Negotiations look tough around Senate crypto trading bill
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Leading Senate Republicans circulated a beefed up discussion draft Friday night of a crypto trading regulatory bill, but the majority is still unclear what concessions will be needed to secure key Democratic votes, according to a Republican aide.
Why it matters: The Senate's market structure bill needs support from at least seven Democrats to move, even with unanimous support from Republicans.
- Senate Banking Committee chair Tim Scott (R-S.C.) said at a crypto conference in August that up to 18 Democrats could be open to voting for the bill, though he acknowledged that some party opposition "is a real force to overcome."
State of play: The first discussion draft on the Senate bill circulated in July ran to only 35 pages. This new version — which Axios obtained but hasn't yet been put out — runs to 182 pages and leaves much less to the discretion of regulators.
- That moves it closer to the spirit of the House version of the bill which passed in July.
- While 78 Democrats in the House voted "yes" to that bill, it was always known that the legislation faced a tougher road in the Senate — where some Democrats have wanted the bill to specifically address President Trump and his family's investments in crypto.
Axios reached out to several Democrats last week, including all of those who voted to pass the prior crypto bill regulating stablecoins.
- As of Monday afternoon, none had responded with specific areas of policy priorities for market structure.
- The Republican aide, however, noted several areas of interest from Democrats.
They include:
- Funding. A longstanding complaint from the minority party has been the fact that the CFTC, the smaller of the two financial regulators, can't levy fees on the regulated community to cover the cost of its operations. In fact, the Clarity Act, passed by the House, includes a limited fee provision.
- Representation. Democrats are said to be concerned about a CFTC operating with only one commissioner (only Acting Director Caroline Pham is serving now). Perhaps more importantly, they object to the lack of any Democratic appointees, the Republican aide said.
- Vertical integration. In traditional finance, an exchange cannot also serve as a broker or trade with its own funds on its platform. That's something of a matter of course in the crypto world.
The big picture: The larger issue, however, remains President Trump's financial entanglements with the crypto world.
- There's no indication right now that bending on any of these policy points would get enough Democrats over this political problem sufficiently to vote for the legislation, the aide said.
- So there's currently no known path to get any form of a bill through the Senate, at the moment,.
What they're saying: The reality is that the digital asset world just isn't regulated now, the Senate staffer said.
- Opposition to market structure regulation, in any form, risks forgoing a law creating some regulation in favor of zero regulation, they argue.
What we're watching: If the Senate can get some kind of legislation through this year.
- The Banking Committee reportedly wants to get a markup done this month.
