Sens. Chuck Schumer, Cynthia Lummis and Tim Scott think legislation addressing crypto could move through Congress this year – here's how.
You’re reading State of Crypto, a CoinDesk newsletter looking at the intersection of cryptocurrency and government. Click here to sign up for future editions.
A long, long journey
The narrative
Earlier this month, Senate Majority Leader Chuck Schumer (D-N.Y.) told the audience at a "Crypto4Harris" virtual event that he hoped to shepherd crypto legislation through Congress and have President Joe Biden sign the bill into law by the end of 2024. It was a bold promise, one that on first blush seems like a hard pledge to fulfill.
Why it matters
The crypto industry has been begging for issue-specific legislation in the U.S. for years, in the hopes that this legislation may create clear permissions for companies to develop and issue tokens, manage blockchain networks or otherwise operate free of the concern that regulators may come knocking. The closest Congress has gotten so far is the Financial Innovation and Technology for the 21st Century Act, a House bill supported by Financial Services Committee Chair Patrick McHenry (R-N.C.). With a limited number of working days left in the year, the chances for crypto legislation moving through the Senate are slim. So here's what could happen and the potential roadblocks.
Breaking it down
Last week at the SALT Wyoming Symposium, Sens. Cynthia Lummis (R-Wyo.) and Tim Scott (R-S.C.) laid out a hypothetical that would get crypto legislation passed. According to the lawmakers, the best path comes through the Senate Agriculture Committee, which would focus on commodities law. Sen. Debbie Stabenow (D-Mich.), the chair of the committee, has been working on legislation, though she has yet to introduce her bill.
If a bill is voted out of this committee, Lummis said, it would likely become a "Christmas Tree bill," where lawmakers add on other amendments and provisions, which could include, for example, the SAFER Banking Bill, stablecoin provisions and more.
But any legislation will be a long shot for a variety of reasons, including the limited number of working days left in this year's legislative calendar.
"It's surprising how few of those are left after the election," Lummis said at the SALT event. Moreover, at least some portion of that remaining time will likely be spent working on must-pass bills like the annual National Defense Authorization Act and budget legislation.
It is entirely possible that a crypto provision may be folded into one of these bills, as one legislative staffer told me after Schumer's remarks, a thought Scott also shared on stage in Wyoming.
"You have an opportunity to get a lot accomplished in a little bit of time because the motivation and the incentives are there," he said.
The potentially bigger issue is whether any crypto provisions will receive enough support to a) see a bill introduced in the Senate; b) get passed out of committee; and c) pass through the Senate, either as a standalone bill solely focused on crypto issues, as part of a larger financial services-focused bill or within the must-pass pieces of legislation.
While crypto is enjoying some bipartisan support in Congress, it's still not totally clear if it's a significant enough issue compared to everything else Congress has on its plate (for example, the fiscal year ends in a month and that's the first major issue lawmakers will likely have to vote on).
Still, everyone I've spoken to in the last few weeks has been cautiously optimistic about legislation moving – if not this year, then certainly next year. The fact that FIT21 did advance out of the House with bipartisan support is a major factor in this assessment, as is the fact that crypto issues are getting more attention from lawmakers than in years past.
Stories you may have missed
Crypto Friendly RFK Jr. Drops White House Hunt, Will Lend Kennedy Name to Trump: Robert F. Kennedy Jr. suspended his campaign in 10 states and endorsed Republican nominee Donald Trump. Kennedy supporters at the Minnesota State Fair told me he still has a pathway to victory through the states where he remains on the ballot, however, and at least three of the states where Kennedy is trying to withdraw his name have ruled that he will remain on the ballot.
Crypto Promoter and Failed Politician Michelle Bond Accused of Illegally Taking FTX Cash: Michelle Bond, who used to run the Association for Digital Assets Markets – an advocacy group – was indicted by prosecutors on charges of illegally handling and accepting campaign funds tied to former FTX executive Ryan Salame. She also allegedly filed inaccurate ethics documents about the source of campaign funds. The indictment dropped a day after Salame filed a motion to withdraw his guilty plea or have his sentence vacated. Salame alleged that prosecutors had reneged on a deal wherein he would plead guilty and they would drop their investigation into Bond. The two have a young child.
SEC’s Case Against Kraken Will Proceed to Trial, California Judge Rules: The U.S. Securities and Exchange Commission brought a plausible case against Kraken, a federal judge ruled last Friday, in its suit alleging the crypto exchange was an unregistered broker, clearinghouse and exchange that facilitated unregistered securities transactions. The case now proceeds to the next stage.
‘My Living Nightmare’: Detained Binance Exec’s Wife Begs for His Immediate Release: Former U.S. government official and current Binance executive Tigran Gambaryan has now been held in Nigerian custody for six months. Yuki Gambaryan, Tigran's wife, posted a video asking for his release, citing his deteriorating medical conditions and making calls to the U.S. and Nigerian governments. Binance CEO Richard Teng also told CoinDesk the company is working to secure Tigran's release. Tigran's trial on money laundering charges, which had been paused after the judge overseeing his case went on summer vacation after the start of his trial, is set to resume on Sept. 2.
Telegram CEO Pavel Durov Indicted on 'Complicity,' Refusal to Communicate Charges in French Court: Pavel Durov was arrested last weekend at a French airport and indicted on a host of charges. Some of the charges seem more straightforward than others – Durov is accused of not cooperating with French authorities in their investigations into the proliferation of money laundering, drug trafficking and child exploitation material on Telegram. Other charges, like Durov allegedly using encryption without embedding controls, have alarmed free speech, crypto and digital technology advocates.
This week
This week
Last week of August, everyone's still out. But hearings will resume next month so stay tuned.
Elsewhere:
(The Air Current) This is a bit of a wonky story. Newark Liberty International Airport used to be part of the air traffic control network that also controlled the rest of the broader New York City area. The Federal Aviation Administration is now moving control of the Newark airspace to a facility in the Philadelphia area. The upshot is this will theoretically alleviate some of the staffing issues Newark's had with air traffic controllers, which should in turn reduce some flight delays.
(The Wall Street Journal) The Journal took a look at Christian Angermayer, a tech investor, and his role in helping stablecoin issuer Tether with its expanding portfolio of investments.
If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at nik@coindesk.com or find me on Twitter @nikhileshde.
You can also join the group conversation on Telegram.
See ya’ll next week!
