NEW YORK, March 14, 2024 — A comprehensive bill regulating the cryptocurrency market could be signed into law before Memorial Day, according to former House Financial Services Chair Patrick McHenry and White House advisor Patrick Witt. The optimistic prediction, shared at the Ondo Summit in New York City, signals growing momentum for landmark crypto legislation in Washington.
Legislative Momentum Builds in Washington
Optimism is rising among lawmakers and industry leaders regarding the potential for a sweeping crypto bill.
- McHenry and Witt discussed the increasing support for a crypto market structure bill, despite ongoing debates surrounding yield, decentralized finance (DeFi), and ethical considerations.
- McHenry anticipates a finalized bill reaching the president’s desk by Memorial Day.
- Witt stated that President Trump has made the legislation a priority following the passage of the Genius Act.
The White House is actively involved in narrowing the scope of the bill, with recent meetings yielding “new areas of agreement” on key issues, Witt explained. The administration’s focus is now on translating broad principles into concrete legislative language, ensuring the final product can withstand scrutiny from both the Senate and the House.
Stablecoin Yield Remains a Key Obstacle
The most significant hurdle to finalizing the legislation centers on the contentious issue of stablecoin yield. While there’s broad consensus on prohibiting deceptive marketing practices—specifically, falsely advertising stablecoins as FDIC-insured—disagreement persists regarding whether centralized exchanges should be permitted to offer passive yield on idle stablecoin balances.
Banks, particularly community lenders, view yield-bearing stablecoins as a potential threat to their deposit funding. Conversely, crypto firms argue that offering yield is crucial for attracting and retaining users on their platforms.
DeFi is Foundational to Future Legislation
McHenry emphasized the critical role of decentralized finance (DeFi) in any comprehensive crypto market structure. He asserted that legislation “doesn’t work without DeFi,” highlighting the efficiency, transparency, and lower costs inherent in decentralized systems compared to traditional finance. He pointed to tokenized lending products, which he noted are already cheaper than traditional securities lending, as evidence of strong market demand for DeFi solutions.
Ethics Concerns and Political Considerations
Ethics concerns are present but may not derail the bill’s progress. McHenry proposed that ethics rules should be applied universally and permanently to all officials, rather than targeting any specific administration or family. Witt acknowledged that some Democratic proposals imposing strict restrictions on officials’ spouses were “grossly over-scoped.” Both officials suggested a more limited ethics compromise could garner bipartisan support, though Republicans are prepared to move the bill forward on a partisan basis if necessary.
A Compressed Timeline for Passage
Legislative teams are currently “trading paper” and refining the specific statutory language of the bill. The White House is urging banks and crypto firms to engage in good-faith negotiations. McHenry indicated that Senate action could occur before Easter, potentially setting the stage for a swift final passage of the legislation.
Watch the discussion from the Ondo Summit here.
