The vote is here.
When I first started covering the beat, Sam Bankman-Fried was wandering the halls of Congress, doling out donations to anyone who would take a meeting in the hopes of advancing crypto legislation. The strategy almost worked, with the Senate Agriculture Committee close to advancing a bill right before the collapse of FTX tanked its prospects. After the string of high-profile collapses, and crypto turning into a punching bag in congressional hearings, the industry's political fortunes seemed dead in the waters.
Over a year later, the blockchain sector has seen a stunning reversal of fate. Today, the House will vote on a comprehensive piece of regulation that would establish a supervisory framework around the "market structure" of crypto, meaning it would delineate the separation of powers between the Securities and Exchange Commission and the Commodity Futures Trading Commission, as well as create rules of the road for other key questions such as commingling and custody. All signs point to a favorable outcome, although the bill faces a less rosy future in the Senate.
Regardless of whether the bill—called the Financial Innovation and Technology for the 21st Century Act, or FIT21—will become law this session (probably not), it is a remarkable achievement for the sector. So what changed? Crypto maintained political allies in D.C., chief among them Rep. Patrick McHenry (R-N.C.), the chair of the House Financial Services Committee, who is retiring at the end of this term. Even if McHenry lost his partner across the aisle, ranking member Rep. Maxine Waters (D-Calif.), he was able to get his party—and a handful of Democrats—over to his side.
That political calculus grew even easier after last week's vote in the Senate on a more modest piece of crypto legislation to overturn a controversial SEC bulletin that would restrict banks' ability to hold crypto. The bill received surprising bipartisan support, including from Majority Leader Chuck Schumer (D-N.Y.). In response, House Democrats decided not to whip—or urge "no" votes—against FIT21. Yesterday, American Prospect reported that even Rep. Nancy Pelosi (D-Calif.) may support the bill. In a briefing yesterday, senior committee staff involved in drafting the legislation said that there has been a "consistent amount of engagement" since last summer, when FIT21 was voted out of both the House financial services and agriculture committees, but the waters have certainly become less choppy.
The bill still faces its challenges. SEC Chair Gary Gensler released a long statement this morning arguing that FIT 21 would erode nearly a century of investor protection laws, and key figures including Waters remain strongly opposed to the legislation. And despite former President Donald Trump's attempt to turn crypto into a wedge issue—alongside tens of millions of dollars in donations from the sector—it is still unclear whether voters will be motivated by the prospect of financial regulation. While today's vote marks a significant step forward for crypto, the sector will have to maintain that momentum past the election into the next Congress if it has any hope of enacting the legislation.
In a press conference with reporters yesterday, McHenry was bullish. "My time in Congress is coming to an end, but the policy is not coming to an end," he said. "This policy set is inevitable. It will happen, just like the world of crypto is here to stay, though it's been proclaimed dead many, many times."
Leo Schwartz
leo.schwartz@fortune.com
@leomschwartz
