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 released its new draft of the Crypto Market Structure Act last Wednesday.
Why it matters
This bill, like its Banking Committee counterpart, aims to reshape the federal regulatory framework to define how regulators such as the Commodity Futures Trading Commission and the Securities and Exchange Commission will oversee the crypto markets. And once again, the question is whether it will survive the markup hearing, let alone the full Senate.
To break it down
The new draft is obviously more focused on the CFTC and how it would regulate digital commodities. The Agriculture Committee was expected to produce a more bipartisan effort that, if it wouldn’t easily sail through a markup, would at least prove less contentious than the Banking Committee draft.
The first sign of trouble came earlier this week, when several people told CoinDesk’s Jesse Hamilton they feared the bill would be partisan, risking its passage through the Senate.
Those fears were apparently confirmed when Sen. John Boozman, the Republican chairman of the committee, acknowledged “fundamental policy differences” in his statement thanking Sen. Cory Booker, the lead Democrat who negotiated the bill.
“While it is unfortunate that we could not reach an agreement, I am grateful for the cooperation 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 series of amendments to be debated Tuesday. As a reminder, the markup is where lawmakers will debate provisions of the bill and amendments to those provisions. The senators will then vote on the amendments before voting on the bill itself.
A first look at the new text suggests lawmakers were at least able to reach agreement on issues such as whether the CFTC will have a bipartisan quorum of commissioners to lead the agency — a section that was previously up for debate during the prior discussion draft.
“It is the opinion of Congress that, prior to the enactment of this Act, the Commodity Futures Trading Commission— (1) shall be fully constituted … with not less than 2 of the Commissioners nominated, prior to such appointments, after 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 for legal protection of developers. One of the committee members is Sen. 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 worked fine for the crypto industry as a whole. As of press time, there were no significant concerns expressed about the text or its potential impact on crypto businesses.
All this leaves next week’s hearing in uncertain territory.
It is possible, said one person following the situation, that there will be bipartisan support for amendments that would 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 Democrats to vote for the bill that it will have a comfortable margin when it goes to the Senate.
It is also possible that this bill will be introduced on a purely partisan basis, which will make things more difficult in the Senate.
Or it cannot go forward (which, as I pointed out last week, will not be the end of the bill).
And for the record, the Senate Banking Committee might not get back to market structure for a few weeks either. Several people told CoinDesk earlier this week that the White House and committee members wanted the crypto industry and banking lobby to resolve their issues with the stablecoin dividend before resuming efforts.
It all remains to be seen.
Some other things to watch next week:
There appears to be a massive blizzard headed for the East Coast, and a snow/ice storm with ridiculously low temperatures headed for the Midwest and South/Southeast US. This storm is expected to start Saturday night and last until Monday morning. The Senate was out of session last week, meaning many of its members are in their home states. As you know, snowstorms can disrupt flights.
If senators on the Agriculture Committee are unable to fly back in time for Tuesday’s hearing, that hearing may have to be postponed, a person following the process told CoinDesk.
A spokesman for the committee did not return a request for comment on what a delay might look like.
More pressingly, there is another important deadline looming: The US government runs out of funding on Friday. The House of Representatives rushed through a funding package Thursday and sent it to the Senate, but the Senate still needs to vote on that package. It may also take oxygen and time next week.
Tuesday
- 15:00 UTC (10:00 ET) The chairmen of the SEC and CFTC will hold a joint discussion to talk about how well they will work together on regulation.
- 20:00 UTC (15:00 ET) The Senate Agriculture Committee is scheduled to hold a markup hearing on its version of the crypto market structure legislation.
If you have thoughts or questions about what I’ll be discussing next week or any 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 you next week!
