House Financial Services starts
Posted on by John Ebbert

Digital Asset Democrats Designated; McHenry Critical Of SEC Chair Gensler

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digital asset Democrats

Yesterday afternoon, just prior to the “Organizational meeting” for the U.S. House Financial Services Committee, Ranking Member Maxine Waters (D, CA) announced selections for Democratic subcommittee posts. The Majority Republicans announced their appointments last week.

For the new “Subcommittee on Digital Assets, Financial Technology and Inclusion,” the eight Democratic members will be:

    • Rep. Stephen F. Lynch (MA), Ranking Member
    • Rep. Bill Foster (IL)
    • Rep. Josh Gottheimer (NJ)
    • Rep. Ritchie Torres (NY)
    • Rep. Brad Sherman (CA)
    • Rep. Al Green (TX)
    • Rep. Sean Casten (IL)
    • Rep. Wiley Nickel (NC)

breaking down the Dems

Ranking Member Rep. Lynch brings his previous Congressional FinTech experience which includes his work as Chairman of the Task Force on Financial Technology  – originally established by Maxine Waters – in the 117th Congress.

Lynch, Foster, Gottheimer and Torres were members of the Congressional Blockchain Caucus in the last Congress with Foster assuming a caucus co-chair role. Rep. Gottheimer introduced the “Stablecoin Innovation and Protection Act” early last year – one of many stablecoin bills put forward in the last Congress.

Rep. Brad Sherman has been a notable critic of cryptocurrencies and Congressional blockchain buzz and will undoubtedly provide a sharp point-of-view in opposition to crypto proponents of the Committee regardless of party.

Rep. Al Green was Chairman of the Financial Services Subcommittee on Oversight and Investigations in the previous Congress and held a hearing in 2021 on “Crypto Frenzy” which looked skeptically at cryptocurrencies. He also asked during the questioning of current FTX John Ray at an HFS hearing in December if the implosion of crypto exchange FTX was “all one big mistake” and due to “sincere ignorance” on former FTX CEO Mr. Sam Bankman-Fried’s part. Mr. Ray answered dutifully, “Ultimately, others will judge him by actions.”

Rep. Casten’s views on blockchain and crypto aren’t clear and same with Rep. Wiley Nickel (NC), who is new to Congress and comes from North Carolina – the same state as HFS Chair Patrick McHenry.

first House Financial Services meeting

“Gary Gensler’s regulation by enforcement isn’t protecting consumers” was among the opening remarks (read them) of The House Financial Services “Organizational” committee meeting from Chair Rep. Patrick McHenry. See the video.

McHenry gave broad strokes about the agenda ahead for the Financial Services Committee and paid special attention to the new digital assets subcommittee – as he noted, the first of its kind in Congress. McHenry stated hopefully to all members, “Divided government can yield bipartisan, legislative outcomes and that’s what I’ll seek whenever we can.”

Ranking Member Waters offered her opening remarks (read them) and after a gracious start did not pull any punches. She asked for an amendment as it relates to “diversity and inclusion” – a Financial Services Subcommittee that was part of the previous Congress. Though she noted McHenry’s request to make each subcommittee responsible to diverse and inclusive them, Waters wanted something each subcommittee “will do” versus “may do” and cited verbiage from McHenry’s own press release last week on Republican subcommittee assignments as a guide.

Waters asked that data be kept and reported on diversity of witnesses. McHenry responded that he had a limit to the number of subcommittees he could create (6) and believed creating the “Digital Assets” subcommittee was appropriate (versus keeping Waters previous subcommitee on Diversity and Inclusion). He urged rejection of Waters amendment. After a recess, the amendment was rejected along party lines, 27-22 – the “party lines” trend was maintained in other rules amendments throughout the day.

Towards the end of the day, Ranking Member Waters shared, “We were right there” in regards to how close the 117th Congress Committee was to introducing a stablecoin bill.

Later Chair McHenry responded on why he didn’t want to put “digital assets” in the agenda for the HFS Oversight Subcommittee. “There’s another committee that thinks it has jurisdiction over digital assets” added McHenry who said he didn’t want a fight between House Agriculture and House Financial Services.

crypto Rep turns Senator

Senator Ted Budd (R, NC), who worked on crypto legislation on the House Financial Services Committee in the last Congress and was a member of the Congressional Blockchain Caucus, announced his new Senate Committee assignments including: Armed Services; Commerce, Science, and Transportation; Health, Education, Labor, and Pensions; and Small Business and Entrepreneurship. Read the release. How his blockchain interests evolve given his new role, committee assignments and “Freshman” status remains to be seen.

event

CFTC Commissioner Kristin Johnson will appear at “Cryptocurrency Regulation Virtual Conference” produced by UC Berkeley on February 8. From conference organizers: “Our focus is a practical one for anyone interested in crypto regulation: how should practitioners and policymakers react?” Sign up.

unregistered securities lawsuit

A class action lawsuit over the listing of purported unregistered securities in New York State was dismissed. The defendant, Coinbase, had 79 digital tokens identified in the suit which were sold through its crypto platform. Though the judge didn’t make a determination on whether the tokes were securities or not, he did say “the terms of Coinbase’s user agreement ‘flatly contradict’ allegations in the lawsuit that the company holds title to the digital assets that are bought and sold on the exchange.” Read more on Yahoo. The original court filing is here. The judges opinion filed yesterday is here.

not-US crypto regulation plans

Former CFTC Commissioner Brian Quintenz says, “It has a nuanced view of DeFi activities and structure, acknowledges potential risks, and affirms consistent DeFi regulatory outcomes, possibly by different means.” New U.S. crypto regulation plans? No. It’s the United Kingdom’s version of the Treasury Department which laid out a plan yesterday to begin the process of regulating digital assets. The stated goal of the announcement is the desire to make “the UK as a safe jurisdiction for cryptoasset activity to take place, fostering innovation and providing firms clarity over the planned regulatory framework.” Read the release. A feedback period on the proposals will be in place until April 30.

The BBC quotes Economic Secretary to the Treasury Andrew Griffith who said the government is “steadfast in our commitment to grow the economy and enable technological change and innovation – and this includes crypto-asset technology. But we must also protect consumers who are embracing this new technology – ensuring robust, transparent and fair standards.” Read more. CNBC covers the news and notes UK Prime Minster Rishi Sunak is considered “crypto-friendly”.

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