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Why Congress' crypto fight is still just beginning

Why Congress' crypto fight is still just beginning

Politico4 days ago

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Quick Fix
The U.S. Senate, once a pit of quicksand for industry-friendly cryptocurrency legislation, is poised to hand digital asset firms one of their biggest lobbying wins ever later this afternoon.
But crypto executives may be wise to hold off on popping any champagne.
The Senate is set to vote at around 4:30 p.m. today on passing bipartisan stablecoin legislation that has been the subject of months of turbulent negotiations between Republicans and crypto-friendly Democrats. The vote will likely send the measure to the Republican-controlled House, where it will set off a new crypto policy scramble that could once again get complicated.
Key senators want House Republicans to quickly send their bill, led by Sen. Bill Hagerty (R-Tenn.), to President Donald Trump's desk — which they say would allow Republicans to notch a major policy win in the coming weeks.
But things may not be so simple in the lower chamber, where pro-crypto Republicans including Financial Services Chair French Hill are plotting the best way to get multiple digital asset bills across the finish line this year.
Hill and House GOP leaders are weighing whether to package stablecoin legislation with an even bigger prize for the crypto industry — a separate, bigger measure that would establish a regulatory framework for the broader digital assets industry. The Arkansas Republican's so-called CLARITY Act, which a pair of House committees approved last week, has long been the crown jewel of pro-crypto lawmakers' agenda and is a much bigger priority for most crypto firms than stablecoin legislation, which only affects a narrow subset of the digital assets world.
Hill, who has championed industry-friendly digital asset policies for years in the House, is so far keeping his cards close to his chest. Though he hasn't explicitly said how he wants to advance the crypto bills across the floor in the lower chamber, MM has noted that he and his allies have made sure in recent interviews about the subject to say that lawmakers must pass both stablecoin and market structure legislation this year.
'Both these bills are very, very important to the goal of a digital asset future for the U.S.,' he said on Fox Business last week. 'You can't just pass a stablecoin bill and have any place to effectively use it. You need the CLARITY Act to give us that market framework.'
The concern pro-crypto House lawmakers have with passing the Senate bill is likely twofold.
First, House Republicans have their own stablecoin bill that the Financial Services panel approved earlier this year. Though it is similar to Hagerty's GENIUS Act, some key differences remain — and House lawmakers don't want to be jammed by the Senate's product.
But more importantly, some members fear that simply passing a stablecoin bill — even if it goes through a conference committee that reconciles the differences between the two versions — would take momentum away from the broader push and leave market structure legislation by the wayside.
'The Senate clearly doesn't … have the consensus built to deal with market structure,' said Rep. Warren Davidson (R-Ohio), a longtime crypto advocate on House Financial Services who chairs the panel's national security subcommittee.
The 'only way we get them to take action' on the House crypto proposals, he said, is to send 'one, combined bill to the Senate' that includes stablecoin legislation, the House market structure bill and a measure that would ban a central bank digital currency. 'I think that's what it's going to take to get the Senate to deal with House-based legislation,' he said, adding that he will ultimately defer to Hill.
That could create an intra-party spat with some Senate Republicans. It has taken a near-Herculean effort to get the GENIUS Act to where it is, and getting enough Democrats on board with a broader package that includes complicated market structure legislation would surely be difficult.
Hagerty, the Senate stablecoin bill's main sponsor, told MM last week that his 'goal is just to put a win in place for the American public and have it for the president to sign before the Fourth of July.'
'It's very clear to me that we have an opportunity to have a great win here for the American public right now,' he said. 'If the bill were to be modified [to include market structure legislation], it would have to come back to the Senate for a lot of work.'
IT'S TUESDAY — And your host is still picking himself up off the floor from this Sunday night stunner out of Boston. Send your thoughts on the Rafael Devers trade — or crypto legislation — to jgoodman@politico.com.
Driving the day
The Senate will vote on the GENIUS Act at 4:30 p.m. … The Business Roundtable hosts its CEO Workforce Forum at 8 a.m., featuring JPMorgan Chase's Jamie Dimon, Deputy Labor Secretary Keith Sonderling and Accenture CEO Julie Sweet.
Megabill latest — Senate Finance Chair Mike Crapo on Monday unveiled changes to how the GOP's 'big, beautiful bill' would execute a major tax revamp and Medicaid cuts, our Brian Faler reports.
—Among the highlights: Crapo's plan would create more limited tax breaks for tips and overtime demanded by President Donald Trump. It also holds the cap on the state and local tax deduction to the current $10,000, far less than the House's $40,000, though the Senate number is widely considered a placeholder. The Idaho Republican is also proposing to scale back a planned hike in a 1.4 percent tax on university endowment earnings. Under his plan, it would max out at 8 percent, compared to the 21 percent the House has proposed.
—The sweeping plan scales back key provisions from the House-passed bill that had drawn the ire of the financial industry, our Michael Stratford and Katherine Hapgood report. It would water down the megabill's proposed new tax on foreign remittances and curtail a so-called 'revenge tax' on foreign companies.
—Senate Banking Committee staff met Monday with the upper chamber parliamentarian's office to discuss Chair Tim Scott's proposed contribution to the GOP megabill, two people with knowledge of the gathering who were granted anonymity to discuss closed-door talks told your host. The discussion included committee aides to both Scott and ranking member Elizabeth Warren.
—The meeting comes as lobbying efforts are ramping up around the Banking panel's proposal. Nearly 100 former regulators, audit partners and professors recently cautioned top Senators that a Republican-led push to fold the Public Company Accounting Oversight Board into the SEC shouldn't be included in the GOP megabill, Declan Harty reports. In a letter, the group, which included former SEC and PCAOB officials, a pack of accounting professors and ex-audit partners, wrote that they believe the effort won't pass muster with the Senate parliamentarian, who determines whether proposals comply with the upper chamber's rules for reconciliation.
A spokesperson for Senate Banking Chair Tim Scott, who was one of the letter's recipients, told Declan that the proposal would 'merely transfer' the PCAOB's responsibilities to the SEC and 'ensures the SEC continues to carry out the PCAOB's mission — but with less duplication and at a lower cost to taxpayers.'
At the regulators
Freddie CEO pay bump — The Trump administration on Friday quietly approved a $1.5 million raise for Michael Hutchins, president and interim CEO of Freddie Mac, our Katy O'Donnell reports. Hutchins' total compensation — a combination of his base salary and fixed deferred and at-risk deferred compensation — will go from its current level of up to $5.5 million to up to $7 million next April, an increase of about 27 percent.
First in MM: Housers outline stakes for Fannie, Freddie release — The National Housing Conference is out with a new report on housing finance reform, Katy reports. The group is calling on the Trump administration to seek input from 'housing stakeholders and advocates, as well as Congress' before moving forward with any plan to release Fannie Mae and Freddie Mac from government control.
'The transition out of conservatorship should be deliberate, transparent, and supportive of the affordable housing market, leveraging existing regulatory authorities where possible and engaging stakeholders across the housing ecosystem,' the report states.
Check fraud — Federal banking regulators on Monday said they would solicit public feedback on ways to crack down on check and payments fraud, our Michael Stratford reports. The Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency jointly issued a request for public comment, seeking suggestions on how the agencies could take steps to prevent or mitigate check fraud.
The Economy
Trump immigration agenda fallout — The WSJ reports that Trump's 'aggressive deportation push has slammed into an economic reality: Key industries in the U.S. rely heavily on workers living in the U.S. illegally, many of them for decades.'
Jobs report
Troy Cullen will serve as executive vice president and chief revenue officer for ICBA Payments, the payments subsidiary of the Independent Community Bankers of America.

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