House Republicans Talk Digital Assets Legislative Plan At Flyover Fintech

Flyover Fintech

Yesterday’s one-day fintech conference in Lincoln, Nebraska dubbed “Flyover Fintech” and organized by freshman Congressmen Mike Flood (R, NE) and his staff, arguably yielded as many insights as a week-long Congressional hearing.

The only thing missing was the physical presence of elected Democrats. Maybe next year?  Nevertheless, 250-strong assembled to hear, and share, the latest in digital assets efforts in DC and the U.S. as well as look to the blueprint being laid in Flood’s home state of Nebraska.

The highlight of the day came last when Rep. Flood, a capable interviewer, asked his fellow House Financial Services Committee members – Rep. French  Hill (R, AR), Chair of the Digital Assets Subcommittee, and Rep. Warren Davidson (R, OH) – to join him on stage for a 40-minute Q&A that took attendees behind-the-scenes in Congress.

After covering the impact of FTX’s implosion and the buildup to the recent markups of the stablecoin and digital assets market structure bills, the Congressmen shared their best guess on next steps…

Partial spoiler:

1) The return of Senate Agriculture to the digital assets legislative mix;

2) House member education needs to happen before any House floor vote;

3) Lummis-Gillibrand (RFIA) need a state pathway in their bill.

Noting that Rep. Hill has been on the Financial Services Committee for nine years, and Congressman Davidson, has been on the committee for six and a half years, Flood began by asking for perspective on what it took to get the stablecoin bill to last week’s markup stage.

(Transcript lightly edited for clarity.)

REP FRENCH HILL: It’s been 15 months of bipartisan work between Rep. Maxine Waters (D, CA), who was the Chair of the HFS committee in the last Congress, and Rep. Patrick McHenry (R, NC), to come up with a stablecoin bill that would fill the gap. But it goes back a lot further than that.

We’ve had efforts since Rep. Davidson came to Congress. And, Majority Whip Tom Emmer (R, MN) came to Congress in my class in 2014 to try and move this conversation forward with a Financial Technology Task Force, where we uncovered exactly what we ought to be doing and how we ought to be doing it.

But then, the pandemic got in the way – I do think we would have made more progress if we hadn’t gone through the pandemic.

Last summer, [Maxine Waters and Patrick McHenry] set a goal of trying to get a consensus stablecoin bill through as the initial gateway [product] in the digital asset space. They got very close. And we picked up with Chair McHenry’s leadership this year. We’ve gotten a bipartisan bill through the House with more changes to come. But, now we have to obviously work with the Senate. Continue reading “House Republicans Talk Digital Assets Legislative Plan At Flyover Fintech”

Reaction To Do Kwon Crypto Securities Ruling; Blockchain For Museums

security

Do Kwon ruling

Another court ruling, more rough waters for digital assets. The Wall Street Journal reported Monday that algorithmic stablecoin creator Do Kwon of Terraform Labs did not convince Judge Jed Rakoff of dismissing the Securities and Exchange Commission’s (SEC) enforcement action against him using the recent Ripple/XRP outcome penned by Judge Analisa Torres.

Read the ruling (PDF) on CourtListener.

Judge Rakoff said he disagreed with Torres’ decision and wrote that securities laws do not make the distinctions between institutional and retail investors that Torres identified in her decision two weeks ago. Rakoff said that “secondary-market buyers have the same expectations for an investment as initial purchasers,” according to The WSJ. Read more.

Do Kwon ruling – reaction

Brown Rudnick crypto lawyer Stephen Palley commented on Twitter about Rakoff’s decision saying, “A big [difference] between Rakoff & Torres decisions is that the former was on a motion to dismiss & the latter on summary judgment. Motions to dismiss focus on if plaintiff has stated a cognizable claim in the pleadings. Summary judgment looks outside the pleading, at evidence.” Read Palley’s thread. Continue reading “Reaction To Do Kwon Crypto Securities Ruling; Blockchain For Museums”

New York State Inserts Itself In Stablecoin Bill Debate; IRS Issues Guidance On Staking Rewards

state of stablecoins

state of stablecoins

It’s starting to become clear that the front lines of the stablecoin legislation battle in House Financial Services (HFS) is being fought in the state of New York.

That’s no surprise given Ranking Member Maxine Water’s (D, CA) position (and the White House’s position) on the Federal agencies having the last word on stablecoin registrations. The robust state stablecoin regime currently available through the New York Department of Financial Services (NYDFS) and led by Superintendent Adrienne Harris says a state framework can work – potentially without the Federal “last word.”

