Crypto's Congressional Committees: A Primer
HODLpac Newsletter - February 2021, Part 2
The bull market continues, everyone is obsessed with NFTs, and life is good.
Let’s jump in to what you need to know about crypto-related politics and policy.
But first, if you don’t already, please follow us on Twitter: https://twitter.com/HODLpac
And join our Discord: https://discord.com/invite/fDxHZxJ
Now, here is what you need to know…
Crypto’s Congressional Committees: A Primer
The big news on Capitol Hill since our last newsletter — besides Trump’s second impeachment trial, of course — was committee assignments for the 117th Congress.
As you know, the purpose of this newsletter is to keep HODLpac members up to speed on the goings on in the world of politics and policy. There are two main reasons for this. First, because it is interesting stuff (if you’re reading this then you hopefully agree). And, second, because HODLpac is a community governed political action committee and it is important to educate ourselves before deciding which candidates to support in 2022.
One strategy that other issue-specific PACs use is to target members of relevant committees for donations. The idea is that doing so will open doors to further dialogue and closer relationships with the members that have the most direct oversight over a given policy area.
As such, today’s newsletter is about: the committees and subcommittees in the House and Senate that are most relevant to crypto, what storylines to watch within each of them during the 117th Congress, and some ideas for how HODLpac might act in the 2022 cycle.
House Financial Services (<— Link to Member List)
Coming out of the 2020 election, the Democrats held onto a 10 seat majority in the House of Representatives and, as a result, control of House Committee chairmanships too.
In the House Financial Services committee, this means that Rep. Maxine Waters still “holds the gavel” and the ability to set the agenda of the most relevant House committee for crypto-related regulation.
Conventional wisdom is that Chairwoman Waters and the Democrats on the House Financial Services Committee are anti-crypto. In some ways, this is true; for example, as reported here in CoinDesk, in December, Chairwoman Waters sent a letter to then-President-elect Biden outlining her priorities and urging him to undo some of the Trump administration’s actions, including the cryptocurrency-related guidance issued by the Brian Brooks OCC that would enable banks to use stablecoins, custody cryptocurrencies, and participate in public blockchain networks.
However, rather than being anti-crypto, Waters and the Democrats are better understood as merely having different priorities. Indeed, it is expected that the House Financial Services Committee will focus on:
Promoting diversity and inclusion in financial services, as evidenced by the creation of the Subcommittee on Diversity and Inclusion in the 116th Congress.
Climate change, as evidenced by comments in the aforementioned letter as well as the expected creation of a Climate Task Force (similar to the Fintech Task Force, which we certainly hope stays around).
Holding “big banks” accountable.
Those who want to see the cryptoeconomy embraced by our representatives in Congress often make the case for clearer regulation with pro-innovation language, i.e. “we need to promote innovation here in the U.S.” While those arguments are still valid and important to make, another two years of a Waters-controlled House Financial Services Committee means that the crypto community must double down on arguments focusing on financial inclusion, consumer empowerment via the ownership economy, and the fact that decentralized finance can enable a bankless future.
Along with supporting our champions with donations (i.e. the politicians who actively acknowledge and support crypto), it’s important that we attempt in good faith to convince those who don’t with arguments tailored to their views and facts that push back on misconceptions.
For example, the Gamestop hearing is coming up on Thursday, Feb. 18th.
Instead of viewing what might be said about curbing retail investment, for instance, as a threat to crypto (though it very well could turn out to be), we should view it as an opportunity to continue to make the case for alternative, decentralized systems (as we did in our last newsletter).
Of course, if there are opportunities to signal our dissatisfaction by supporting the primary or general election opponents of representatives who refuse our offer of such good faith engagement then so be it! HODLpac provides the crypto community with the tools to do just that.
Speaking of those who have refused to engage in good faith, Representative Brad Sherman (D-CA) is the Chairman of the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, which oversees the SEC, the securities industry, and general topics related to capital formation.
As readers here may know, Rep. Sherman has famously proposed banning “buying or mining cryptocurrencies” in the United States. He also has said:
Cryptocurrencies are a crock. They are popular with guys who sit around in their pajamas and tell their wives they're going to be millionaires
Insert the Michael Jordan “… and I took that personally” meme here.
