Today's HFSC Markups of the Digital Asset Bills

A couple of quick takeaways from watching the HFSC markups today around DAMS (now FIT ) and its prospects based on statements from today’s marathon House Financial Services Committee markup of digital asset bills (which is ongoing and voting scheduled for tonight).

(1) The Good: There has been some movement among Democrats with 5 Democrats coming out with statements of support at the hearing (Himes, Gottheimer, Nickel, Torres, Petersen). In particular, the statement from Himes was compelling and worth tuning into – he has pivoted his stance and come out strongly in favor – citing his significant engagement and opportunity to submit comments and have his concerns heard. 

TLDR: The movement here is a glimmer of hope that Democrats can join in genuinely bipartisan efforts and the division is less of a partisan issue than a division based on age.

(2) The Bad: The hold the SEC Chair has over Democrats is strong – many speeches given by Dems were clearly prepared talking points for representatives with low engagement on the bill (Rep. Beatty from Ohio whipped out a cell phone and read the talking points she was sent directly from there). Others engaged in bad faith mischaracterizations (Rep. Sherman – this bill allows Apple to tokenize its stock to avoid securities laws) and bombastic /dramatic statements with Rep. Lynch taking the cake with “I have been on this committee for 20 years and I can say unequivocally that this is the worst piece of legislation that has been presented for markup in 20 years”.

TLDR: we knew this was unlikely to pass the Senate but the odds arent looking great that it will pass the House (the Dems also presented 3 amendments).  Party lines are holding stronger than we had hoped. The HFSC is in recess until 7pm with voting scheduled tonight so we will see shortly how everything plays out… but even if it doesnt have the support to pass at this time, the draft bill can still (and likely will) form the basis of something that eventually passes.

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This is more of a big picture question, but assuming we do get another bull cycle, at what point do constituents start to get more vocal about the restrictions (or lack of clarity) that prevents them from participating in crypto? Is there a realistic possibility that this becomes a much more mainstream issue when prices start to make a run higher? Or do not enough people care to make any real waves...

I think the pressure has been mounting. I think we saw Warren pivot this year when her anti-crypto messaging wasnt resonating with her constituents... so that is something. We definitely have our work cut out to fight political apathy among younger voters to make more noise from a grassroots perspective (the pro-crypto crowd has historically been especially apathetic/down on politics) ... I think another issue historically is the space hasnt been in a position to coordinate as well as other industries (decentralized/competing factions) but over the last 1-2 years there have been more advocacy orgs working on this - including letter writing infra to make it easier to let your reps know how you feel with minimal effort. For instance, Coinbase put together resources like this: Coinbase legislative portal where you can look up and email your rep to support crypto.

Hey Sarah, any thoughts on why the democrats seem so staunchly anti-crypto.

Yea there are some really interesting dynamics at play - I think there are some really compelling arguments for crypto for dems, especially from an antitrust perspective and a hedge against too big to fail (should get traction with the anti-big bank crowd)... but these haven't taken hold. I think the biggest division is ultimately going to be age rather than political party though - the younger dems get it (Torres is pretty much becoming a champion) and others are coming on board... it is the older reps - some want immediate use cases (not potential ones) that help their constituents (read: the lower/middle-class, single moms, farmers, union workers etc) to get them on board and others are part of this contingent in the Biden admin that are fiercely anti-tech/finance and want the US to return to being an industrial power (reclaim worker/union votes) -- this group has done the most harm to crypto and is aligned with Gensler.