PHFintech: Crypto Policy Tracker - December 20, 2024

This week, Congress wrapped up its final session of the 118^th Congress. Crypto legislation in the next Congress will likely be based on the bills introduced in the prior session, but we might see some significant changes to those bills given that Republicans will control both the House and Senate. In this week’s tracker, we highlight key policy updates from recent weeks and provide a brief overview of the process when a new Congress takes office. This edition will also provide updates on members of Congress who will be some of the top decisionmakers on the future of crypto policy and legislation. Our weekly updates will resume in January as the new congressional term begins, and the new presidential administration takes office.

Congress Adjourns This Week—What’s Next for Digital Asset Legislation?

When Congress reconvenes in January to commence a new session, the 119th Congress will officially begin with a clean legislative slate. Many in the digital assets industry are curious about the future of bills affecting crypto, including those addressing stablecoins or market structure. Here is a high-level breakdown of the process:

• Bills from the 118^th Congress “Die.” At the end of each congressional session, any bill that has not been passed into law expires. This means bills introduced but not enacted during the previous Congress, including those focused on digital assets, will not automatically “carry over” into the new session. To be considered in the next Congress, legislators must reintroduce the bill.  
• Reintroduction by a Member of Congress. A member of the 119^th Congress must introduce or reintroduce legislation. This is often done by the same sponsor as before, though new sponsors or co-sponsors may take the lead depending on the political climate, their legislative priorities or attrition caused by retirement or lost elections.
• Bill Drafting and Updates. Identical legislation may be introduced, or it might be revised based on feedback from industry, consumer groups, think tanks or other interested parties. When a bill is introduced or reintroduced, it is assigned a new bill number to reflect the order in which the bill is submitted in the current Congress, starting with H.R. 1 in the House and S.1 in the Senate.
• Committee Action. Once a bill is introduced, it is referred to the committee or committees of jurisdiction. For digital asset bills, this historically has been the House Financial Services Committee, Senate Banking Committee and the House and Senate Agriculture Committees.
• Floor Consideration. Typically, once the committees of jurisdiction approve a piece of legislation, the House or Senate leadership decide if and whether to schedule the bill for consideration and vote on the House or Senate floor. If passed in one chamber (e.g., the House), the bill moves to the other chamber (e.g., the Senate) for consideration. Unless the Senate passes the bill in identical form (in which case it is sent to the president for approval or veto), the bill may go to conference committee to reconcile differences and would then be re-considered in each chamber.

Key Policy Updates

The policy updates summarized below highlight important developments that may shape the future of digital asset policy.

SEC Commissioner Crenshaw’s Renomination Appears Unlikely Before Congress Adjourns. The Senate Banking Committee postponed a vote on SEC Commissioner Caroline Crenshaw’s renomination due to objections from current Ranking Member Tim Scott (R-SC). Crenshaw has been a critic of digital assets, opposing the approval of spot Bitcoin ETFs and aligning with Chair Gensler’s approach. Crypto industry groups are actively opposing her renomination. A confirmation vote may not happen before January, because Congress is adjourning this week and must focus on higher priority items such as a budget continuing resolution. Notably, two key Democrats, Senator Charles Schumer (D-NY) and Senator Elizabeth Warren (D-MA), have not publicly voiced support for Commissioner Crenshaw’s renomination.

Hill to Lead House Financial Services Committee. The House Republican Steering Committee chose Representative French Hill (R-AR), a key leader on digital asset policy and sponsor of major crypto legislation, to lead the House Financial Services Committee. Hill, who formerly served as chair of the House Financial Services Committee’s Subcommittee on Digital Assets, Financial Technology and Inclusion, has prioritized the development of legislation around issues such as market structure, stablecoins and combating illicit finance. He also plans to investigate Operation Choke Point 2.0 (discussed in last week’s update). As chair of the subcommittee, Hill played a leading role in the House’s passing of the Financial Innovation and Technology for the 21st Century Act (FIT21) in May 2024. Hill’s leadership signals continued momentum for meaningful, pro-crypto legislation in the House.

Thompson to Lead House Agriculture Committee. The returning chair of the House Agriculture Committee will be Representative GT Thompson (R-PA). Thompson has led efforts to give the CFTC oversight of the digital commodity market and played a key role in crafting FIT21 (discussed in our November 15 update). The Commodity Futures Trading Commission falls under the jurisdiction of the House and Senate agriculture committees. Within the House Agriculture Committee, an important subcommittee for digital assets is the Subcommittee on Commodity Markets, Digital Assets and Rural Development.

Democratic leaders nominated Representative Angie Craig (D-MN) to be the ranking member of the House Agriculture Committee in the 119th Congress. The Steering Committee voted in favor of Craig over current Agriculture Ranking Member David Scott (D-GA) and Representative Jim Costa (D-CA).

Senate Banking Committee. Senator Tim Scott (R-SC) will be the lead Republican of the Senate Banking Committee, and Senator Elizabeth Warren (D-MA) will be the ranking member. Scott has indicated there may be a subcommittee on digital assets in the 119th Congress.

Leadership. Republicans have gained the majority in the Senate and selected Senator John Thune (R-SD) to be the new majority leader.