Hints of progress: State of Crypto

Despite the rocky start crypto policymaking got off to this year, at the moment it does look like U.S. policymakers are making progress on the legislative and regulatory fronts. The White House is kicking off new discussions on stablecoin yield with representatives of the banking and crypto industries.

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The narrative

The Senate Agriculture Committee voted to advance market structure legislation, the White House is directly involved in resolving yield issues and the SEC and CFTC are back to trying to get crypto rulemaking going. What we don’t know yet is how quickly these discussions will lead to changes in the Senate Banking Committee’s version of the market structure bill, or indeed, how far apart the different groups are.

Why it matters

The year is still young but lawmakers appear to be making progress on market structure legislation. Let’s see what happens in February.

Breaking it down

The White House is convening a meeting of representatives from the crypto and banking industries to kickstart a conversation on stablecoin yield and rewards. The parties involved so far largely consist of representatives from trade organizations and lobbyist groups, though a handful of companies also appear to be sending representatives from their policy teams.

The parties will likely discuss what they might be willing to compromise on around the yield issue, and could form the basis of further negotiations as the Senate Banking Committee gets back to negotiating the bill itself.

Of course, yield rewards was just one of the many outstanding areas of disagreement; there’s still anti-money laundering and know-your-customer provisions as they apply to decentralized finance (DeFi), whether the regulators will be required to have a quorum of bipartisan commissioners and whether there will be ethics provisions enforced on the president (and other lawmakers). The Banking Committee’s members have not yet indicated if they are making any progress on some of these issues. A markup hearing still seems likely to happen in the coming weeks — it’s just unclear when.

Another complicating factor is the Federal Reserve. President Donald Trump announced his intent to nominate former Fed board member Kevin Warsh as his pick for chair to succeed current Chair Jerome Powell. The Banking Committee will run that confirmation process, which is likely to take precedence over crypto legislation when it ramps up.

The Senate Agriculture Committee, which was working on its own version of the bill to address the commodities regulation aspect, did not go out of its way to make its Banking counterpart’s work on partisan concerns easier.

The committee held an hour-long hearing on Thursday to debate a handful of proposed amendments to its version of the crypto market structure bill which ended in the bill advancing on a party-line vote. Democrats at the outset of the hearing said they supported the legislation broadly, but wanted a bipartisan bill.

The hearing, brief as it was, still saw lawmakers vote down the proposed amendments, with Committee Chair John Boozman saying the Banking Committee had proper jurisdiction over several of the proposals.

The SEC and CFTC, for their part, are not waiting for Congress to get moving. Paul Atkins and Mike Selig, the respective agency chairs, held a joint conference on Thursday (alongside a joint CNBC appearance and a Fox News oped). Among their statements about “harmonization” in rulemaking, Selig announced that he was directing the commodities regulator to engage in formal rulemaking on prediction markets and tokenized collateral.

The backdrop to this year continues to be the upcoming election. Fairshake, one of the crypto-focused super political action committees (super PACs) boosted by crypto companies, announced it has just under $200 million ready to deploy this year, a sum lawmakers will likely keep in mind as they continue to work on legislation. It remains to be seen whether the money cannon will outweigh their concerns about the bill.

Monday

• The White House is convening a meeting between representatives of the crypto and banking industries to discuss stablecoin yield and rewards in the crypto market structure legislation.

Wednesday

• 15:00 UTC (10:00 a.m. ET) The Financial Stability Oversight Council, represented by Treasury Secretary Scott Bessent, will make its annual report to the House Financial Services Committee.

Thursday

• 15:00 UTC (10:00 a.m. ET) The Financial Stability Oversight Council, represented by Treasury Secretary Scott Bessent, will make its annual report to the Senate Banking Committee.

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.

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See ya’ll next week!