Republicans' Leadership Squabbles Delayed U.S. Crypto Bills Until 2024, Key Lawmakers Say

After months of hoping U.S. crypto legislation could win House of Representatives approval this year, lawmakers doing much of the behind-the-scenes work are looking to 2024 as the time when digital assets bills may get passed by that Republican-controlled chamber though the efforts still face an uphill climb in the Senate where Democrats have the reins.

U.S. Rep. French Hill (R-Ark.), the chairman of the House Financial Services Committee's subcommittee that focuses on digital assets, said the House's consideration of two major crypto bills – one to regulate U.S. stablecoin issuers and another to form a broad system of rules for crypto markets – has likely shifted into "early 2024."

The House Republicans' recent fight over installing a new speaker – which ensnared key crypto negotiator Rep. Patrick McHenry (R-N.C.) as stand-in speaker for a time – delayed the floor time lawmakers needed for the legislation, Hill said at a Blockchain Association event in Washington on Thursday.

"That, I think, set us back a little bit," echoed Sen. Cynthia Lummis (R-Wyo.) at the same event. Lummis, who has been pressing her own wide-ranging crypto legislation in the Senate, also suggested that the stablecoin bill, specifically, will make more progress next year. "That is an area that could come early in 2024."Rep. Jim Himes (D-Conn.), who has also occupied a leading role in the House negotiations for both bills as the committee's top Democrat Rep. Maxine Waters (D-Calif.) withdrew support, suggested the industry needs to counter what House Democrats are hearing from outside groups and U.S. Securities and Exchange Commission Chair Gary Gensler – a dedicated critic of the industry.

He was among a handful of Democrats on the House Financial Services Committee to buck his party's ranking member on the committee to favor both crypto bills this year. Waters has since indicated she's still open to moving forward on legislation, and Himes said Thursday that if Waters gets on board and the overall House approves a bill, "a Democratic Senate sits up and takes notice."

"On the other side of the Capitol, the weather is uglier," Himes said of the crypto views of some Senate Democrats, including Sen. Sherrod Brown (D-Ohio), who runs the Senate Banking Committee. "You could see a path, but I think it probably starts with a strong bipartisan vote" in the House, Himes said.

Brown's banking committee "has been a tough nut to crack," said Lummis, who is a member of that panel. But she said the fact that the U.S. Department of the Treasury recently came forward with crypto illicit-finance policy proposals is a good sign that the administration is now willing to negotiate, which could nudge the Senate Democrats, too.

Hill argues that the implosion of FTX last year and the recent massive settlement and criminal conviction of Binance, which may give some lawmakers pause about the sector, should actually encourage pursuit of the legislation. He said each example of bad behavior "only reinforces that we need to do this and do it the right way." Having no regulations in place "is what's going to advantage illicit finance."

So, even if a crypto bill passes the House next year, it still needs approval in the Senate and a presidential signature. In practical terms, that may require plugging it into a more complex package and attaching it to must-move legislation, such as a spending bill.

"Passing laws takes time," Sen. Kirsten Gillibrand (D-N.Y.), who has partnered with Lummis on crypto legislation, warned the industry crowd on Thursday.

"Not that many people care about cryptocurrency," Gillibrand argued, advising the industry to keep educating people. "The rest of the country doesn't know what you're doing."