Posted October 28, 2024 at 3:57 pm EST.
Presidential election odds have been driving cryptocurrency fluctuations in recent months, demonstrating how investors believe the outcome may affect the future of the industry. But crypto legislation starts in Congress, making certain Senate and House Committees crucially important for the industry to see tangible progress.
It’s not always clear how an election will change committee leadership at first blush, however. The average voter chooses who to support based on the individual politician’s perspectives, not necessarily the political chess of who will take what role in political leadership.
Understanding the political maneuvering is a lobbyist’s job. So we talked to a handful of lobbyists and other policy experts to provide you with the full breakdown.
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Republican vs. Democrat Committee Rules
As a general rule, the current chair of a committee remains in that post if their party continues to control the relevant chamber of Congress. If control of the chamber flips, the most senior member of the minority party, aka the “ranking member,” typically becomes chair.
However, Republicans and Democrats have very different processes for deciding who is placed into those top roles. Democratic leadership is fairly predictable, because, by and large, committee appointments follow seniority. If the most experienced member retires or loses their election, the next most experienced takes their place. This can sometimes get complicated, however, when the next-most-senior member chooses to chair a different committee, as congresspeople cannot helm multiple committees at the same time.
Republicans, meanwhile, only allow a politician to be ranking member or chair for a total of six years. They also consider more factors when choosing who will lead their party on a committee, such as their political style, relationships with other party members, and ability to fundraise. There isn’t a strict formula, and senators vote by secret ballot.
Each party’s policies have their pros and cons. The Democratic process elevates the most experienced politicians, but that can make leadership less responsive to party dynamics. It also can limit the party from elevating fresh, young faces.
The Republican process, meanwhile, embraces change and incentivizes politicians to build relationships. However, it can put the party in a bind when the best candidate for chair has simply aged out. It can also mean that if a congressperson is the minority ranking member for their full six-year term, they get locked out of ever holding the chair position.
It’s also worth noting that ranking members have much more power in the Senate than they do in the House due to the way that legislation is formed. In the Senate, the minority party in general has much more leverage, because they have the power to filibuster. Senate members also have the ability to attach amendments that are not germane to the main topic of the bill in many cases, while in House members can’t. They generally have to make a “point of order,” or a formal objection, against an amendment before debate on it begins. This forces much more collaboration in the Senate than House, and means that the opinions of Senate ranking members are taken more seriously when a committee is drafting legislation to avoid delays later in the process.
Senate Committee on Banking, Housing, and Urban Affairs
The Senate Banking Committee got a lot of attention in crypto this year because it, along with its House of Representatives counterpart, the Financial Services Committee, oversees the SEC. Like the name suggests, its purview also includes legislation related to banks, price controls, deposit insurance, federal monetary policy, and related topics. Many of the laws that have originated out of this committee are applied to crypto today, while new laws having to do digital asset market structure would also go through this committee. This includes bills like the Financial Innovation and Technology for the 21st Century Act (FIT21) and stablecoin legislation.
Leadership
Because Democrats control the Senate, Ohio’s Democratic Senator Sherrod Brown is currently chair of the Senate Banking Committee. He has been fairly hostile to crypto, voting against key legislation like that to overturn SAB 121, a controversial SEC accounting guideline which effectively requires firms to list crypto assets on their balance sheets, and focusing his statements on the use of crypto by terrorist organizations and fraud.
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Brown is running in a tight race against candidate Bernie Moreno to represent Ohio in the Senate. Crypto interest groups like Fairshake have thrown their support behind Moreno, who is seen as supportive of the industry due to having created a blockchain-based car title tracking business and several pro-crypto industry statements. However, if Brown loses his seat, and Democrats win the Senate, it is likely that Elizabeth Warren would take over as chair.
The current Ranking Member, South Carolina Senator Tim Scott, would almost certainly become chair if Republicans win the Senate. He has been outspokenly supportive of the crypto industry, voting in favor of the resolution to overturn SAB 121, co-sponsoring the Equal Opportunity for All Investors Act which expanded the definition of an accredited investor, and criticizing SEC Chair Gary Gensler.
House Financial Services Committee
The House Financial Services Committee, as counterpart to the Senate Banking Committee, is also crucial for crypto. FIT21 started in House Financial Services this year, before it went for a full house vote. It is also likely where stablecoin legislation would originate, driven by support from current Chair Patrick McHenry.
Read More: Gensler Grilled in Congressional Hearing Over SEC’s Approach to Regulating Crypto
Leadership
North Carolina Representative Patrick McHenry is retiring at the end of this session, leaving four Republicans in the running to replace him: Arkansas Rep. French Hill, Kentucky Rep. Andy Barr, Oklahoma Rep. Frank Lucas, and Michigan Rep. Bill Huizenga. If Democrats win, it is almost certain that the chair would be filled by current ranking member, and former chair, California Rep. Maxine Waters.
Waters has been warming up to crypto legislation, saying that “crypto is inevitable” and that she would reach across the aisle to find a compromise on a stablecoin bill. Each of the Republicans would likely also be positively oriented towards crypto, albeit with varying political strategies.
Hill and Barr are considered the top contenders for committee leadership on the Republican side, but have distinctly different approaches. Hill made the commitment on Unchained that the first two bills he would prioritize as chair would be on stablecoins and crypto market structure, two top initiatives for the industry. He also has a record of being able to reach across the aisle and find bipartisan compromise.
