Crypto is taking center stage this week as the White House will need to deal with a bill that passed the House and the Senate which rolls back an SEC rule known as Staff Accounting Bulletin 121 (SAB 121) that requires banks to place crypto on their balance sheets as liabilities raising their capital requirements. The American Bankers Association (ABA) joined the crypto community in opposing SAB 121.
Two weeks ago, the House led the effort to reverse the SEC rule when it passed a resolution of Congressional disapproval on a bipartisan vote of 228YES to 183NO. Twenty-one Democrats joined the Republican majority in voting for the resolution. However, before the vote the White House issued a Statement of Administration Policy saying that the President viewed the SEC rule as an important tool “to protect investors in crypto-asset markets.” Here’s a link to the White House veto threat.
Despite the Biden veto threat, the Senate Democratic Leader, New York Senator Chuck Schumer, brought the House-passed resolution up for a vote in the Senate on Thursday and it passed the Senate with a strong bipartisan vote. 12 Democratic Senators, including Leader Schumer, voted with 48 Republicans to pass the House Resolution on a vote of 60 to 38.
What surprised many is that Senator Schumer pushed the legislation even though two leading Democrats, Banking Chair Sherrod Brown (D, OH) and Senior Banking Committee member Elizabeth Warren (D, MA) opposed the legislation.
This week the White House will need to decide whether to follow up the veto threat and indeed veto the legislation. Having issued a formal Statement of Administration Policy, it is hard to see how the White House can retreat even with the support of Senator Schumer. Many Democrats in the House and Senate stuck by Biden after the veto message and while the resolution easily passed the House and Senate the numbers were well below the 2/3rds margin that would be required to overturn a Presidential veto.
Digital coin regulation
House bill HR 4763 is scheduled for a vote in the House this week. The bill, HR. 4763, the Financial Innovation and Technology for the 21st Century Act. It is designed to establish rules for jurisdiction of digital assets divided between the Commodity Futures Trading Commission (CFTC) and the Securities Exchange Commission (SEC). The bill was approved by both the House Financial Services Committee that has jurisdiction over the SEC and the Agriculture Committee that oversees the CFTC.
It is expected that the bill should pass with a broad bipartisan majority as was seen last week with the vote overturning SAB 121 discussed above. It is an emerging issue and here is the link to the Report done for Congress by the Congressional Research Service about the legislation.
The House will also consider HR 5403 the Central Bank Digital Currency (CBDC) Bill that would prohibit the Fed from issuing a US government digital currency. The legislation has a long list of co-sponsors, was approved by the House Financial Service Committee and is likely to pass. As with other crypto legislation it has a tough road in the Senate with significant opposition from the Democratic banking leadership, but it will at least start the process of government policy for digital currency.
Border politics
Democrats know that President Biden gets low marks from voters on the issue of the border. As I have written Democrats are going to have a very hard time keeping control of the Senate consequently Senate Leader Schumer is looking for ways to change the nature of the border debate.
The Senate had worked out a bipartisan border bill, but after former President Trump opposed the bill, it failed to pass the Senate with substantial Republican opposition. In an effort to try to demonstrate Democratic support for tough border rules, Leader Schumer has stated his intention to bring the bipartisan border bill up for a vote this week. The vote is pure political posturing and won’t pass as all Republicans and a handful of Democrats are likely to vote NO. Even if it would squeak by it has no chance of consideration in the House.
Senate elections
Last week West Virginia and Maryland had hotly contested primaries to choose their Senate nominees.
In West Virginia there were primaries in both parties to fill the seat that is being vacated by the retirement of Democratic Senator Joe Manchin. I
In the Republican primary incumbent Republican Governor Jim Justice, who had the backing of former President Trump, defeated Republican West Virginia Congressman Alex Mooney. In the Democratic primary voters chose Wheeling mayor Glenn Ellliot.
Governor Justice has a wide lead in early polls and with President Trump expected to carry the state easily West Virginia looks like a seat that will be flipped from Democratic to Republican.
Maryland saw Democrats have a hotly contested primary between Rep. David Trone and Prince George’s County Executive Angela Alsobrooks. The seat has been held for many years by Democratic Senator Ben Cardin who decided not to run. Trone, who was a founder of Total Wine, put millions of his own money into the race. However, the Democratic base stood squarely with Alsobrooks and she won easily, getting 53% of the vote to Trone’s 43%.
The Republican nominee will be former Governor Larry Hogan. While Maryland has become a very red state Hogan easily won two terms as Governor and left with high approval ratings. Democrats had viewed the seat as a sure hold, but Hogan’s candidacy puts the seat very much in play. Biden should do well in Maryland, and this could help Alsobrooks keep the seat Democratic, but it is a race to watch in the coming months.
