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Crypto Action in Senate Remains on Back Burner: Sources

source-logo  coindesk.com 21 February 2024 21:00, UTC

A rush of legislative proposals among Senate Banking Committee members, including from one of the chamber's biggest crypto critics, Sen. Elizabeth Warren, aren't poised for immediate action, according to people familiar with the panel's planning.

Committee Chairman Sherrod Brown is still in talks with the members about their ideas for dealing with criminality in crypto.

Despite keen interest from U.S. Senate Democrats such as Elizabeth Warren (D-Mass.) to deal with the illicit movement of funds in crypto, there's no immediate action planned in the committee that would need to get it rolling, according to two sources familiar with the plans.

Some Democrats on the Senate Banking Committee have been pushing legislation to address what they see as dangerous vulnerabilities for the abuse of crypto by criminals and terrorists, but the panel is busy with other priorities at the moment and isn't yet turning to crypto legislation, the people said.

When asked about the intentions of panel Chairman Sherrod Brown (D-Ohio), a spokesperson said that he "has made clear that cracking down on illicit finance is a priority for this Congress" and that he's "continuing to work with the members" on what they're putting forward on crypto money-laundering controls and related matters.

The next step is a markup – a process in which a bill is brought before the committee to be amended and approved before it can head to the floor for a vote. That's not currently on the panel's agenda, the people said.

However, a consensus has been building – illustrated by the members' bills – that this particular segment of crypto oversight is most urgent for the committee, unlike the House's priorities that have first focused on the structure of the digital assets markets and the regulation of stablecoins.

The legislative effort led by Warren would – among other things – extend anti-money-laundering (AML) requirements from the Bank Secrecy Act to providers of digital assets wallets, crypto miners, validators and other network participants, and the legislation is backed by a lengthening list of other prominent lawmakers. Additional bipartisan bills pushed by Sens. Mark Warner (D-Va.) and Jack Reed (D-R.I.) overlap, also aiming at getting a handle on the criminal use of cryptocurrencies.

Deputy Secretary of the Treasury Wally Adeyemo also lobbied lawmakers in November to provide Treasury officials with additional powers to reach across borders with enforcement and sanctions authority even beyond the activities of U.S. citizens – yet another consideration for Brown and other committee members.

Read More: U.S. Treasury Campaigning for Amplified Powers to Chase Crypto Overseas

In an October hearing, Brown said he wants to "crack down on the use of crypto to fund terrorism and evade sanctions," though no specific proposal has shown up yet on his agenda.

Any senators who are serious about making new crypto laws must also consider the viability of what's been moving through the House of Representatives. The House Financial Services Committee has approved multiple bills, including legislation that would outline crypto market structure and regulatory jurisdiction and another bill that would put guardrails around stablecoin issuers. Chair Patrick McHenry (R-N.C.) has said crypto oversight remains a priority for him even as he winds down his House career this year on his way toward retirement from Congress.

Warnings this week from the Chamber of Digital Commerce about the bill from Warren may be premature, one of the people said. The group's CEO, Perianne Boring, sent out a notice with the subject line, "URGENT: Cryptocurrency Under Threat," that warned that Brown may advance Warren's bill "effectively banning cryptocurrency in the United States."

Even if Warren's bill were approved at the committee level, it would likely need bipartisan momentum to clear the closely divided overall Senate. But the Massachusetts lawmaker's stance is unlikely to move the House Republican majority, which would have to be enlisted for any crypto money-laundering law to come out of this session of Congress.