today’s vote – FIT 21
With an expected vote this afternoon on the Financial Innovation and Technology Act for the 21st Century [H.R.4763] or “FIT 21,” pro- and anti-crypto interests alike are wondering how many Democrats will be voting for the digital asset market structure bill. (We took a partial “crack at it” on Monday.)
Senior Republican committee staff told press yesterday that they are “hopeful” about Democratic support and pointed to the SAB 121 resolution vote where more Democrats voted for the resolution than many expected.
For a livestream of the vote this afternoon:
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- Visit: live.house.gov.
- Majority Leader’s Daily Schedule is here.
- H.R.4763 – rules.house.gov
Industry observers are also hopeful that with enough Democratic support in the House, Senate Majority Leader Chuck Schumer (D, NY) may bring FIT 21 up for a vote on Senate floor – an unthinkable outcome prior to the Senate’s vote on the House’s SAB 121 resolution.
more tips:
Several U.S. House Democrats Petition Colleagues to Join Yes Side on Crypto Bill – CoinDesk
FIT 21 – presser
House Republican leaders held a press conference on FIT 21 yesterday.
House Financial Services (HFS) Chair Patrick McHenry (R, NC) and House Agriculture Chair Glenn “GT” Thompson (R, PA) were joined by their colleagues Rep. French Hill (R, AR), who is the Chair of the HFS Subcommittee on Digital Assets, Financial Technology and Inclusion Subcommittee and Rep. Dusty Johnson (R, SD), who is chair of House Ag’s Commodity Markets, Digital Assets and Rural Development Subcommittee.
A few highlights (lightly edited for clarity):
HFS Chair McHenry on if FIT 21 doesn’t pass into law this Congress:
“My time as Chair and my time in Congress is coming to an end…but the policy is not coming to an end. And I’m going to leave it to these ‘young’ kids that are at this table with me – [Chair Thompson and Reps. Johnson and Hill] and members of the Ag and Financial Services Committee – to go see the policy through if it’s not done this Congress.”
“But, we’re going to drive like hell to get whatever we can out of this Congress. Whatever policy, good policy we can get done. We’re going to try to get done. There is bipartisan support for that drive.”
Chair GT Thompson on the generational appeal of FIT 21 as well as the Senate:
“There are people of all age groups and generations that are interested in [this bill] obviously -but it’s pretty heavily weighted within the the newest generation of voters, who are really attuned into digital commodities and cryptocurrency.”
“Just speaking on the issue of what could be some motivations for the Senate to move the bill – first, we’ve got a very comprehensive bill for them to start with here something that – legislatively – will get across the finish line in the House. And certainly something that I think is relatively appealing to the newest generation of voters that are out there. I think it helps speak to the future of why, ultimately, we need to get this done.”
Rep. Hill on the sense of history with FIT 21:
“Just like Congress came to consensus back in 1996, about the Internet in its earliest stages and rejected the idea of regulating the internet or taxing the internet, and instead would be focused on how people would use the Internet and commerce, I think you’ve seen – due to the work and leadership of Chairman McHenry and Chairman Thompson – that consensus come along – that is a bipartisan consensus – that innovation in the United States should be invested in. And this bill clearly does that. And so I think we’re at an inflection point about writing applications on blockchain for financial services and beyond.”
Rep. Johnson speaking to FIT 21’s new definitions for how particular crypto tokens would be identified – commodity v. security:
“Clearly, Ether is a little bit more complicated. We were in a situation not all that long ago where seemingly everybody agreed that Ether, like Bitcoin, was a commodity and was entirely decentralized. Some of the changes to how that token operates has caused some in the SEC to view it differently.”
“Although I would tell you…. clearly, this is a very mature digital asset. And I’m not a regulator, but to me, I have high confidence that Ether is going to be able to meet that [commodity] test. If it doesn’t already today than it would in a relatively short period of time. So between Bitcoin and Ether, you’ve got well in excess of 70% of all of the trading on digital assets already generally agreed to be in the commodities regime rather than the securities regime.”
FIT 21 – Rules hearing
Even though Reps. French Hill and Dusty Johnson made an extensive case for FIT 21 at yesterday’s House Rules Committee hearing, Ranking Member Maxine Waters (D, CA) was having none of it.
The Ranking Member provided a strong repudiation of and no room for compromise on the details of FIT 21. Her critique often began and ended with a lack of consumer protections. She also took on the Republican’s position on Central Bank Digital Currency’s (CBDCs) saying that, for example, Federal Reserve pilot programs for CBDCs were an important part of shaping America’s role on the global financial stage while balancing privacy concerns.
Ranking Member Waters advocated for oversight of digital assets by the SEC and the current securities regime (i.e. the Howey Test). She said, “This is a framework that is applied to all securities. For more than 90 years without withstanding numerous technological advancements and helping to make our capital markets the envy of the world and the SEC is enforcing that framework.”
Using FTX founder and CEO Sam Bankman-Fried as an example, “buyer beware” was the Republican’s point-of-view versus the consumer must be protected according to Democrats during the hearing.
