Crypto bill advances in Senate committee despite Democrats’ Trump, DeFi concerns

US Senators in the Agriculture Committee advanced crypto market structure legislation along party lines on Thursday.

Republicans voted to advance the bill, which details rules for the trading of so-called digital commodities and includes protections for developers of decentralised financial protocols.

“In order to protect American consumers, onshore innovation, and allow US businesses to continue to grow and prosper, we must grant the CFTC regulatory authority over the spot market trading of digital commodities,” Committee Chair John Boozman, a Republican from Arkansas, said ahead of the vote.

“Advancing this bill is the first step, and there are many steps to come in achieving those goals.”

Familiar fault lines emerged during the vote, with Democrats saying they couldn’t support a bill that allowed President Donald Trump to enrich himself with crypto as he pushes for a bill that has the potential to bring the asset class into the mainstream.

Democrats also said they wouldn’t support a bill that failed to guarantee Democratic representation on the Commodity Futures Trading Commission, one of two key financial regulators in the US.

The body is currently led single-handedly by Trump appointee Michael Selig. Historically, the CFTC and other regulatory commissions have had a mix of both Democrats and Republicans.

One senator even suggested decentralised finance remains a sticking point.

“We keep talking about this thing called DeFi. Go and have a town hall and talk to your constituents about DeFi and see how many of them are going to be able to talk about it with clarity,” Senator Ben Ray Luján, a Democrat from New Mexico, said.

“There are loopholes that terrorists and cartels are using today that the United States knows about,” he later said, adding that the details weren’t widely known because such reports had been classified.

The road ahead

Even as Republicans advanced the bill, its wider prospects remain in doubt. A companion bill in the Senate Banking Committee, which details which digital assets should fall under the purview of the Securities and Exchange Commission, was scheduled for a similar vote earlier this month.

But that vote was cancelled at the last minute after Coinbase CEO Brian Armstrong said he could not support the bill, citing its ban on stablecoin yield and its stringent anti-money laundering provisions, among other things.

Both bills will have to be combined before they can go to the full senate for a vote. And Senate rules mean any bill will need to secure bipartisan support.

Should a combined bill earn the chamber’s support, it will have to be reconciled with a version that passed the House of Representatives last summer.

Those obstacles will be difficult to scale in an election year.

The Trump conundrum

The Trump family’s foray into crypto remains a key issue for Senate Democrats.

“The White House has made this infinitely harder,” New Jersey Senator Cory Booker, the bill’s lead Democrat negotiator, said on Thursday.

“I have had private conversations with republican colleagues and staffers that agree with me. … The fact that Donald Trump is grifting on crypto himself, it’s like me creating a Cory coin,” he added, calling it “ridiculous.”

Other Senators complained about the lack of Democrats on the CFTC.

“We can’t give the CFTC this broad new authority when it only has one Republican member,” Senator Amy Klobuchar, a Democrat from Minnesota, said.

Republicans rejected a series of proposed Democrat amendments, including ones that would limit federal officials’ ability to profit off crypto and that would bar crypto companies from receiving taxpayer-funded bailouts.

Boozman said the amendments were either beyond the scope of the bill or best handled by the Senate Banking committee.

Still, Booker said he was hopeful a crypto market structure bill could earn bipartisan support.

“What divides us here isn’t some fundamental disagreement on both sides,” he said. “We’ve got this short distance with a clear path forward.”

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.