Patrick McHenry’s crypto scramble
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QUICK FIX
Rep.Patrick McHenry’s three-week speakership is looking easy compared to his latest challenge: convincing Washington to enact landmark crypto bills.
Our Jasper Goodman and Eleanor Mueller
have a new story today on how the House Financial Services chair is fighting to overcome political resistance and a narrowing window to advance his top legislative priority before lawmakers go into campaign mode next year.
“There hopefully will be an opportunity,” said Cody Carbone, the vice president of policy at the Chamber of Digital Commerce, a crypto trade group.“But that window is absolutely closing the closer and closer we get to the election.”
McHenry argues that it’s critical for Washington to set up a new regulatory regime for digital currencies and their underlying blockchain technology, which he sees as offering big benefits to the consumer and the economy.
But he’s facing resistance from crypto-skeptic lawmakers, including Senate Banking Chair Sherrod Brown, who aren’t eager to do any favors for the industry amid concerns about fraud and excessive risk-taking revealed by a series of scandals.
McHenry is trying to court Rep.
Maxine Waters and the Biden administration in a bid to shore up support for a bill that would set up a new legal pathway for stablecoins.He’s simultaneously trying to attach to the annual defense authorization bill separate legislation that would divvy up crypto oversight between the SEC and the CFTC.
On the stablecoin bill, talks with Waters have resumed after she broke with him at a summer committee vote, and administration officials are also back at the table, according to a House aide.
Treasury Department spokesperson Chris Hayden said, “we are encouraged to hear reports that conversations are still occurring in the House Financial Services Committee, and we will continue to offer assistance to those bipartisan efforts.”
But McHenry’s SEC-CFTC push is causing real drama as the House and Senate try to merge their distinct versions of the defense bill.McHenry’s long-shot maneuver requires buy-in from not only Waters, who opposed his bill in committee, but also Brown, who has criticized McHenry’s crypto efforts, and Senate Banking ranking member Tim Scott.
The clash is threatening to derail other finance-related NDAA provisions that the committee leaders also must resolve, including measures to address fentanyl trafficking and artificial intelligence in banking, according to Senate Republican aides granted anonymity to discuss the talks.
If the crypto legislation doesn’t ride on the defense bill, House Republicans are preparing to bring it to the floor, possibly before the end of the year.
Rep.Dusty Johnson (R-S.D.), a lead lawmaker in the crypto push, said he feels “very good about our prospects for progress here in the next couple months.”
It all may be for naught, with Brown knocking House crypto efforts that he says are “not even worth discussing if they’re going to just bow to the industry.” Regarding the NDAA, Brown told reporters Monday: “We’ve put in there what we can put in there for now.”
“If Sherrod’s not interested, a floor vote is just ornamentation,” Rep.Jim Himes (D-Conn.) said.
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Driving the day
Fed Governor Christopher Waller discusses the economic outlook at AEI at 10 a.m.… Chicago Fed President Austan Goolsbee delivers opening remarks at the Midwest Agriculture Conference at 10 a.m.
… CFPB Director Rohit Chopra speaks at an Axios AI summit in Washington at 10:30 a.m.… Fed Governor Michelle Bowman talks monetary policy and the economy at the Utah Bankers Association and Salt Lake Chamber Breakfast at 10:45 a.m.… Fed Vice Chair for Supervision Michael Barr gives speeches on the Community Reinvestment Act at 1:05 p.m.and 3:30 p.m.
CZ grounded — A federal judge says Binance founder Changpeng “CZ” Zhao must remain in the U.S., for now, after he pleaded guilty to violating anti-money laundering laws last week, Sam reports.
Prosecutors have argued that Zhao, a UAE resident, could pose a flight risk if he returns home before sentencing.
The WSJ reports that
the SEC is still looking for evidence that Binance and Zhao may have a back door to control assets on the Binance.US platform.The agency sued Binance and Binance.US in June alleging they operated illegal securities exchanges.
Crypto fly-in — The Blockchain Association told MM it’s organizing a fly-in today with 18 national security, law enforcement and military experts for meetings across 30 Hill offices.The
industry is facing questions about the role of digital assets in illicit finance.
MM first look: Rob Nichols on banking fraud — The American Bankers Association CEO will announce today that the trade group plans to manage an industry effort to help banks share real-time information to combat fraud and money laundering.A pilot is expected early next year.
Nichols will discuss the plan at the kickoff of a financial crime enforcement conference that ABA is co-hosting with the American Bar Association.
“We believe this effort can make a real difference in fighting financial crime,” he said
in prepared remarks.
Economy
Rates hit home sales — Sales of new single-family homes fell more than expected in October as higher mortgage rates squeezed out buyers even as builders cut prices, Reuters reports.A recent decline in rates may open the door for a sales rebound.
Biden on inflation — Bloomberg reports that President Joe Biden on Monday took credit for easing supply-chain pressures and lowering inflation ahead of the holiday shopping season, but he accused companies of keeping prices artificially high.
“Let me be clear to any corporation that has not brought their prices back down, even as inflation has come down, even as supply chains have been rebuilt — it’s time to stop the price gouging,” Biden said.
Regulatory Corner
SEC finishes conflict-of-interest rule — Per Sam, the agency approved a regulation mandated by the 2010 Dodd-Frank law that would ban Wall Street firms from trading against asset-backed securities they sell to clients.Senate Democrats warn the CFTC — Brown, with Sens.John Fetterman and Tina Smith, are urging CFTC Chair Rostin Behnam to reconsider a plan to ease margin requirements for certain derivatives traders.They argue the proposal would “unilaterally deregulate some market participants without coordination with prudential regulators overseeing other participants in the swaps market.”.
