Last November, the voters sent representatives to Washington from the President to Members of the House and Senate who are more favorably disposed to the future of crypto and who will work to make the US a friendlier regulatory environment for crypto markets.
Under the Biden Administration and Democratic control of the Senate there were multiple headlines that showed a less than friendly environment for the growing number of crypto market participants. The negative signals came from the SEC under Chair Gary Gensler and the Senate Banking Committee under Chair Sherrod Brown.
The House, under Republican leadership and the Financial Services Chair Patrick McHenry got legislation passed designed to improve the regulatory environment for crypto; but these measures hit a stone wall when the Democratic Senate Banking Committee looked at the issues.
From my days working on Capitol Hill, I know that the most important power a Committee Chair has is to direct the agenda and focus of their committees mainly through the power of holding hearings. To make a bill a law can be a long and complicated process, but holding a hearing, selecting the witnesses, and setting the tone is largely a power that is solely held by a Committee Chair. While Senator Elizabeth Warren, a crypto skeptic, may be the top Democrat on the Senate Banking Committee, all decisions on hearings, bill consideration, and tone will be set by the new Committee Chair, South Carolina Senator Tim Scott – a pro-crypto Senator.
In the House, while Chair McHenry left Congress, his replacement, Arkansas Representative French Hill, shares his predecessor’s views on crypto and the House Committee should be a leader in legislative initiatives.
Likely the top issue for both the Administration and Congress is overturning the SEC’s SAB 121. With Chair Genzler gone from the SEC the Commission itself may change the rule, but failure of the SEC to act would likely lead to a Congressional initiative. Most importantly, the tone from both the White House and Congress will change, and the crypto sector is likely to see more support from the US government and an end to the government’s role of being a roadblock rather than a friend of the emerging financial market.
