Crypto Bill Crumbling in Congress: What’s Happening?
- Right now, under the GENIUS Act, it is not prohibited to offer thes rewards.
- That's Coinbase's number one issue with this, and it's the number one reason that this bill, or at least the markup at Senate banking, didn't go forward two...
- How much exactly does Coinbase stand to lose if this provision goes through?
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Last week, when I was tracking Coinbase‘s opposition to the Clarity Act, I kept hearing the same fear from worried DC insiders: The crypto industry was running out of time to pass a bipartisan market structure bill that would actually give them a favorable outcome. The midterm elections are imminent, and congress will switch to campaign mode in the upcoming weeks, meaning policymaking and bipartisanship will take a backseat to reelection priorities. To put it in private sector parlance, there will be guaranteed personnel turnover, and their replacements may not be quiet as pleasant to the crypto industry.
But to put it in political terms, the Democrats are likely to gain a lot more power, and the Republicans are about to lose it. Historical statistics almost guarantee it: In 90 percent of the midterm elections over the past 80 years, the incumbent president’s party lost seats in the House. Every president since Bill Clinton has lost both the House and Senate in the first two years of their term. Midterms are,more or less,a referendum on the president,and the less popular a president is,the more seats his party ends up losing.
Given this trend, Coinbase has taken a huge gamble: that crypto’s allies would remain in Congress, with the Republicans nudged along by President Donald Trump, and that the Democrats who are antagonistic to crypto, like Rep. Maxine Waters (D-CA) or Sen. Elizabeth Warren (D-MA) wouldn’t seize the policy wheel. They had two allies speaking on their behalf, to: White House AI and crypto czar David Sacks, and the president’s son, Eric Trump, who told a crowd at the World Economic Forum in Davos, Switzerland, that the banking industry was responsible for Clarity stalling.
then ICE agents killed an ICU nurse in broad daylight during an anti-ICE protest in Minneapolis on Saturday. I grew up with Alex pretti“, Kristen Radtke: The kind-hearted ICU nurse shot by federal agents was my childhood best friend.
That’s way higher than a traditional bank interest rate.
Way higher. Right now, under the GENIUS Act, it is not prohibited to offer thes rewards. It is prohibited to offer yields.So the banks are calling it a loophole. Now, there’s nothing in the bill that prohibits the banks from offering rewards or higher interest rates, but that is what’s holding up market structures. The banking industry is saying, The only way we can prohibit stablecoin issuers, or anyone holding stablecoin offering these rewards, is to have it addressed now in market structure legislation. So they have lobbied really, really hard to get a full prohibition on rewards in this bill.
That’s Coinbase’s number one issue with this, and it’s the number one reason that this bill, or at least the markup at Senate banking, didn’t go forward two weeks ago.There wasn’t direct alignment, even between Republicans - but especially between Republicans, Democrats, and the members of the committee and the crypto industry – on what to do and how to solve this issue.
How much exactly does Coinbase stand to lose if this provision goes through?
It would be a huge detriment to their business. It’s not their whole business, but there’s a massive appetite – and I’m sure there’s a massive user base on Coinbase right now – for people to go in and to hold and buy stablecoins because of the rewards. I mean,I am someone who has moved their savings from a traditional bank to USDC because I get 3.5 percent back versus getting .001 percent. I think it’s a big use case for stablecoins especially as we’re still in this nascent period where we just passed the first regulatory framework [with the GENIUS Act]. There’s still not mainstream adoption of stablecoins, but there coudl be very, very soon, not only from business to business, but business to consumer.
one of the big concerns I was hearing about this bill, even before the shooting happened, was that there was only a limited amount of political runway to get this bill done before the election season started. Do you think that a lack of partisanship would impact the passage of this bill?
it has to be bipartisan. The only way this bill can pass the Senate floor is if they get 60 votes,so they will need at least six Democrats. There’s a group of 12 Democrats who have earnestly been working day by day
Number one is what [New Jersey Democratic Sen.] cory Booker does. So [Minnesota Democratic Sen. Amy] Klobuchar, the ranking member, delegated the task of negotiating this bill with the Chairman [Arkansas Republican Sen. John Boozman] to Booker.
Klobuchar is probably busy right now.
She’s quite busy. So Booker has been working earnestly with the chairman. It has been the Senate Ag Committee’s stated intention from the start of this Congress: We want to have a bipartisan product. That’s really important to us. that manifested itself in a bipartisan discussion draft that came out a few months ago.Though, the most recent text that came out last week was the first product that came out that was not bipartisan. Democrats said, Hey, we’re not signing onto this. However, we’re continuously working with Republicans to get to yes.
So,as of right now,as we sit here 72 hours before the markup,has that changed since the text was released last week? Has Cory booker come on board? Can they broker an agreement? What we have heard from othre Democrats on the committee is that they’re not going to do anything without Cory Booker’s blessing. If Cory Booker says he’s a yes on this, then I imagine a big portion of the Senate Democrats vote yes. If Cory Booker says he’s a no, then I imagine it’s going to be a partisan vote, and the bill will pass out of committee with just republican supporters.
Let’s game out a situation where either the House and/or Senate is taken by the Dems. Exactly how much will the partisan makeup of a chamber impact whether this bill comes through again?
Just based on the people in power on the Democratic side for the committees of jurisdiction, it’ll mean a lot.If you look at the House Financial Services Committee, [California Rep.] Maxine waters, who would take back over as chairwoman, is not a fan of this technology.So that makes it tough right o