House Democrats Take a Voting Stance on 2 Pro-Crypto Bills

In a leaked email, Democratic Party leaders [House Financial Services Committee Ranking Member Maxine Waters (D-Calif.) and House Agriculture Committee Ranking Member David Scott (D-Ga.)] “strongly oppose” two Republican-led crypto bills. They will not force House members to vote no on them.

Reports have it that Democrats in the US House of Representatives will not have to vote against two crypto-friendly bills that are due for a floor vote in the next few days. However, they are highly encouraged to do so.

House Leaders Won’t Force Democrats to Vote on Crypto Bills

Politico reported that leading Democrats on their respective committees have informed Democratic members of the House of Representatives via email that they “strongly oppose” H.R. 4763, the Financial Innovation and Technology for the 21st Century Act (FIT21), but are not whipping their members against the bill.

NEW: House Democratic leaders said today they will NOT whip against House Republicans' crypto bill, I'm told.

The whip question sent to members this a.m. says that Waters and Scott "strongly oppose" the legislation, but does not urge them to vote "no": https://t.co/V3DSjewYzV pic.twitter.com/lORrUIo4RZ— Eleanor Mueller (@Eleanor_Mueller) May 20, 2024

If enacted, both measures would benefit the crypto industry. Waters and Scott oppose the measure because it disrupts established legal precedents and introduces unpredictability into the conventional securities market.

The office of the Democratic Whip stated in an email first obtained by Politico:

This language undermines decades of legal precedent and case law, thereby creating uncertainty in our traditional securities market.

Democrats Email

While the Securities and Exchange Commission and Commodity Futures Trading Commission finalize new rules, the email states that the bill provides a safe harbor in which entities may file an “intent to register” if they satisfy certain requirements. This, the email argues, protects them from securities law rules and regulations.

Democratic Leaders Published a “Dear Colleague” Letter 

A “Dear Colleague” letter published on the Democrats page of the House Financial Services Committee provides additional insight into the two leaders’ stance against the measure, labeling it the “Not Fit for Purpose Act.”

FIT21 would, among other things, strengthen the classification process for determining whether a cryptocurrency is a security or commodity and primarily transfer regulatory oversight of the sector to the Commodity Futures Trading Commission of the United States.

The bill has received support from the US crypto industry and lobbyists; in a letter dated May 16, sixty companies urged the House to enact the bill.

According to a numbered list, the bill would create a “pathway for ‘investment contract assets’ with no alternative regulator,” meaning they would be governed by essentially no laws or regulations.

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The letter stated that if the bill were to become law, it would preempt state regulations regarding digital assets, impair fiduciary obligations, and undermine capital markets, in addition to preventing shareholders from suing publicly traded companies.

CBDC Conversation Takes Center Stage in DC

A bill introduced by Majority Whip Tom Emmer (R-Minnesota) to prevent the Federal Reserve from issuing a central bank digital currency, H.R. 192, was also urged in an email from the Democratic Whip’s office to lawmakers to urge them to vote against the measure. 

The email said the bill raises concerns that it could undermine the Fed’s ability to conduct monetary policy due to its “excessively broad definition” of CBDCs.

According to the Congressional Budget Office (CBO), the bill’s overly broad definition of CBDC raises concerns the bill could undermine the Fed’s ability to conduct monetary policy […] Particularly concerning as it attempts to navigate a soft landing in regard to inflation. Democrats Email

FIT21 supporters include Coinbase, Kraken, Andreessen Horowitz, and fifty other companies and organizations operating in the digital assets sector. According to FIT21’s proponents, the initiative establishes a regulatory framework that the United States does not currently offer.

The bill expands the CFTC’s authority to register and regulate digital commodities, requires the CFTC and SEC to issue rules jointly for assets not otherwise classified, and defines whether a digital asset is a security or a commodity.

Cryptopolitan Reporting by Florence Muchai