Despite the rocky start cryptopolitics got off to this year, it currently appears that US policymakers are making progress on the legislative and regulatory fronts. The White House is starting new discussions about stablecoin dividends 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 addressing dividend issues, and the SEC and CFTC are back to trying to jumpstart crypto regulations. What we don’t yet know 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 various 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.
To break it down
The White House is calling a meeting with representatives from the crypto and banking industries to kick-start a conversation about stablecoin dividends and rewards. The parties involved so far consist largely of representatives from trade associations and lobbyist groups, although a handful of companies also appear to be sending representatives from their political teams.
The parties are likely to discuss what they might be willing to compromise on on the yield issue, and could set the stage for further negotiations as the Senate Banking Committee returns to negotiate the bill itself.
Of course, dividend rewards were only one of the many outstanding areas of disagreement; there are still anti-money laundering and know-your-customer provisions as they apply to decentralized finance (DeFi), whether 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). Banking Committee members have not yet indicated whether they are making progress on any of these issues. A markup hearing still looks set to happen in the coming weeks — it’s just unclear when.
Another complicating factor is the Federal Reserve. President Donald Trump announced his intention to nominate former Fed board member Kevin Warsh as his choice for chairman to succeed current chairman Jerome Powell. The Banking Committee will run this confirmation process, which will likely take precedence over crypto legislation when it is increased.
The Senate Agriculture Committee, which was working on its own version of the bill to address the commodity regulation aspect, went out of its way to make its banking counterpart’s job of partisan concerns easier.
The committee held an hour-long hearing Thursday to debate a handful of proposed changes to its version of the crypto market structure bill, which ended with the bill advancing to a party-line vote. Democrats said at the beginning of the hearing that they broadly supported the legislation but wanted a bipartisan bill.
The hearing, brief as it was, still saw lawmakers vote down the proposed amendments, with committee chairman 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 act. Paul Atkins and Mike Selig, the respective bureau chiefs, held a joint conference call Thursday (along with a joint CNBC appearance and a Fox News open). Among their statements about “harmonization” in rulemaking, Selig announced that he is directing the commodities regulator to engage in formal rulemaking on prediction markets and tokenized security.
The background for this year is still the upcoming election. Fairshake, one of the crypto-focused super political action committees (super PACs) boosted by crypto companies, announced that it has just under $200 million ready to deploy this year, a sum lawmakers are likely to keep in mind as they continue to work on legislation. It remains to be seen whether the money cannon will offset their concerns about the bill.
Monday
- The White House is calling a meeting of crypto and banking industry representatives to discuss stablecoin dividends and rewards in crypto market structure legislation.
Wednesday
- 15:00 UTC (10:00 ET) The Financial Stability Oversight Council, represented by Treasury Secretary Scott Bessent, will deliver its annual report to the House Financial Services Committee.
Thursday
- 3:00 PM UTC (10:00 AM ET) The Financial Stability Board, represented by Treasury Secretary Scott Bessent, will deliver its annual report to the Senate Banking Committee.
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.
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See you next week!