Remember that awkward moment in April when Superintendent Harris told Ranking Member Waters about New York’s stablecoin framework at an HFS stablecoin hearing to Waters’ surprise?

Rep. Ritchie Torres (D, NY) and Rep. Gregory Meeks (D, NY) votes in support of the stablecoin bill coming out of the HFS Committee markup last week reinforce the bipartisan interest in preserving state’s rights when it comes to stablecoins.

Punchbowl News’ Brendan Pedersen reported yesterday on NYDFS’s involvement in the stablecoin bill and speaks to Rep. Torres, who said, “New York members, such as myself, take our guidance from Adrienne. If she were dissatisfied with the state option in the bill, then I would have trouble supporting it.”

And then there’s the separate intrastate battle which NYDFS and Superintendent Harris are waging with New York State Attorney General Letitia James.  There was a lof of fanfare when James issued her own legislation (CRPTO) to address the crypto industry – seemingly circumventing NYDFS and Harris. But, with expectations of a June ratification of sorts in New York State’s assembly having quietly fallen by the wayside, nothing has come of James’ legislation thus far. Continue reading “New York State Inserts Itself In Stablecoin Bill Debate; IRS Issues Guidance On Staking Rewards”

Money Laundering Act Adds Senators Graham, Manchin; Apple And The Blockchain

AML-KYC

Senate AML-KYC

Senator Elizabeth Warren (D, MA) announced the re-introduction of the bipartisan “[S.2669] Digital Asset Money Laundering Act” in the Senate late last week and added two, powerful new co-sponsors and a well-known industry trade group for lenders called the Bank Policy Institute. The bill looks to tighten rules around Anti-Money-Laundering (AML) and Know Your Customer (KYC) requirements.

In addition to Senator Roger Marshall (R, KS) who co-sponsored the bill in the last Congress, Senators Joe Manchin (D, WV) and Lindsey Graham (R, SC) have come aboard. Manchin says in the release, “Our bipartisan legislation would curtail these security risks and require cryptocurrency platforms to abide by the same anti-money-laundering rules that banks have to follow.”

The press release also notes that the recent NDAA amendment co-sponsored by Sens. Kirsten Gillibrand (D, NY), Cynthia Lummis (R, WY), Warren and Marshall overlaps with the re-introduced bill. How the two play out in the coming weeks may be driven on the final version of the NDAA as the Senate and House negotiate.

See the press release. And, download the one-pager and the bill.

The bill has been referred to the Senate Banking Committee.

more tips:

Warren and Graham have separately formed a partnership with a bill called, “Digital Consumer Protection Commission Act” targeting “big tech.” Continue reading “Money Laundering Act Adds Senators Graham, Manchin; Apple And The Blockchain”

House Agriculture Committee Markup: What If There Was A Roll Call Vote?

Roll Call Vote in House Agriculture

With the voice vote of the House Agriculture markup last Thursday, at first glance,  it’s hard to quickly identify which Members were “for ” or “against” the digital asset market structure bill known as “Financial Innovation and Technology for the 21st Century Act.”

Chair Glenn “GT” Thompson’s (R, PA) decision – no doubt in consultation with Ranking Member David Scott (D, SC) – to use the voice vote was likely driven by the Republican’s clear majority which would lead to unquestioned passage.

But, unlike House Financial Services, where roll call votes were requested by the Republican majority, the need to maintain comity among members could have been paramount for the House Ag Committee.  The Committee’s remit includes the critical Farm Bill and now has expanded to the complex, and potentially divisive, digital assets market structure framework.

Therefore, “Let’s not stir the pot more than necessary.”

breaking it down

But, what is there was a roll call vote? Let’s stir the pot.

There are 29 Republicans and 25 Democrats on the House Agriculture Committee. Continue reading “House Agriculture Committee Markup: What If There Was A Roll Call Vote?”

Democrats Split Again As Stablecoin Bill Passes House Financial Services

stablecoin bill

With the first day of House Financial Services (HFS) Committee markups in the books, Day 2’s roster of bills for markup featured H.R. 4766, the “Clarity for Payment Stablecoins Act of 2023.”

