on the Clarity Act.
His committee is currently examining other issues, such as tokenization and the role of lawmakers in this area, he said. The Financial Services Committee held a hearing on tokenization in late March, which Hill said was intended to help lawmakers think about what the Securities and Exchange Commission (SEC) and banking regulators might need in terms of additional authorities or rules to help companies engage in tokenization of real-world assets.
Part of that effort is determining whether a legislative effort is necessary or whether policymaking can remain at the level of regulators, he said.
“Tokenizing an asset, such as a common stock, is really an exercise in system change,” he said. “It doesn’t change the law. Any legal or regulatory requirements for common stock also apply to common stock tokens, right? And so, in our view, that’s why these hearings are raising awareness.”
The House and Senate, as overseers of regulatory agencies, can, for example, use hearings to ask how existing systems can be adopted for blockchain-based systems, he said.
Along the same lines, Hill said he is exploring the possibility of tokenizing deposits in the commercial banking sector, which could enable direct debit payments without the need for an intermediate shutdown.
It’s not necessarily imminent, but it’s an area his committee could explore, he said.
“You think about moving from call markets to paper markets and then the digitalization of that paper system, which happened in the 1970s and 1980s, and it’s increased accuracy, reduced fraud, increased speed, decreased need for liquidity. [and] improved settlement,” he said. “We went from T+5 on stocks in the 1970s to T+1. So for me it is an operational decision, and interoperability is the biggest challenge, not the mechanical or technical aspect. »
Tokenized markets will therefore require work on interoperability and compliance, he said.
“We’ll see if there’s a need to have legislative activity rather than purely regulatory activity, and that’s good. That’s the job of Congress,” he said.
The other major topic he’s following — at least in the crypto world — is the effort to update tax regulations around digital assets, he said. The House Ways and Means Committee is already working on tax issues, and a bipartisan group of lawmakers reintroduced a bill specifically targeting crypto taxes earlier this month.
And of course, there will be elections later this year that will determine control of the House of Representatives and the Senate. The crypto industry is, as it was in 2024, heavily engaged in primary races, trying to support candidates that various political action committees view as pro-crypto.
Hill said the Financial Services Committee in particular has a long interest in digital assets, referencing the work of former Rep. Patrick McHenry and his Democratic counterpart, Rep. Maxine Waters, over the past 10 years.
“Over the last four years, we’ve seen the digital asset ecosystem really engage, not just policy-wise, but politically,” Hill said. “And you saw that in the 2024 election… So I anticipate that the digital asset ecosystem and political activity will be important for the 2026 election. They’re bipartisan. They support pro-innovation people.”
Hill said the industry’s political engagement in this year’s vote was significant and that there is already a bipartisan appetite for crypto.
“If we are successful in developing GENIUS rules and adopting Clarity, you will begin an approximately 12-month joint rulemaking process between the CFTC and the SEC,” Hill said. “And I do think the political focus will shift to the regulatory agencies to try to ensure that our vision in the House of an integrated, common, fit-for-purpose approach is fully implemented.”
THURSDAY
- 2:00 p.m. UTC (10:00 a.m. ET) The House Financial Services Committee will hold an oversight hearing with federal banking regulators.
If you have any ideas or questions about what I should discuss next week or any other comments you’d like to share, feel free to email me at nik@PK Press Club.com or find me on Bluesky @nikhileshde.bsky.social.
You can also join the group chat on Telegram.
See you next week!
