Crypto Framework Passage In The 118th Congress Discussed; Rep. Khanna Supports FIT 21

FIT 21 – Senate Ag

Noting renewed “pressure” on the Hill to get a crypto regulatory framework in place after the House’s passage of the “Financial Innovation and Technology for the 21st Century Act” (FIT 21), Politico reported yesterday on scuttlebutt shared by an anonymous Senate aide: “Senate Majority Leader Chuck Schumer (D, NY) has spoken with Senate Agriculture Chair Debbie Stabenow (D, MI) in recent weeks about her bill to overhaul how the SEC and CFTC share oversight of crypto.” Read more.

Senate Ag Chair Debbie Stabenow sponsored the Digital Commodity Consumer Protection Act (DCCPA) [S.4760] in the last Congress which – at the time – looked like it was on its way to passage. But, then the implosion of FTX and the involvement of FTX CEO Sam Bankman Fried in the legislation stopped DCCPA in its tracks.

what you should know: There appears to be scrambling by Democratic leadership. And Sen. Stabenow has now appeared on both sides of the fence: rumors of her working on new crypto legislation (yesterday and February) while at the same time voting against the CRA resolution rescinding Staff Accounting Bulletin 121. Perhaps the SAB 121 “no” was an attempt to compromise with the White House, which could have looked like this:  “I’ll vote ‘no’ and support your already-expressed veto on SAB 121 and you support me on my new crypto legislation.” Also, Sen. Stabenow’s term ends in January. This could be another race for burnishing her legacy just like House Financial Services Chair Patrick McHenry’s (R, NC) own race against time.

FIT 21 – wedge issue

Other than the extremely compressed schedule to get a new digital assets framework done in the 118th Congress – and more “cooks” in the FIT 21 “kitchen” (Lummis-Gillibrand, for example) -, could Republicans try to scuttle any legislative deal before the election in the interest of maintaining crypto as a wedge issue between the two parties much like the Congressional machinations around the border?

“Crypto as wedge issue” – that’s how far things have come in 30 days.

Assuming the Senate was to go to Republicans in November, Senate Ag Ranking Member John Boozman (R, AR) could run with a new bill in the 119th Congress -and with much less input from Democratic colleagues.

Blockchain Association policy executive Ron Hammond also identified the crypto “wedge” on X yesterday saying, “The [Trump] campaign sees a wedge issue, engaged grass roots, formidable funding and a policy issue his opponent seems to be fumbling.”

FIT 21 – loophole

Is the latest crypto bill an opening for banks to bypass regulation? (subscription) – American Banker

Summary of [American Banker] article… – Zach Wong

SAB 121 veto – Rep. Nickel

“It’s unfortunate that [Chair Gary Gensler] and the [SEC] put [POTUS] in the tough position to veto the bipartisan [SAB 121] CRA. I remain ready to work in a bipartisan way to #RepealSAB121 and ensure that the most well-regulated banks can safely hold digital assets for investors…” – Rep. Wiley Nickel (D, NC) on X yesterday.

Rep. Nickel co-sponsored H.J.R. 109, the resolution rescinding the SEC’s Staff Accounting Bulletin 121.

House Democrats – Khanna

California Congressman Ro Khanna (D) continues to show support for a digital assets regulatory framework. On X yesterday, he appended an interview on MSNBC earlier in the day, and made clear his interest in FIT 21 and called out the bill’s Republican sponsor: “Democrats have delivered on innovation and entrepreneurship with the CHIPS and Science Act and the IRA. The White House should also support [Rep. PatrickMcHenry’s] FIT21 Act to bring regulatory clarity for blockchain and crypto and support those jobs here in the US.

Rep. Khanna was a member of the now-dormant Congressional Blockchain Caucus in the 117th Congress.

EU – stablecoins and MiCA

Circle CEO Jeremy Allaire sounded the alarm on X yesterday on stablecoin regulation changes coming to the European Union courtesy of the continent’s regulatory framework, MiCA. Circle is the issuer of the USDC stablecoin which will be impacted by the implementation coming at the end of June.

Although Allaire wasn’t specific on his concerns, he linked to crypto platform Binance’s announcement yesterday on changes for users in the “European Economic Area” (EEA) beginning June 30:

“…stablecoins will be regulated in the EEA, which means in practice that only certain regulated companies will be able to issue and offer to the public stablecoins, those stablecoins will be ‘Regulated Stablecoins’.”

“Several existing stablecoins may not fall into this category and will therefore be subject to certain restrictions. These will be categorized as ‘Unauthorized Stablecoins.’…”

Read the entire announcement.

what you should know: How MiCA ends up effecting global regulation will be something to watch. If it’s anything like GDPR (General Data Protection Regulation), many jurisdictions could use elements of MiCA as a baseline for their local markets in order to maintain European liquidity as well as remain in compliance with European government.

use case – supply chain

Hyundai Motor and Kia to Introduce Blockchain-based Carbon Emission Monitoring System to Foster a Sustainable Value Chain – press release

more crypto donations

On his company’s blog, Coinbase CEO Brian Armstrong announced a new, Super PAC campaign donation of $25 million in USDC stablecoins to support “Fairshake and its affiliates.”

Stressing the need for a bipartisan effort to create “regulatory clarity” in the United States, Armstrong addresses the political reality: “From a U.S. perspective, there are now dozens of races in the House and the Senate that matter in this upcoming election in November, where a pro-crypto candidate is running, and many of these pro-crypto candidates are in a strong position to win. The House and Senate help determine what crypto legislation gets passed, amongst other things, so growing the number of pro-crypto members is critical.” He doesn’t leave off the Presidential race, either – read the blog post.

what you should know: The continuing multi-million dollar campaign donations by crypto industry interests, combined with President Trump’s acceptance of crypto campaign donations, will keep Democratic leadership – with its anti-crypto positioning – on its heels when it comes to digital assets voters.

still more tips

Why Congress is about to take an interest in tokenisation’s $16tn promise –

Wisconsin Pension Plan Likely to Invest Much More in Bitcoin ETF, Marquette Professor Says – CoinDesk

What we learned from the latest ETH ETF filing dump – Blockworks

State Street is Rebuilding Digital Assets Team, Signaling Optimism About Crypto (subscription) – The Information

FTX offloads remaining Anthropic shares as bankruptcy cost surpasses $500 million – The Block