As Congress stumbles toward a government shutdown, Sen. Kirsten Gillibrand (D-N.Y.) is still rallying colleagues in the Senate to take up crypto regulation.
Gillibrand's Senate Agriculture Committee came close to advancing a digital assets-focused bill last year, but the collapse of the infamous FTX exchange led many Democrats in both the House and Senate to slow down the legislative process. Gillibrand remains one of the few Democrats in Congress calling for new crypto regulation, and worked with her Senate GOP colleague Sen. Cynthia Lummis (R-Wy) to unveil a revamped digital assets bill in July.
Speaking with Fortune at the Mainnet conference on Friday, Gillibrand said she's working to convince fellow Democrats—especially on the key Senate Banking Committee—to make crypto a priority. "I don't think it has to be a partisan issue," Gillibrand said. "I'm optimistic that through conversation, and through socialization of the ideas that are in our bill, it will become more bipartisan."
A legislative vacuum
As state and federal agencies jostle over the right to supervise the Wild West crypto industry, digital asset regulation remains a hot-button issue in Congress. While FTX founder Sam Bankman-Fried was still roaming the halls of the Capitol, comprehensive legislation seemed like a real possibility. Multiple bills floated around the House and Senate, including the first version of Lummis and Gillibrand's proposal.
Bankman-Fried's fall from grace spurred many lawmakers to remove crypto from their agendas and distance themselves from the once-prodigious donor. The House Financial Services and Agriculture Committees proved an exception, with Republicans in both pushing for stablecoin and market structure bills.
Even with both bills advancing out of committee, and likely gaining approval in the full House due to its Republican majority, the Senate remains a roadblock. The legislative body is filled with crypto skeptics, including Sen. Elizabeth Warren (D-Mass.) and Chair Sherrod Brown (R-Ohio) of the Senate Banking Committee.
Gillibrand told Fortune she continues to have conversations with Brown about crypto and blockchain technology. Specifically, she has asked him to have a hearing or markup—a process where committees deliberate over proposed legislation—over the stablecoin provision in her bill with Lummis.
"That's something he's considering," she said, adding that she hopes to have markups by the spring and a vote on the bill by the end of this Congress, which concludes in January.
Gillibrand admitted crypto isn't a top priority for the Senate Banking Committee, a fact made clear in its recent oversight hearing with Securities and Exchange Commission Chair Gary Gensler. Without buy-in from the banking committee, any bills that might advance out of the House Financial Services Committee would wither in the Senate.
One possible solution would be reaching a compromise on one of the Senate Banking Committee's priorities—cannabis banking reforms—where the House and Senate committees would take up each other's bills. Gillibrand said that she has spoken with Brown about a compromise along those lines, although declined to comment on his openness to the proposal.
Other pathways
Lummis and Gillibrand's bill, called the Responsible Financial Innovation Act of 2023, contains provisions that sit across multiple committees in the Senate. Its likeliest path forward would be for different committees to take up individual sections or add them to existing bills.
One key section proposes to define most crypto assets as commodities and put them under the jurisdiction of the Commodity Futures Trading Commission, expanding the oversight of the federal agency. Gillibrand said that the section, which would include the definition of a digital commodity, could become part of the once-every-five-years farm bill, on which her Senate Agriculture Committee is deliberating this year.
Similarly, she expressed optimism that elements of her bill, especially related to stablecoin regulation, could complement the House version if it comes to the Senate.
With more comprehensive crypto legislation seemingly stalled, another priority has emerged as a bipartisan issue among lawmakers—national security-focused anti-money laundering regulation. While Warren has been pushing an AML bill that has drawn criticism from the crypto industry, Gillibrand said that a toned-down amendment that she worked on with Warren as part of a national defense funding bill is more likely to pass.
"Some of the provisions that were in their bill and not in our bill are inapplicable to the industry—they just can't be easily applied and can't actually work," she told Fortune. "There's no need to have another AML bill."
For now, the main question mark is whether the government will shut down amid a funding stalemate between Congressional Democrats and Republicans. Gillibrand said that a shutdown would delay progress on crypto legislation.
"Speaker McCarthy has not been able to get control of his caucus, and it's harming America," she said.