See video of the hearing on YouTube.
more tips:
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- Rep. Hill Testifies Before Rules Committee in Support of the Financial Innovation and Technology for the 21st Century Act – press release
- Video: Are memecoins securities? (video clip) – Rules Committee hearing via X
FIT 21 – Nancy Pelosi
According to American Prospect, former House Speaker Rep. Nancy Pelosi (D, CA) may support FIT 21. Prospect writes, “Pelosi is no longer in the Democratic leadership, but her opinions still carry weight among many House Democrats. She also remains one of the most prodigious fundraisers in the Democratic Party, at a time when the crypto industry has delivered large sums of campaign contributions over the past two electoral cycles.” Read more.
FIT 21 – special takes – pro
Politico’s Eleanor Mueller says conservative think tank Heritage Foundation has been actively courting support for FIT 21 among Members. She quotes a Heritage email this week supporting the need for the digital assets market structure bill: “The SEC and CFTC ‘have had more than a decade to promulgate rules governing digital assets, yet the SEC has utterly failed to do so and the CFTC has provided only minimal guidance.” Read more.
what you should know: Majority Whip Tom Emmer’s (R, MN) “CBDC Anti-Surveillance State Act” [H.R.5403] will also receive a House Floor vote this afternoon. Heritage is a strong supporter of this bill, too.
FIT 21 – special takes – anti
Meanwhile, Better Markets, which is run by Dennis Kelleher, who was a member of the Biden Administration’s 2020 transition team along with SEC Chair Gary Gensler, continues to take issue with the crypto industry estimates of crypto owners in the U.S. who could influence the election. “Just as [crypto] legislation is being pushed in Congress, the industry is escalating its DC advertising, including the claim that 52 million Americans own [crypto.]” See more on X.
crypto capital
The Wall Street Journal is the latest publication to look at the increased campaign spending by crypto interests – mainly Fairshake and two associated Super PACs. The WSJ reported yesterday, “Wealthy investors and big companies have long used campaign donations and lobbyists to win influence in Washington. What sets the crypto industry’s push apart this year is that its ability to keep operating in the U.S. is at stake.” Read it.
Rep. Katie Porter (D, CA) gets a mention for the crypto funds used against her primary campaign for the Senate in California.
fighting crime
The digital assets industry and web publishers have had enough of fraud pulsing through their products and platforms. According to TechCrunch, “…a group of major tech companies including Match Group, Meta, Coinbase and others are jointly launching a new coalition to take on online fraud across dating apps, social media and crypto.” It’s called Tech Against Scams.
Read more. Also, visit the “global anti-scam organization” website here.
The initiative targets “pig butchering,” which Wikipedia defines as “a type of long-term scam and investment fraud in which the victim is gradually lured into making increasing contributions, usually in the form of cryptocurrency, to a fraudulent cryptocurrency scheme.”
more tips:
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- Tech Companies Announce A New Coalition To Fight Online Fraud & Pig Butchering Scams – press release
what you should know: This new group adds to a similar but different effort called CryptoISAC, “a ‘neighborhood watchdog’ specializing in cybersecurity analytics and comprised of crypto industry companies.” The organization will officially roll out at next week’s Consensus conference in Austin, Texas. Read more from earlier this month.
Choke Point 2.0
With the imminent exit of Chair Martin Gruenberg from the Federal Deposit Insurance Corporation due to the well-documented sexual harassment scandal, is the often-denied “Choke Point 2.0” strategy on its way out, too?
Back in March of 2023 – just after the banking crisis – law firm Cooper & Kirk published a lengthy review arguing that regulators had “come for crypto” and, in particular, the FDIC had.
From Cooper & Kirk’s paper :
“FDIC, it has been widely reported, continued to send this anti-crypto message as it wound down Signature. According to two anonymous sources, the FDIC required bidders for Signature to agree not to bid for the bank’s assets with ties to the crypto industry. An FDIC spokesperson denied these allegations, claiming that the agency would not require divestment of crypto activities as part of any sale, and referred concerned banks to prior statements by FDIC Chairman Martin Gruenberg that they are ‘neither prohibited nor discouraged’ from providing services to any sector of the economy.”
“These denials were all too familiar to the victims of Operation Choke Point, who were similarly assured by Chairman Gruenberg in 2015 – indeed, in the very same words Chairman Gruenberg continues to use in 2023 – that supervised banks were ‘neither prohibited nor discouraged from providing services to any category of business customers or individual customers.'”
Wells Notice response
Uniswap Labs COO Mary-Catherine Lader announced on X yesterday that her company has responded to the Wells Notice sent by the Securities and Exchange Commission. A Wells Notice inevitably means the SEC will be bringing an enforcement action a company.
Lader tweeted in part, “When regulators try to litigate new technologies out of existence, only well-resourced companies like [Uniswap] Labs can fight back. For the US to keep leading in tech and finance, teams need to be able to innovate *in* the US.” Read her thoughts.
more tips:
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- The fight for DeFi continues – Uniswap Labs
- Wells submission on behalf of Uniswap Labs – Uniswap Labs
election central
A website titled “Cryptopols” is highlighting the crypto interests of current candidates running for office this November and whether they are “pro-” or “anti-crypto.” Covering the campaigns for the White House, Senate and U.S. House of Representatives, the site also provides a visualization of sentiment across the country. Visit cryptopols.com.
still more tips
Trump Now Accepts Bitcoin Donations, Making Good on Crypto Promise – Decrypt
Rep Patrick McHenry on Crypto’s Big Week in DC (podcast) – Bankless
The Crypto Comeback (podcast) – The New York Times’ The Daily