The 119th Congressional session begins today. Politicians have promised clarity on regulatory requirements for stablecoins, a framework for deciding whether crypto firms are mostly overseen by the CFTC or SEC, even the establishment of a bitcoin national reserve.
Spiking cryptocurrency prices indicate that investors expect regulatory clarity faster than the government may be able to provide it. Policy advocates are thinking in terms of what can be passed in the next two years; while Congress may lean pro-crypto, getting a bill to the president’s desk will take time.
“We should contextualize ‘quickly,’” explained Marta Belcher, president and chair of the Filecoin Foundation, which facilitates governance for the decentralized storage network Filecoin. “Quickly is quickly for Congress, which is not quickly for what anyone in the industry would think of.”
Market Structure and Stablecoins
Two bills – on stablecoins and general market structure – occupied most of the crypto-related attention during the last Congressional session. Rep. French Hill, who leads the House Financial Services Committee, has promised to pass both bills through committee in the first 100 legislative days. Senate Banking Committee Chair Tim Scott, House Agriculture Committee Chair Glenn “GT” Thompson, and Senate Agriculture Chair John Boozman also have expressed support for getting bills passed. Legislation would likely originate in these committees before going to floor votes. The House committees took the lead drafting legislation last session, and are expected to do so again.
Read More: Crypto-Savvy Rep. French Hill Will 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 contention is whether stablecoins have to be one-to-one backed by U.S. dollars, Belcher said, arguing that this requirement would be “above and beyond” what is asked of other sectors.
Market structure legislation, meanwhile, is significantly more complex. While the Financial Innovation and Technology for the 21st Century Act (FIT21), which would likely be used as a starting draft for a bill introduced this year, Republicans seem eager to use their newfound majority in the Senate as a reason to pass a bill that is more ambitious. And while 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 only voted “yes” on FIT21 because they knew president Biden would veto it — essentially, wanting to appear “pro crypto” without actually making the bill law. This raises questions as to whether Democrats would show more resistance to a bill under a Trump presidency.
Bitcoin Reserve
Legal experts are divided on whether Trump needs the support of Congress for the Treasury to hold Bitcoin as a national reserve currency.
The odds that Trump signs an executive order to accrue additional Bitcoin or convert existing Bitcoin holdings into Treasury reserves are currently less than 50%, according to Dennis Porter, who founded the Satoshi Action Fund, which advocates for pro-Bitcoin policy at the state and federal level. Things could change by inauguration day – scheduled for Jan. 20 – if a state approves a reserve before then, Porter said.
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Optimism that a bitcoin national reserve bill will get passed and approved by Congress, however, is tepid at best. Trump’s own speech at the Bitcoin 2024 conference in Nashville indicated that his goal was to have the government hold bitcoin it already has in its possession, not buy more. Last year, Wyoming Senator Cynthia Lummis’ Bitcoin Reserve Legislation, which called for the Treasury to buy 200,000 bitcoins per year for the next five years, failed to gain traction.
Castle Island Ventures General Partner Nic Carter told Bloomberg last month that he did not think enough members of Congress were on board for such a bill to get passed. Digital Chamber founder and CEO Perianne Boring told Reuters that she thought such a bill could pass, albeit not within the first 100 days. All in all, it seems that if national reserve legislation is approved by Congress, it won’t be anytime soon.
The Political Calculus
With each of these bills, there’s political pressure on members of Congress to get something done before the midterm elections in 2026, according to Dave Grimaldi, executive vice president of government relations at Blockchain Association.
The crypto industry’s donations to political campaigns had an outsized impact on electoral outcomes in November, and the industry’s largest Political Action Committee, Fairshake, has already raised millions for the midterms. Nobody who will be running for a competitive seat can afford to appear anti-crypto.
“The New Republican majority in the Senate and returning Republican majority in the House want to work with Democrats to make this an easy and quick process,” Grimaldi explained.
Before the midterms, however, members of Congress don’t face any hard deadlines. It’s also safe to say that the Senate will be busy debating confirmations for controversial presidential political appointees over the first couple of months. Congress as a whole will be busy with Trump campaign priorities like border control and tax policy.
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As CoinDesk’s Jesse Hamilton pointed out in the State of Crypto newsletter, it could take over a year for some of the changes articulated in crypto legislation to become reality.
If the CFTC is given authority to oversee crypto in market structure legislation, for example, it could take months to design and implement a new set of rules, even if someone who has experience in the agency, like former commissioner Brian Quintenz or current commissioner Summer Mersinger, is chosen as chair. Blockchain Association CEO Kristin Smith told Unchained last month that the rulemaking process takes about 18 months.
All of this means that when it comes to laws covering the crypto industry, change could take more than a year, if not several years, to become reality. And though that’s fast for government, it’s likely a pace the crypto markets will need some adjusting to.
