US House will have crypto bill in 2 months, says Representative Patrick McHenry

AUSTIN, Texas – The US House Financial Services Committee and the House Agriculture Committee will put together legislation to oversee the crypto sector in “the next two months” after holding joint public hearings starting in May, Rep. Patrick McHenry (R–NC) said. chairman of the House Financial Services Committee.

Asked if such a bill could be signed by President Joe Biden in the next 12 months, McHenry told the crowd at CoinDesk’s Consensus 2023 event, “yes.” The key legislator was quick to give a rider that legislating something new is always a challenge.

“What we plan to do in the next two months is report an agreement,”[ads1]; McHenry said, adding that the bill would address both the securities and commodities regimes and issues that are difficult to fix on either side.

Sen. Cynthia Lummis (R-Wyo.), the other panelist during the session, said she looked forward to coordinating those efforts with McHenry, adding that the House had a better chance than the Senate of getting the legislation through sooner. She said if the House moves first on crypto, it will “improve our chances” in the Senate.

“We’ve tried to keep bias out of this topic,” Lummis said. “This is a cross-party issue that we must address before the 2024 election.”

The US Congress has so far been unable to pass comprehensive crypto legislation despite a number of bills making progress on Capitol Hill last year.

But this month, Republicans on the House Financial Services Committee took a swing at finding bipartisan support for a new effort at stablecoin legislation, though bipartisan support remains uncertain. The Republicans introduced a discussion draft that could mark a new starting point for negotiations with the Democrats.

Lummis, who has been dubbed the Senate’s “Crypto Queen,” had introduced the bipartisan “Responsible Financial Innovation Act” aimed at creating a regulatory framework for the industry last year with Sen. Kirsten Gillibrand (DN.Y.).

Lummis told the audience at Consensus that a new and improved version of the bill will be unveiled in six to eight weeks.

“We’re probably going to have a stronger national security section. You’ll see a stronger cybercrime aspect of our bill,” Lummis said.

A bipartisan bill introduced in both the US Senate and House of Representatives on Thursday would require the federal government to study cases of crypto use for illegal activity, including studying how terrorists or other criminals might use cryptocurrencies.

Last week, McHenry grilled Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), over his refusal to say whether ether (ETH), the second-largest cryptocurrency by market capitalization, was a security.

“Congress needs to provide adequate guidance there,” Lummis said. “I expect we will still use the Howey test” in the most modern way expressed by American courts.

As the deadlock in Congress between Republicans and Democrats continues, lawmakers have been faced with increasing pressure to legislate the industry following the collapse of the FTX crypto exchange and the more recent collapse in crypto banking.

McHenry also said that crypto’s recent role in the US banking crisis, which has left the industry’s banking relationships strained, is fair to call “Operation Choke Point 2.0.”

“We need to fix this problem, we need to make sure you can bank in a safe and sound way,” he said. “This is a prime example of why Congress needs to legislate and provide clarity.”

Meanwhile, jurisdictions such as the European Union have approved the Markets in Crypto Assets (MiCA) Act, making it the first major jurisdiction in the world to introduce a comprehensive crypto law. The EU’s deal puts the bloc in the lead on Web3 technology, McHenry told CoinDesk earlier.

“More jurisdictions are ahead of us,” Lummis said, citing MiCA and other efforts. “We are falling far behind. These countries are asking us to catch up.”

Regulators in Japan and the United Arab Emirates have also moved toward regulating the space while Hong Kong and the United Kingdom are looking at how they approach crypto.

UPDATE (April 28, 2023, 22:49 UTC): Adds comments from McHenry and Lummis on banking and international competition.