And with Chair Patrick McHenry (R, NC) and Ranking Member Maxine Waters (D, CA) negotiating the night before over federal versus state jurisdiction according to Rep. Ritchie Torres (D, NY), an HFS member, there was some question as to whether the stablecoin bill would be ready for today’s hearing or would have to be postponed until the Fall.

See hearing page with video stream.

But after a marathon, 12-hour hearing that included rancorous debate and a parliamentarian’s delight of rules and rulings, the stablecoin bill passed by a tally of 34-16 with five Democrats splitting from Democratic leadership and joining all of the Committee’s Republicans.

Democrats voting for the bill included:  Rep. Gregory Meeks (NY), Rep. Jim Himes (CT), Rep. Josh Gottheimer (NJ), Rep. Ritchie Torres (NY) and Rep. Wiley Nickel (NC).

Himes, Gottheimer, Torres and Nickel also voted to pass yesterday’s market structure bill, too.

opening remarks

From the start, the markup for the stablecoin bill was a steady stream of lawmaker fireworks.

Chair McHenry began by explaining his frustration that even though the new bipartisan version of the stablecoin bill was nearly ready, the White House was not helping move the negotiation to the next step.

After completing his opening remarks, he passed the baton to Ranking Member Waters who asked for a quorum which was a way to use Congressional rules and shutdown the hearing given the lack of attendance by Committee members at the time.

Republicans scrambled and delivered the quorum. Continue reading “Democrats Split Again As Stablecoin Bill Passes House Financial Services”

Six Democrats Break From Party Leaders On HFS Digital Asset Bill

Markup Day 1

Nearly eight hours after Day 1 of the House Financial Services markup hearing commenced, it ended with approval of the signature bill of the day – the digital assets market structure bill a.k.a. H.R. 4763, the “Financial Innovation and Technology for the 21st Century Act.”

The final vote was … 35-15 in favor of the digital assets market structure bill as amended.

The vote was along party lines except for six (6) Democrats who broke with their party’s leadership: Rep. Ritchie Torres (D, NY), Rep. Wiley Nickel (D, NC), Rep. Josh Gottheimer (D, NJ), Rep. Steven Horsford (D, NV), Brittany Pettersen (D, CO), and, in particular, Rep. Jim Himes, (D, CT), who seemed exasperated with his party’s positioning.

Keep in mind, tomorrow’s House Agriculture Committee markup will also vote on the same digital assets market structure bill.

Read below for coverage of the day’s House Financial Services markup pertaining to the “Financial Innovation and Technology for the 21st Century Act.”

opening remarks

At the top of the markup hearing, House Financial Services (HFS) Chair Patrick McHenry (R, NC) outlined that any debate of the bills being marked up today would be completed before a final vote on all of the day’s bills by the Committee.

See all the bills on the HFS hearing page. And, see the video recording.

Clearly, the digital assets market structure bill was the featured bill today – the “Financial Innovation and Technology for the 21st Century Act.”

At a high level, the bill aligns certain crypto regulatory oversight with the Commodity Futures and Trading Commission (CFTC) versus the Securities and Exchange Commission (SEC). Continue reading “Six Democrats Break From Party Leaders On HFS Digital Asset Bill”

Historic Digital Assets Markup Hearings Begin Today

markups for digital assets legislation

Markups – today and tomorrow

Between the House Financial Services (HFS) Committee and the House Agriculture Committee, there are now three (3) markups scheduled which include digital assets legislation crafted by the committees – one markup is today, two are tomorrow.

Markup #1 – Today’s HFS markup led by Chair Patrick McHenry (R, NC) entails six (6) bills including the digital asset market structure bill known as “H.R. 4763 – Financial Innovation and Technology for the 21st Century Act.”

    • Today’s HFS landing page with the bills and live stream are here. Starts at 10 a.m. ET.
    • Among the other bills to watch today is a bipartisan effort introduced by Majority Whip Rep. Tom Emmer’s (R, MN)H.R.1747 – Blockchain Regulatory Certainty Act” co-sponsored by Rep. Darren Soto (D, FL).

Markup #2 – Tomorrow’s  HFS markup entails seven (7) bills including the stablecoin bill known as “H.R. 4766 – Clarity for Payment Stablecoins Act of 2023.”

Markup #3 – Also tomorrow, the House Agriculture Committee led by Chair Glenn “GT” Thompson (R, PA) will convene their own markup of “H.R. 4763 – Financial Innovation and Technology for the 21st Century Act.”

Continue reading “Historic Digital Assets Markup Hearings Begin Today”