A shrinking legislative calendar and the fallout from November’s election results – no matter which party gains the upper hand in the battle for control of Congress – are likely to doom lawmakers’ efforts to pass cryptocurrency legislation this year.
Still, the need for legal clarity in the industry and a new push from investors and some lawmakers are giving crypto advocates hope that next year could be the year.
Former President Donald Trump and congressional Republicans clearly support digital assets. At the Republican national convention in Milwaukee this summer, the GOP’s platform touted crypto innovation and came out against creating a central bank digital currency.
Democrats’ position on the industry has been evolving. The party’s platform, adopted in August, did not even mention cryptocurrency, bitcoin or digital assets. But in an apparent break from President Joe Biden’s hostility toward the industry, Vice President Harris on Sept. 26 said she would “encourage innovative technologies like AI and digital assets.” Similarly, Senate Majority Leader Chuck Schumer, D-N.Y., has signaled industry support, and Rep. Maxine Waters, D-Calif., the top Democrat on the Financial Services Committee, recently said that “crypto is the future” and “crypto is inevitable.”
But Congress acting on digital asset legislation during the postelection lame-duck session would be challenging. Even with the recent shift in tone from some leading Democrats, others in the party remain opposed a greater adoption of digital assets, including Senate Banking, Housing and Urban Affairs Committee Chairman Sherrod Brown, D-Ohio, and Sen. Elizabeth Warren, D-Mass.
Despite the uncertainty regarding future congressional action, individual lawmakers are putting down markers that could signal the direction of future legislation.
Several industry-related bills have been introduced in Congress, and other draft legislation also has been circulating on the Hill. These measures would define the legal status of digital assets in various contexts and expand the application of the Bank Secrecy Act as well as anti-money-laundering and know-your-customer regimes to the crypto industry.
One bill, the “Financial Innovation and Technology for the 21st Century Act,” introduced by House Agriculture Committee Chairman Glenn “GT” Thompson, R-Penn., and Reps. French Hill R-Ark., and Dusty Johnson, R-S.D., won House approval in May on a bipartisan vote. It would grant the Commodity Futures Trading Commission (CFTC) jurisdiction over digital commodities and clarify the Securities and Exchange Commission’s (SEC) jurisdiction over digital assets offered as part of an investment contract.
In the Senate, the top Republican on the Banking Committee expressed frustration about that chamber’s opposition to digital assets legislation. Sen. Tim Scott, R-S.C., told an industry conference in August that it would be “kind of cool” to consider crypto bills in a dedicated digital assets subcommittee, which under Democrats’ control doesn’t currently exist. If Republicans capture the Senate majority in November, Scott would replace Brown as chairman of the Banking Committee – a post he prefers unless tapped for a Cabinet position in a potential second Trump administration.
While the November elections will provide some legislative and regulatory clarity for the industry, so, too, will pending federal court cases, such as separate SEC matters against Ripple, Binance, Kraken and others.
If Trump wins, the SEC and CFTC will have new leaders. The SEC also will likely have a new litigation strategy and new agency clarity on which digital assets are securities.
If Harris wins, SEC Chair Gary Gensler and CFTC Chair Rostin Benham could stay in their posts for at least the near term, leaving crypto policy to an uncertain regulatory and enforcement environment.
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