Days of our market structure bills: State of Crypto

There will come a time when this newsletter is not about crypto market structure legislation. But this is not that time.

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The narrative

The Senate Agriculture Committee published its new draft crypto market structure bill last Wednesday.

Why it matters

This bill, like its Banking Committee counterpart, aims to reshape the federal regulatory framework to define how regulators like the Commodity Futures Trading Commission and Securities and Exchange Commission will oversee the crypto markets. And once again, the question is if it will survive the markup hearing, let alone the full Senate.

Breaking it down

The new draft, naturally, is more focused on the CFTC and how it would regulate digital commodities. The Agriculture Committee was expected to produce a more bipartisan effort that would, if not easily sail through a markup, at least prove less contentious than the Banking Committee draft.

The first sign of trouble came earlier this week, when multiple people told CoinDesk’s Jesse Hamilton that they feared the bill would be a partisan one, risking its passage through the Senate.

Those fears were seemingly confirmed when Senator John Boozman, the Republican chair of the committee, acknowledged “fundamental policy differences” in his statement thanking Senator Cory Booker, the lead Democrat negotiating the bill.

“Although it’s unfortunate that we couldn’t reach an agreement, I am grateful for the collaboration that has made this legislation better,” he said in the statement. “It’s time we move this bill, and I look forward to the markup next week.”

Late Friday, Democrats (and a few Republicans) filed a number of proposed amendments to be debated Tuesday. As a reminder, the markup is where lawmakers will debate provisions in the bill and amendments to those provisions. The Senators will then vote on the amendments before voting on the bill itself.

An initial glance at the new text suggests lawmakers were at least able to come to agreement on issues like whether the CFTC will have a bipartisan quorum of commissioners to run the agency — a section that was previously under debate under the prior discussion draft.

“It is the sense of Congress that prior to implementation of this Act the Commodity Futures Trading Commission — (1) be fully constituted … with not fewer than 2 of the Commissioners nominated, prior to such appointments, following consultation and coordination with the ranking minority member,” one section read.

Other sections may be more controversial.

Like the Banking version of the bill, this text included a provision on legal protections for developers. One of the committee members is Senator Chuck Grassley, the Iowa Republican who chairs the Senate Judiciary Panel and wrote a letter to the Banking Committee last week saying such provisions are within his committee’s jurisdiction.

Much of the bill itself seemed fine to the crypto industry at large. By press time, there were no significant concerns expressed about the text or its potential impact on crypto businesses.

All of that leaves next week’s hearing in an uncertain area.

It’s possible, one individual following the situation said, that there will be bipartisan support for amendments that will allow the bill to advance on a bipartisan basis, even if the current form does not have buy-in from both parties.

It’s also possible that the threat of primary challenges funded by crypto political action committees like Fairshake will persuade enough Dems into voting for the bill that it’ll have a comfortable margin when it goes to the Senate.

It’s also possible that this bill advances on a purely partisan basis, which will make things more difficult in the Senate.

Or it might not advance (which, as I pointed out last week, won’t be the end of the bill).

And just for good measure, the Senate Banking Committee may not get back to market structure for a few weeks, either. Multiple individuals told CoinDesk earlier this week that the White House and committee members wanted the crypto industry and the banking lobby to sort out their issues on stablecoin yield before they pick the effort back up.

It all remains to be seen.

Some other things to watch for next week:

There appears to be a massive snowstorm heading for the East Coast, and a snow/ice storm with ridiculously low temperatures aimed at the Midwest and south/southeast U.S. This storm is expected to start on Saturday night and last through Monday morning. The Senate was out of session last week, meaning many of its members are in their home states. Snowstorms can famously disrupt flights.

If Senators on the Agriculture Committee are unable to fly back in time for Tuesday’s hearing, that hearing may need to be postponed, an individual following the process told CoinDesk.

A spokesperson for the committee did not return a request for comment on what a delay may look like.

More pressingly, there is another key deadline coming up: The U.S. government runs out of funding on Friday. The House of Representatives rushed a funding package through on Thursday and sent it to the Senate, but the Senate still needs to vote on this package. That might also take up oxygen and time next week.

Tuesday

• 15:00 UTC (10:00 a.m. ET) The SEC and CFTC’s chairs will hold a joint discussion to talk about how great they’ll be at working together on regulation.
• 20:00 UTC (3:00 p.m. ET) The Senate Agriculture Committee is scheduled to hold a markup hearing on its version of the crypto market structure legislation.

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 [email protected] or find me on Bluesky @nikhileshde.bsky.social.

You can also join the group conversation on Telegram.

See ya’ll next week!