There will come a time when this newsletter will no longer be about crypto market structure legislation. But now is not the time.
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The story
The Senate Agriculture Committee released its new crypto market structure bill last Wednesday.
Why it matters
This bill, like its Banking Committee counterpart, aims to reshape the federal regulatory framework to define how regulators such as the Commodity Futures Trading Commission and the Securities and Exchange Commission will oversee crypto markets. And again, the question is whether it will survive the markup hearing, let alone the Senate as a whole.
Break it down
The new draft, of course, focuses more on the CFTC and how it would regulate digital products. The Agriculture Committee was expected to produce a more bipartisan effort that, if not easily passing a mark-up, would at least prove less controversial than the Banking Committee’s plan.
The first sign of trouble came earlier this week, when several people told CoinDesk’s Jesse Hamilton that they were concerned the bill would be partisan, risking its passage through the Senate.
Those fears were apparently confirmed when Sen. John Boozman, the committee’s Republican chairman, acknowledged “fundamental policy differences” in his statement thanking Sen. Cory Booker, the lead Democrat negotiating the bill.
“While it is regrettable that we were unable to reach an agreement, I am grateful for the collaboration that resulted in improved legislation,” he said in the statement. “It’s time to move this bill forward, and I look forward to the markup next week.”
On Friday evening, Democrats (and some Republicans) filed a number of proposed amendments that will be debated on Tuesday. As a reminder, it is in the markup that legislators will debate the provisions of the bill and amendments to these provisions. Senators will then vote on the amendments before voting on the bill itself.
A first look at the new text suggests that lawmakers have at least managed to agree on issues such as whether the CFTC will have a bipartisan quorum of commissioners to run the agency — a section that was previously up for debate as part of the previous discussion draft.
“Congress believes that, prior to the implementation of this Act, the Commodity Futures Trading Commission — (1) be fully constituted…with at least two of the commissioners appointed, prior to such appointments, after consultation and coordination with the ranking minority member,” one article reads.
Other sections may be more controversial.
Like the banking version of the bill, this text included a provision on legal protections for developers. One of the committee members is Sen. Chuck Grassley, Republican of Iowa, who chairs the Senate Judiciary Committee and wrote a letter to the Banking Committee last week saying such provisions fall within his committee’s purview.
Much of the bill itself seemed acceptable to the crypto industry as a whole. As of press time, no major concerns have been expressed regarding the text or its potential impact on crypto businesses.
All of this leaves next week’s hearing in a limbo zone.
It’s possible, said one person tracking the situation, that there will be bipartisan support for amendments that will allow the bill to move forward on a bipartisan basis, even if the current form doesn’t have bipartisan buy-in.
It is also possible that the threat of primary challenges funded by crypto political action committees like Fairshake persuade enough Democrats to vote for the bill so that it will have a comfortable margin when it goes to the Senate.
It’s also possible that this bill will advance on a purely partisan basis, making things more difficult in the Senate.
Or it might not move forward (which, as I pointed out last week, won’t mean the end of the bill).
And for good measure, the Senate Banking Committee may not return to market structure for a few weeks, either. Several people told CoinDesk earlier this week that the White House and committee members want the crypto industry and banking lobby to iron out their issues regarding the stable yield of coins before resuming their efforts.
Everything remains to be seen.
Some other things to watch for next week:
There appears to be a massive snowstorm heading toward the East Coast, and a snow/ice storm with ridiculously low temperatures aimed at the Midwest and South/Southeast United States. This storm is expected to begin Saturday evening and last until Monday morning. The Senate was not in session last week, meaning many of its members are in their home countries. Snowstorms can disrupt flights.
If senators on the Agriculture Committee cannot return in time for Tuesday’s hearing, that hearing may have to be postponed, a person tracking the process told CoinDesk.
A committee spokesperson did not respond to a request for comment on what a delay might look like.
Even more urgent, another key deadline is approaching: the US government will run out of funding on Friday. The House of Representatives hastily passed a funding package Thursday and sent it to the Senate, but the Senate has yet to vote on the package. It might also take some oxygen and time next week.
Tuesday
- 3:00 p.m. UTC (10:00 a.m. ET) The chairs of the SEC and CFTC will hold a joint discussion to discuss the importance of their regulatory collaboration.
- 8:00 p.m. UTC (3:00 p.m. ET) The Senate Agriculture Committee is expected to hold a markup hearing on its version of the crypto market structure legislation.
If you have any ideas or questions about what I should discuss next week or any other comments you would like to share, please feel free to email me at [email protected] or find me on Bluesky @nikhileshde.bsky.social.
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See you next week!
