The industry is used to things changing more quickly than policy allows.
Published January 3, 2025 at 10:44 am EST.
The 119th session of Congress begins today. Politicians have promised to clarify regulatory requirements for stablecoins, a framework for deciding whether crypto companies are primarily supervised by the CFTC or the SEC, and even the creation of a national bitcoin reserve.
The surge in cryptocurrency prices indicates that investors are expecting regulatory clarity faster than the government can provide it. Policy advocates are considering what can be enacted over the next two years; Even if Congress may tilt in favor of cryptocurrency, it will take time for a bill to reach the president’s desk.
“We should contextualize “quickly”” explain Marta Belcher, president and president of the Filecoin Foundation, which facilitates governance of the Filecoin decentralized storage network. “Fast is fast for Congress, which is not fast for what anyone in the industry would think of.”
Market Structure and Stablecoins
Two bills – on stablecoins and general market structure – took up most of the crypto-related attention during the last session of Congress. Rep. French Hill, who heads the House Financial Services Committee, has promised to pass both bills out of committee within the first 100 days of the Legislature. Senate Banking Committee Chairman Tim Scott, House Agriculture Committee Chairman Glenn “GT” Thompson and Senate Agriculture Chairman John Boozman also expressed support for the adoption of bills. Legislation would likely be developed by these committees before being put to a floor vote. House committees took the lead in drafting the bill last session and are expected to do so again.
Learn more: Crypto expert Rep. French Hill to chair House Financial Services Committee
Most policy advocates expect stablecoin legislation to come first, given that Republicans and Democrats on the House Financial Services Committee nearly reached a compromise last year. The biggest debate is whether stablecoins should be backed by U.S. dollars, Belcher said, arguing that this requirement would be “above and beyond” what is asked of other sectors.
The legislation relating to market structure, on the other hand, is significantly more complex. While the Financial Innovation and Technology for the 21st Century Act (FIT21), which would likely serve as the basis for a bill introduced this year, Republicans appear eager to use their new Senate majority as a pretext to pass a bill that is more ambitious. And although FIT21 received bipartisan support in the House and Senate, three sources told Unchained last year that key Democrats like Senate Minority Leader (Majority Leader at the time) Chuck Schumer did ‘only voted “yes” on FIT21 because they knew President Biden would veto it – essentially, wanting to appear “pro crypto” without actually passing the bill. That raises the question of whether Democrats would show more resistance to a bill under a Trump presidency.
Bitcoin Reserve
Legal experts are divided on whether Trump needs congressional support for the Treasury to hold Bitcoin as a national reserve currency.
The chances of Trump signing an executive order to accumulate additional Bitcoin or convert existing Bitcoin holdings to Treasury reserves are currently less than 50%, according to Dennis Porter, founder of the Satoshi Action Fund, which advocates for pro-Bitcoin policy at the level of state and federal level. Things could change between now and Inauguration Day — scheduled for Jan. 20 — if a state approves a reservation before then, Porter said.
Learn more: Trump picks hedge fund manager Scott Bessent to become Treasury secretary
Optimism that Congress will pass and approve a Bitcoin National Reserve bill, however, is lukewarm at best. Trump’s own speech at the Bitcoin 2024 conference in Nashville indicated that his goal was to allow the government to keep the bitcoins it already has, not to buy more. Last year, Wyoming Sen. Cynthia Lummis’ Bitcoin Reserves legislation, which called for the Treasury to purchase 200,000 bitcoins annually over the next five years, failed to gain traction.
Nic Carter, General Partner of Castle Island Ventures said Bloomberg said last month that he didn’t think there were enough members of Congress for such a bill to pass. Perianne Boring, founder and CEO of Digital Chamber said Reuters that she thought such a bill could pass, but not within the first 100 days. Overall, it seems that if national reservations legislation is approved by Congress, it won’t be anytime soon.
The political calculation
With each of these bills, there is political pressure on members of Congress to do something before the midterm elections in 2026, according to to Dave Grimaldi, executive vice president of government relations at the Blockchain Association.
Crypto industry donations to political campaigns had a huge impact on election results in November, and the industry’s largest political action committee, Fairshake, has already raised millions for the midterm elections . No one running for a competitive seat can afford to appear anti-crypto.
“The neo-Republican majority in the Senate and the returning Republican majority in the House want to work with Democrats to make this process easy and quick,” Grimaldi explained.
However, ahead of the midterm elections, members of Congress do not face strict deadlines. It can also be argued that the Senate will be busy debating confirmations of controversial presidential political appointees in the first two months. Congress as a whole will be busy with Trump campaign priorities like border control and tax policy.
Learn more: Who will be Trump’s CFTC chairman? There is a new candidate for the role
As CoinDesk’s Jesse Hamilton pointed out in the State of Crypto newsletter, it could take more than a year for some of the changes outlined in crypto legislation to become reality.
If the CFTC is given authority to oversee crypto in market structure legislation, for example, designing and implementing a new set of rules could take months, even if someone with experience within the agency, such as former Commissioner Brian Quintenz or current Commissioner Summer. Mersinger, is chosen as president. Kristin Smith, CEO of the Blockchain Association said It was revealed last month that the rule-making process takes around 18 months.
All of this means that when it comes to the laws covering the crypto industry, the change could take more than a year, if not several years, to become a reality. And while that’s fast for the government, it’s likely a pace that crypto markets will need to adapt to.
