A swirl of several hundred government relations executives and general counsels from crypto companies around the globe gathered at the Conrad Hotel this week for Blockchain Association’s first annual Policy Summit.
Even amidst the recent implosion of crypto exchange FTX, an agenda sprinkled with an impressive list of elected officials offered hope to a beleaguered audience that could be justified for wanting to update their LinkedIn profile in the past week.
In a panel titled, “Post Midterms Political Outlook: What’s On Deck for the Next Congress?,” Congressional staffers who drive policy discussion on Capitol Hill, provided a behind-the-scenes look at a range of blockchain-related issues facing Congress.
Participants reflected the bipartisan strategy of crypto policy in the House and Senate today with two Democratic and two Republican staffers – who stressed they spoke for themselves and not Members of Congress:
- Francesco Castella, Senior Policy Advisor for Congressman Ted Budd (R, NC). Rep. Budd, a member of the House Financial Services Committee and the Blockchain Caucus, will be moving to the Senate in the next Congress. Mr. Castella appeared at DeFiCon (https://blockchaintipsheet.com/policy/us-house-staffers-blockchain-cryptocurrency/) in August in New York City.
- Rashan A. Colbert, Legislative Assistant for Senator Cory Booker (D, NJ). Sen. Booker, who sits on the Senate Agriculture committee, is co-sponsoring the Digital Commodity Consumer Protection Act (DCCPA). Mr. Colbert appeared in a CFTC financial inclusion webcast about blockchain technology in August.
- Emily German, Subcommittee Staff Director at U.S. House of Representatives Committee on Agriculture, which has jurisdiction over the Commodity Futures Trading Commission (CFTC). Ms. German serves the interests of Democrats on the House Ag Committee and its Chairman, Rep. David Scott (D, GA).
- Tim Hite, Financial Services Counsel for Congressman Warren Davidson (R, OH). Rep. Davidson has been an active Member when it comes to cryptocurrency legislation (such as the Digital Taxonomy Act and Token Taxonomy Act) which includes his participation in the House Financial Services Committee and the Blockchain Caucus.
Ron Hammond, Director of Government Relations at Blockchain Association and a former staffer for Rep. Davidson, moderated the discussion.
FTX fallout for this Congress
With FTX’s imploding looming over the conference, Hammond didn’t waste any time by asking staff members about the FTX elephant-in-the-room particularly as it related to DCCPA and where FTX and its founder/CEO Sam Bankman-Fried had taken an active, aggressive role in lobbying efforts.
Just prior to the panel, the House Financial Services Committee announced it would convene a hearing about FTX in December.
House Ag Committee staffer Emily German quickly sought to defend the commodities regulator by clarifying the CFTC’s role in the FTX situation given what had been “obfuscated” in the press: “The CFTC registered entity that was under FTX.us is LedgerX. LedgerX is still one of the few that is not bankruptcy. It is still operational. As of yesterday afternoon, at the very least last time I talked to CFTC. So that’s the biggest thing that I really want to stress – the CFTC’s role in this. FTX.us as we know is in some difficulty that is the spot market.”
Rashan Colbert added his Senate Ag Committee perspective, “The things that the Committee has been working on [such as] the DCCPA and others are going to continue on. It’s not a perfect piece of legislation, [but] that’s been the whole thing – tailoring it and getting the feedback and making it better and better as things go on. I think also there’s a chance to separate the rhetoric from the reality here. FTX and Sam [Bankman-Fried] himself definitely had been very vocal people giving lots of input and comments, but that hasn’t resulted in quite the “hand on the pen” that I think some people think it has.”
Tim Hite and Francesco Castella said they expected more FTX-related hearings on the House Financial Services Committee with Castella adding, “I think there was no way that we weren’t going to address FTX at least in some form in this Congress. Our biggest thing right now is who’s going to come. We have no idea who’s gonna testify… The Chairwoman [Maxine Waters, (D, CA)] does have subpoena authority. So that’s something to keep in mind.”
On potential for 2023 crypto legislation
“I think, fortunately, this is an issue that has really significant bipartisan agreement,” said Colbert. “Debbie Stabenow (D, MI) will maintain the chair of the Ag Committee, so I think she’s serious about moving forward with [DCCPA] in whatever form that might take. As I think many of you know, there was supposed to be a hearing this week, but events have made that not the best [timing] so we’re taking a pause, seeing what lessons are to be learned. But I think a lot of the things in the bill we’re attempting to address are what we saw happen with FTX. There’s definitely still energy to keep moving forward. [But for now] just take the lessons, sit back for a second and try and take it all in.”
German added, “Just to to expand a little bit further, you know, we did have our hearing in the past year with FTX on their proposal that was before the CFTC -their clearing proposal, and that’s since been withdrawn. But it was an interesting dynamic to have one of the few hearings that was more critical of SBF and and the way that they were going. I think that this whole thing has provided us just another case study to take a look at what the heck happened and how we can prevent it or address it with future legislation. We’ve already got a fantastic framework, thanks to Senator Stabenow and Senator John Boozman (R, AR). There’s also the Digital Commodity Exchange Act (DCEA) as well. Ag has been pretty active in this space… Next year, the Farm Bill has to get done which the Ag Committee does every four or five years. So it typically takes up all of the oxygen in the room. And, it’s going to be a balancing act for sure. But I know that we have some fantastic staffers on the House and the Senate side that are focused solely on the CFTC side of things, so we’ll continue that effort next year [despite] the Farm Bill.”
On stablecoin legislation momentum
Chairwoman Maxine Waters and Ranking Member Patrick McHenry (D, CA) have been working on a greatly anticipated stablecoin bill on the House Financial Services committee and Hite believed no momentum had been lost given the events of the past couple of weeks. He added, “I think you’re gonna see Chairman McHenry (when takes the new role given the Republican majority in the 118th Congress) continue to push this… I think stablecoins are obviously still the ‘low hanging fruit.’ I think they’re the ones that you can get through on a bipartisan basis and we look forward to working with our Democratic counterparts in the Senate and getting it done.”
Francesco Castella: “I think one of the biggest hurdles that we’ve seen in DC – and publicly – is the battle we constantly have between what is CeFi and what is DeFi. So that’s a goal: to essentially create a framework that makes sense that is actually focused on DeFi and is not mixed up on anything else, and makes it clear on what we can do. We want to see the DeFi prosper. We think it’s a great tool going forward and a massive disrupter. Now even centralized, traditional financial institutions look at it and say, ‘There’s something here like to work with.’ So we want to create a framework that’s going to continue building [DeFi] up. That’s a goal for us internally.”
Finally, as panelists were asked for the concluding ‘hot takes’, agreement coalesced around the importance of the industry continuing to bring its “technical” people into the legislative discussion. The sense is.. Congress wants to get into the weeds to make legislation work properly.