Sen. Kirsten Gillibrand, D-N.Y., is “very optimistic” that the Senate Agriculture Committee’s updated legislation to regulate cryptocurrencies will move forward, even though Republicans have yet to reach a deal with Democrats.
“Senators have worked pretty intensively on a bipartisan basis over the last six months, and we have two different bills,” Gillibrand told CNBC in an exclusive interview.
One bill falls under the Agriculture Committee, which oversees the Commodity Futures Trading Commission, and the second falls under the Banking Committee, which oversees the Securities and Exchange Commission and banking issues, she said.
“Since these types of digital assets have some characteristics of both commodities and securities, you need regulation under both of these committees,” Gillibrand said.
The Democratic senator is not a member of the Senate Agriculture Committee, but participated in negotiations on the structure of the crypto market. She explained that the two bills, which deal with different parts of the crypto market structure, are being worked on simultaneously.
“I think both senators on the Banking and Agriculture Committee are working in a bipartisan manner and in good faith,” she said.
On Wednesday evening, the Senate Agriculture Committee released the updated legislation, which builds on a previously released bipartisan discussion draft. The bill would give the CFTC new authority to regulate digital assets.
In a statement, committee Chairman John Boozman, R-Ark., acknowledged that “differences remain on fundamental policy issues” but that the bill “builds on our bipartisan discussion draft while incorporating stakeholder input and represents months of work.”
“While it is unfortunate that we were unable to reach an agreement, I am grateful for the collaboration that resulted in improving this legislation,” Boozman said, adding that “it is time to bring this bill forward.”
The Senate Agriculture Committee’s markup of legislation to regulate digital products was scheduled for Jan. 27, then was delayed until Jan. 29 due to winter weather.
The Senate Banking Committee’s hearing on its proposed text to regulate digital assets was scheduled for January 15, but was postponed at the last minute after opposition from the crypto industry, including Coinbase.
Asked if she thought the Senate Agriculture Committee hearing was also likely to be delayed, Gillibrand told CNBC there are still areas that need bipartisan resolutions, but she thinks the markup will happen on Tuesday.
Gillibrand noted that the Senate Agriculture Committee’s plan is still under review, adding that “I hope that senators will work on a bipartisan basis to amend this plan to make it stronger, to make it better, and to continue their negotiations in areas where there has been no resolution.”
She said an earlier Agriculture Committee draft contained many bipartisan compromises, some of which were left out. “I hope these senators can go back to the drawing board and try to reinstate some of those compromises that I thought were very strong,” Gillibrand said.
Senate Banking Committee bill suspended
Bipartisan negotiations continue on the Senate Banking Committee’s proposed crypto market structure legislation, according to Chairman Tim Scott, R-S.C.
“I have spoken with leaders in the crypto industry, the financial sector, and with my Democratic and Republican colleagues, and everyone remains at the table and working in good faith,” Scott said in a statement.
No new hearing date on the Senate Banking Committee’s crypto market structure bill has yet been set.
“I think people are going to continue to work over the next few weeks,” Gillibrand told CNBC, emphasizing that “people want this done now.”
Speaking to CNBC’s “Squawk Box” on Tuesday at the World Economic Forum’s annual meeting in Davos, Switzerland, Coinbase CEO Brian Armstrong kept the pressure on the Senate’s crypto legislative efforts. He said the company’s legal team and executives began to notice “some pretty serious issues in the draft language” of the Senate Banking Committee’s bill and that there did not appear to be a plan in place to address those issues.
“We felt like we had an obligation to stand up for our customers’ rights and say, ‘We have problems here,'” Armstrong said.
In an article on X, Armstrong wrote that the version of the bill “would be significantly worse than the current status quo.”
Armstrong also highlighted some of the problems Coinbase had with the Senate Banking Committee’s draft text, including “proposed amendments that would remove rewards on stablecoins, allowing banks to ban competitors.”
The Senate Banking Committee’s text would have prohibited stablecoin issuers from offering rewards for holding them. Instead, these rewards should be offered through the completion of a transaction or rewards program.
The banking industry is urging Congress to close what it sees as a loophole in the GENIUS Act stablecoin legislation, which prohibits stablecoin issuers from paying interest directly. Banks claim that this would lead to a flight of deposits from the insured banking system. Some crypto companies, particularly Coinbase, have objected to this claim.
Gillibrand was the lead Democratic senator on the GENIUS Act and helped guide the regulatory framework through Congress. In July, President Donald Trump signed it into law.
When asked what she thought about the banking industry’s allegations of a loophole in the GENIUS Act, she said she was “optimistic that we can find common-sense, bipartisan language that satisfies everyone’s concerns on this issue.”
“I thought we had done that in GENIUS, but if it requires more work, we will continue to work,” she added. “We had very strong language saying that we were OK with rewards, points and other programs, but you couldn’t offer interest-like products on stablecoins,” she said.
Gillibrand said lawmakers want to give the crypto industry an opportunity to show it can follow the rules of the road, and added that lawmakers don’t want to see deposits flee from banks.
“We wanted to make sure that no consumer was confused about what a stablecoin is versus what a dollar deposited into a bank account is, because stablecoins are not FDIC insured,” she said, adding that different protections are in place for stablecoins.
“We made sure that every stablecoin was backed by a US dollar or its US dollar equivalent and so we thought that the compromise and the language with which we entered into this bill was very strong,” Gillibrand added.
Republican ally announces retirement
The Democratic senator has been pushing for crypto legislation since 2022, when she and Sen. Cynthia Lummis, R-Wyo., introduced the Lummis-Gillibrand Responsible Financial Innovation Act, a bipartisan framework for regulating cryptocurrencies.
In December, Lummis announced she would retire at the end of her term this year. Lummis chairs the Senate Banking Committee’s crypto subcommittee and also guided the passage of the GENIUS Act. The two senators are currently negotiating a bill as part of an industry-backed push for broader regulation of digital assets.
“It’s a tremendous loss for the United States Senate and it’s a personal loss for me,” Gillibrand said of Lummis’ planned retirement.
Despite Lummis’ retirement, Gillibrand said his advocacy for digital assets would not change. She emphasized that she is “committed” to crypto because she believes it offers opportunities for entrepreneurship and innovation.
“I don’t want China or Asia or other parts of the world to benefit from these industries because we are unwilling or unable to regulate them,” Gillibrand said.
“If we want to protect consumers and traditional financial services, the best way to do that (…) is to regulate them. That’s the only thing that really allows us to be competitive on a global scale,” she added.
Gillibrand stressed that lawmakers must stay at the negotiating table and continue working on a bipartisan basis to create a comprehensive regulatory framework for digital assets.
