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Eight House Democrats signed onto a memo arguing in favor of a largely Republican-driven bill to establish U.S. regulations over the crypto markets.
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The U.S. House is set for a final vote on the first major crypto legislation, and approval would send it to a murky fate in the Senate.
The U.S. House of Representatives is on the verge of a vote on Wednesday that is widely expected to approve comprehensive cryptocurrency legislation with bipartisan support – a major milestone for the industry – and several Democrats there are pushing their colleagues to vote yes.
At least eight House Democrats were vocally supporting the Financial Innovation and Technology for the 21st Century Act (FIT21) – and they may recruit more – according to a memo shared with CoinDesk by a congressional aide. At this point, the bill is scheduled for floor discussion and a vote later in the day on Wednesday.
“As Democrats, we feel this is a crucial opportunity to regulate the digital asset markets,” the eight lawmakers wrote in the internal memo Tuesday asking support from their colleagues. “This should not be a partisan issue,” according to the lawmakers, including Reps. Wiley Nickel (D-N.C.), Yadira Caraveo (D-Colo.), Jim Himes (D-Conn.), Jasmine Crockett (D-Tex.), Ritchie Torres (D-N.Y.), Darren Soto (D-Fla.), Josh Gottheimer (D-N.J.) and Don Davis (D-N.C.).
But despite fans on both sides of the aisle in the House, the effort further highlights the lack of similar progress in the Senate, where the crypto market-structure legislation could fizzle. To that end, senior staff of the House Financial Services and Agriculture committees working on the bill said Tuesday that they’re having increasing discussions with Senate counterparts but are also open to legislative vehicles the bill could eventually be attached to as this congressional session winds toward its close.
“What we want is to have a substantial vote total this week in the House that will show momentum,” said Rep. Patrick McHenry (R-N.C.), the chairman of the House Financial Services Committee who has shepherded the bill in the retiring lawmaker’s final months in Congress. He lamented to reporters on Tuesday that the effort that was meant to happen almost a year ago was delayed this long. “We’re now in May of an election year.”
Still, he said his fellow lawmakers now have an “awareness” of the existence of crypto voters, too, and “that is supportive of our efforts.”
FIT21 would establish a clear framework for digital assets in the U.S., identifying where and how each token and exchange might be regulated. It establishes consumer protections, disclosures and addresses the use of crypto in illicit finance. The vote on the bill represents the first time such a comprehensive piece of crypto legislation has reached a final decision in either chamber of Congress.
Read More: Crypto Industry Rallies Behind House Bill as It Heads Toward Final Vote
The Democratic advocates made a case for stepping in to police the crypto markets, where the leading businesses are waging a multi-front legal battle with the Securities and Exchange Commission (SEC) over how much authority that regulator rightfully has. The lawmakers also argued that the U.S. is falling behind other jurisdictions that have already instituted rules for the industry.
“Roughly 20% of Americans have invested, traded, or used crypto, so it’s not going anywhere,” according to the Democrats’ memo. “Meanwhile, Congress hasn’t passed legislation to usher in this new generation of internet technology responsibly.”
The House’s digital assets legislation isn’t yet facing any White House promises for a veto, unlike the recent vote in the Senate that saw a large number of Democrats join all the Republicans to approve a resolution to reverse an SEC crypto account policy – Staff Accounting Bulletin No. 121 (SAB 121).
Republican aides said they expect some of the same 21 Democratic names who voted in the House to overturn SAB 121 might also support this bill.
FIT21 has previously cleared its two relevant House committees with some Democratic support.
House Financial Services Committee Ranking Member Maxine Waters (D-Calif.) and House Agriculture Committee Ranking Member David Scott (D-Ga.) – the leading Democrats on their respective panels – sent their own email to fellow Democrats saying they still “strongly oppose” the effort, but they won’t organize any voting against it, Politico previously reported.
Consumer advocates including Americans for Financial Reform argued against the bill, too, saying it didn’t sufficiently protect consumers and uses an “easily manipulated definition” of decentralization when deciding how things should be regulated.
Rep. Glenn “G.T.” Thompson (R-Pa.), chairman of the Agriculture Committee, told reporters that passing legislation is urgent, because the current state of regulation has driven crypto business away from the U.S.
“Right now, most of them are parked somewhere offshore, because the only regulatory structure they see is regulation by enforcement,” he said.
In the Senate, a wide-ranging bill from Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) is currently the closest equivalent to FIT21, and the House aides said that talks are underway about the topics on which those bills find common ground.
Rashan Colbert, head of policy at dYdX Trading and a former legislative assistant to Sen. Cory Booker (D-N.J.), noted that the bill has been working its way through the House for a year and a half.
“[For] the Senate to take this up, [starting] with the committee process to go through, that would be needed to really consider this bill in full,” he said. “So unfortunately, I think that there’s not a great chance of Senate consideration this Congress.”
One of the key components to iron out would be funding the Commodity Futures Trading Commission, which would have a much more significant and defined role in policing the crypto spot markets but currently has a tiny fraction of its sister agency’s budget.
Read more: Democrat House Leadership Says Crypto Bill Vote Won’t Be Whipped
Nikhilesh De contributed reporting.
UPDATE (May 21, 2024, 19:48 UTC): Adds comment from Americans for Financial Reform.