I think it is apparent to really anyone that has watched the news recently that this Congress has gotten off to a bumpy start. The issues that popped up include not only the House but also the Senate and cross-party lines as well though this is not as widely known to the public. Due in part to this, Committees have also been a little behind, resulting in lagging legislation and debate. Congress has been far from inactive though and in a twist of events crypto has been an unexpected unifying force.
We really began to see crypto bring together the two parties last year when several different pieces of bipartisan legislation were introduced. Even though these pieces of legislation ended up "dying" in Congress last year it was a rare time that both parties actively worked together to accomplish a common goal. This year we are already seeing much of the same with Committees, in particular, looking to address and tackle some of the issues facing crypto. The House Financial Services Committee has taken the biggest step in this regard with the creation of the Subcommittee on Digital Assets, Financial Technology, and Inclusion a first-of-its-kind congressional group that will focus on digital assets. Where the Senate Banking Committee is going to be holding a hearing tomorrow, February 14th, titled Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets" they do not yet have or plan on having a subcommittee devoted to studying and addressing this issue like the House has chosen to do.
Interestingly enough as well The White House has been pretty active in the crypto space but it is not how anyone in the space would like. At the end of January, several senior Biden officials penned a note that was posted on the White House's Offical Blog calling out Congress for what they say are stalling tactics. As someone who works in Congress this type of call-out was pretty shocking as the SEC falls under the Executive Branch ie the President and recently the SEC has said and taken it up that they can investigate and charge crypto companies. If the SEC has the power that they claim they do then really it is on them to act and not Congress. The idea of rushing legislation through especially in a cutting-edge field like crypto and blockchain is something that we know historically is an awful move to make as it leads to unnecessary fallout and damage to American interests. Rushing legislation has been shown to push companies to operate "off-shore" meaning that they locate their headquarters in another company to get out of U.S. regulations.
With House currently out of session a lot of work is being done to set up legislation to introduce and Committee staff is meeting with stakeholders to figure out how to address issues facing these companies and organizations. I am sure a huge target is being placed on the back of the SEC as they have been launching what seems to be daily investigations or charges against crypto companies. Congress has previously made it known that if the SEC magically thinks it has gained the ability to regulate then they have a lot to answer for since it did not do anything for so long. Legislation has not been passed to give either the SEC or the CFTC additional powers so they are operating under the powers that were already in place meaning this should not be occurring in the way it has. The next two weeks while the House is out could see some sort of legislation or hearing accounted by the House Financial Services Committee to address this major escalation by the SEC and get to the bottom of what is going on. At a minimum, I would expect the Committee to be issuing a statement about this and put the SEC on notice that there are issues that need to be addressed and things that need to be explained.
As I have mentioned the next two weeks will be very interesting to watch and see how Members of the House react with this being the first recess since Committees have formed. The Senate Banking Committee will most likely be our first view into what the Senate is thinking and how those Members are looking at tackling/addressing this issue.
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