The News
As senators butt heads over the cryptocurrency industry’s top-priority legislation, the digital assets industry is trying to stick together in the hopes of getting a rare bipartisan deal.
That’s the outlook that top digital assets executive Miles Jennings shared with Semafor this week. Jennings succeeded President Donald Trump’s stalled pick to chair the Commodity Futures Trading Commission, Brian Quintenz, as head of policy for Andreessen Horowitz’s crypto-focused venture capital fund earlier this year.
Since then, the White House has rolled out reams of industry-friendly executive orders and Congress has passed long-sought legislation creating rules for stablecoins, a type of crypto pegged to other assets like the dollar. The policy wins have come fast enough that they’ve spurred banks, long used to getting their way in Washington, to rethink their own lobbying strategies.
But crypto has another huge challenge ahead: getting senators to coalesce around more ambitious legislation that would overhaul how the Securities and Exchange Commission and CFTC regulate digital assets. Though a House bill drew robust bipartisan support, the Senate counterpart is stalled after Democrats signaled Friday that Republicans have not sought a “mutual understanding” on their demands.
A spokesperson for Senate Banking Chair Tim Scott said in a statement that Republicans “have worked hard to build trust and hope their Democratic counterparts will come to the table.”
“The urgency to get a regulatory framework in place, that provides a regulatory framework for the blockchains that these assets are going to exist on, is more urgent now than it has ever been,” Jennings said in an interview.
In this article:
The View From Miles Jennings
This conversation has been edited for length and clarity.
Eleanor Mueller: What’s the biggest roadblock for market structure legislation?
Miles Jennings: Just getting industry aligned with Republicans, and Republicans and industry aligned with Democrats, is kind of the biggest potential hurdle. I think there’s good momentum on all three of those constituencies. But obviously you’re seeing Democrats wanting kind of a little bit of a different process.
Were you surprised by Senate Democrats’ statement Friday?
There’s a little bit of talking past one another, in the sense that Republicans are trying to run a process that is better than [the stablecoin bill had]. I think one of the significant challenges ahead of them is that this is very, very complicated. The House has been dealing with this subject for four or five years. And the Senate just doesn’t have that kind of muscle memory.
Should the Senate have just taken up the House bill?
That would have been the easiest way to go about this. That said, I understand that the Senate wants to run its own process.
Of course, Republicans have also pushed back. What do you think of Sen. John Kennedy’s recent comments that the Senate Banking Committee isn’t “ready” for a vote?
It’s just people grappling with the complexity of the bill. The Senate Banking draft was over 150 pages — and this is complex material. So I think people are trying to get up to speed as quickly as possible.
Crypto firms have been tasked with resolving their differences over the Senate’s definition of ancillary assets themselves. Has that happened yet?
I think that progress has been made, and I think that the industry is generally aligned with the direction that the Senate is moving. So we’re hopeful that we see in the next draft something that takes industry feedback and incorporates it.
They’re still workshopping language and everything like that. But I expect that the middle ground will be kind of a compromise position between the two different [House and Senate] approaches.
Banks have been pushing hard for the bill to include changes to the stablecoin law, including regarding interest payments. Do you think those make it in?
I don’t think that they should make it in. Fundamentally, stablecoin legislation is stablecoin legislation, right? We shouldn’t be dealing with stablecoins in market structure legislation. It would be a significant kind of burden to place on the market structure legislation to solve everyone’s potential issues.
We’re told lawmakers are in part waiting on a confirmed CFTC chair who can weigh in on the legislation. Do you agree?
It’s critically important to have a chair of the CFTC in there, because that person is going to be tasked with overseeing a significant kind of expansion of power of the agency.
What will be the biggest challenge in merging the House and Senate’s bills?
There are a couple of things that you’ll need to make consistent between the two, right? [The House bill] defined digital commodity as a very specific type of digital asset. [But] there is a world in which the CFTC should have oversight over all digital commodities, not just a specific type of digital asset.
So they’re going to need to marry those two concepts. And then there are a few others around how do you build in safe harbors for DeFi by making sure that those are consistent across both the CFTC regime and the SEC regime.
Do you think the committee vote slips past this month? This Congress?
I certainly think that there’s enough momentum out there right now and that there is enough consensus among both Democrats and Republicans to make that happen [this year]. But you know, you’ve been around long enough to know that predicting anything in Congress is very difficult.
Meanwhile, Trump-affiliated digital assets continue to dominate headlines. How does that affect negotiations?
It’s been a little bit of a distraction for people that want a distraction. There are people that want to play politics [who] will use that as an excuse to play politics. But fundamentally, the people that are working on this legislation are being earnest about it, and so I don’t think that it will ultimately prevent us from getting the regulatory framework in place.
Notable
- A top White House official said Tuesday they expect Congress to pass the pending crypto legislation “before the end of the year,” The Block reports.
- Crypto investors’ decision this week to sell more than $1.5 billion in assets “without a clear trigger” underscores “the fragility of cryptocurrency markets,” per Bloomberg.