Crypto Bills Face Setback as House Vote Fails to Advance

The second day of "Crypto Week" in the US House saw the Rules Committee engage in discussions on three significant crypto bills: the GENIUS Act, the CLARITY Act, and the Anti-CBDC Surveillance Act. The committee heard from representatives on these bills, but a procedural vote on Tuesday failed to advance further debate. The vote, which required a two-thirds majority, fell short with 196 votes in favor and 223 against, as thirteen Republicans joined Democrats in opposition.

The GENIUS Act, which focuses on stablecoins, passed the Senate last month with bipartisan support and is expected to pass in the House as well. However, it faces opposition from some Democrats who argue that it does not prevent President Trump and his family from profiting from USD1, a stablecoin tied to World Liberty Financial. During the Rules Committee hearing, Rep. French Hill defended the bill, stating that Trump is not the issuer of a stablecoin but an owner of a company that issued one. Hill also noted that the Senate had extensively discussed this issue, leading to its passage with 68 votes. Critics of the bill contend that it lacks sufficient anti-money-laundering and terrorism-financing protections. US-based stablecoin issuers generally support the legislation, with Circle, for example, applying to establish a national trust bank to align with the policy. Foreign issuers like Tether, however, face additional requirements under the GENIUS Act, including mandates for stablecoins to be backed by cash and cash equivalents and for issuers to file regular audited financial statements.

The CLARITY Act aims to establish the concept of "digital asset commodities" and divide regulatory authority between the SEC and the CFTC. This bill is more contentious within the industry due to its length and the various points of contention it raises. One key issue is the definition of sufficiently decentralized blockchains, which are considered commodities under the legislation. The Rules Committee allowed the bill to advance but noted that representatives would need to consider amendments.

The Anti-CBDC Surveillance Act seeks to amend the Federal Reserve Act to prohibit the central bank from issuing a retail central bank digital currency (CBDC). Proponents of the bill highlight its privacy benefits, arguing that a CBDC could grant the government excessive access to sensitive information. Opponents, however, contend that banning a CBDC could put the US at a disadvantage compared to other countries exploring this technology. Democrat Rep. Stephen Lynch criticized the bill as "an act of breathless stupidity."

With the procedural vote failing, the next steps for these bills remain uncertain. The House will need to find a way forward, potentially through further negotiations and amendments, to advance the debate on these critical pieces of legislation. The outcome of these discussions will significantly impact the regulatory landscape for cryptocurrencies and stablecoins in the US.