Barr, meanwhile, seems more willing to go on the offensive than Hill, previously taking an aggressive stance towards Gary Gensler on several occasions. If Vice President Kamala Harris wins the presidency and keeps Gary Gensler as SEC Chair, or appoints someone Republicans see as unfit, Republican Congress members may prefer someone who is willing to be tough on SEC oversight. Crypto legislation also appears to be a top priority for Barr, though he hasn’t made the same public commitments Hill has, and historically been more focused on rural banking issues.
Huizinga is also highly critical of Chair Gensler, and is willing to go on the offensive, though his focus has been more on capital markets. Frank Lucas, meanwhile, has prioritized other issues, like SEC rulemaking, though he still is considerably positive towards crypto. He also has a history on the House Agriculture committee and the House Committee on Science, Space and Technology, where he is currently chair, showing he has experience in leadership positions.
Read More: Congressman French Hill on Crypto and His Top Pick for the Next SEC Chair
Senate Agriculture Committee
The Senate and House Agriculture Committees are important for the crypto industry because they are responsible for CFTC oversight. Both would play a significant role in a market structure bill that gives the CFTC any amount of regulatory authority over crypto, while they also have power to encourage the CFTC to take a more aggressive or relaxed stance on cryptocurrency commodities enforcement. Multiple lobbyists also explained that these committees’ members are eager to take up cryptocurrency as a key issue, because it’s more politically exciting and “sexy” than the agriculture committees’ primary focus, farming.
Leadership
If Democrats maintain control of the Senate, crypto will lose a key advocate, as Democratic Michigan Senator Debbie Stabenow, who wrote a crypto bill earlier this year which would have expanded the CFTC’s role regulating cryptocurrency, is retiring. The next most senior Democratic member on the committee who is available for the role is Minnesota Senator Amy Klobuchar who, despite pressing the CFTC to more aggressively oversee cryptocurrency earlier this year, also said she would support the creation of a market structure bill.
If Republicans gain control of the Senate, it is almost certain that the ranking member, Arkansas Senator John Boozman, will become chair. He has consistently supported having the CFTC regulate digital assets, and was rumored to have been working with Stabenow on her market structure bill.
House Agriculture Committee
The House Agriculture Committee, for the reasons stated above, is also crucial for crypto. It additionally has a subcommittee on commodity markets, digital assets, and rural development, which workshops legislation having to do with digital commodities exchanges and CFTC oversight amongst its other responsibilities.
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Leadership
It is fairly easy to predict who would be chair of the House Agriculture Committee: if Republicans maintain control of the House, it will continue to be Pennsylvania Rep. Glenn “GT” Thompson, and if Democrats gain control, it will be Georgia Rep. David Scott. Thompson has been very supportive of the industry, ahead of the curve in writing his own draft of a crypto market structure bill in 2021, while Scott has been more critical of the industry, highlighting ample consumer and investor protection concerns.
More complicated, however, is the chairmanship of the subcommittee. If Thompson is chair, it is likely that the current subcommittee chair, South Dakota Rep. Dusty Johnson, will maintain his position. However, there is a rumor in Washington that Johnson could move up in Republican leadership, in which case a different member, like Georgia Rep. Austin Scott or Oklahoma Rep. Frank Lucas could take his place — sources who spoke with Unchained were divided in their predictions.
Even less clear is what happens within this subcommittee if Scott is chair. A committee chair has the power to change membership within subcommittees, or even rename a subcommittee and change what it has power over, if they so choose. That means Scott could theoretically remove members who are more supportive of the industry, if he wanted to be that aggressive. If he doesn’t, next in line is outspoken crypto supporter and Colorado Rep. Yadira Caraveo, who is in a tight political race this November. Behind her in order of seniority is Rep. Don Davis.
In short, this subcommittee is a wild card.
Senate Finance Committee
The Senate Finance Committee and House Ways and Means Committee dictate tax policy — and with the Tax Cuts and Jobs Act enacted by former president Donald Trump expiring in 2025, these committees are set to be in the spotlight at the beginning of the next session. An unrealized capital gains tax is the biggest issue the crypto lobby opposes.
Leadership
Leadership for the Senate Finance Committee is also predictable, as neither the current chair, Oregon Democrat Ron Wyden, nor the Ranking Member, Idaho Republican Mike Crapo, are up for reelection. If Democrats win, Wyden, one of the Democrats who is outspokenly supportive of the crypto industry, will almost certainly be chair. If Republicans win, Crapo will be chair. One lobbyist explained that Crapo hasn’t made cryptocurrency a core part of his political identity because it’s not a major electoral issue in his home state of Idaho, but he is quietly supportive of tax legislation that supports industry priorities.
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House Ways and Means Committee
The House Ways and Means Committee is important for tax policy just like the Senate Finance Committee. It’s also worth noting that tax bills themselves are often a grab bag of disparate policy priorities, requiring a lot of compromises and horse trading between the companion House and Senate committees before they go to a floor vote. If a policy has a significant revenue raising component, the House Ways and Means Committee takes the lead.
Leadership
If Republicans control the house, Missouri Rep. Jason Smith will remain chair. Though he hasn’t said much about crypto publicly, he has consistently voted in support of laws the crypto industry supports. If Democrats are in power, the current Ranking Member, Massachusetts Rep. Richard Neal will become chair. Neal voted against FIT21, the House Joint Resolution to overturn SAB 121, and the CBDC Anti-Surveillance Act, but also has a reputation for striking compromises across party lines, so crypto lobbyists who spoke with Unchained aren’t particularly concerned about him assuming power.
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