Time will tell if Rep. Sherman has tempered his feelings towards cryptocurrencies in recent years.
This, of course, is a storyline worth watching for HODLpac as this is a subcommittee with particular importance to crypto-related topics.
The Subcommittee on Consumer Protection and Financial Institutions oversees all of the financial regulators as well as matters relating to consumer credit, access to financial services, and the safety and soundness of the banking system.
With the rapid growth of bitcoin and cryptodollar/stablecoin adoption by both retail consumer and banks, this subcommittee has increased relevance to crypto in the 117th Congress.
In the 2020 cycle, HODLpac donated to two members on this subcommittee — one Democrat (Bill Foster of Illinois) and one Republican (Ted Budd of North Carolina).
Ed Perlmutter of Colorado, the subcommittee’s new chairman, hasn’t been too vocal for or against Bitcoin and crypto-related issues. In 2018, he sponsored and led the passage of “The FinCEN Improvement Act” which required the Financial Crimes Enforcement Network (which we previously discussed in the context of self-hosted wallets) to coordinate with other countries about “cryptocurrency-related initiatives.”
Rep. Perlmutter’s district in Colorado includes the western suburbs of Denver, which is home to a fast-growing crypto scene. (Check out the videos from the recently concluded EthDenver conference.)
If you’re reading this and from the area, reply here and let us know - let’s talk!
The Subcommittee on National Security, International Development and Monetary Policy’s jurisdiction encompasses domestic monetary policy, international trade and finance, and matters pertaining to the IMF and Export-Import Bank.
One might think that Bitcoin has relevance to Congressional supervision of domestic monetary policy but the connection is not so direct, at least in the short term. The pressure that alternative, non-state money puts on central banks is unlikely to manifest into something significant in between Humphrey-Hawkins hearings.
Instead, the storyline to watch with this subcommittee is its role overseeing legislation regarding illicit finance. Rep. Warren Davidson, a long-time champion of Bitcoin in Congress, is on this subcommittee. Watch for him to lead the fight against the false narrative that Bitcoin and cryptocurrencies are used solely by criminals and terrorists.
The Senate side equivalent of the House Financial Services Committee is the United States Senate Committee on Banking, Housing, and Urban Affairs. This powerful committee has jurisdiction over “banking, insurance, financial markets, securities, housing, urban development and mass transit, international trade and finance, and economic policy.”
Shortly after we released our last newsletter, which praised the newly elected pro-Bitcoin senator from Wyoming — Sen. Cynthia Lummis — for her intention to create a Financial Innovation Caucus in the Senate to educate her fellow members on “cryptocurrency and digital assets,” we got the following great news:
We can’t understate how great this news is but we also shouldn’t rest on our laurels. There are a number of more senior Senators on this committee (and not on this committee) that haven’t been won over to our cause yet. Our work is cut out for us but this is an awesome development!
There are two more committees worth mentioning here:
The first is the House Agriculture Committee, which has jurisdiction over, among other things, the Commodities Futures Trading Commission. Here’s a useful link to the CFTC’s Bitcoin page on their website describing how they interact with digital assets. Also, listen to or read our podcast interview with Representative Stacey Plaskett from the US Virgin Islands to learn more about this committee’s relevance to Bitcoin and crypto.
The second is the House Committee on Appropriations, which is responsible for passing appropriation bills (i.e. the big behemoths that fund the federal government). In our very first Crypto in Congress interview, co-chair of the Congressional Blockchain Caucus Rep. Darren Soto (D-FL) described how that process works and how it can be used to help advance HODLpac’s goals.
“The Coming Decentralization of Everything,” Balaji Srinivisan on the Realignment Podcast
“Is The GameStop Trade Really A Political Rebellion?,” The Odd Lots Podcast
“Decentralized Social Networks,” Brian Flynn, Jamm Session
“NFTs make the internet ownable,” Jesse Walden, Variant Fund Blog
“How public-interest technologists can build government that works for everyone,” Michelle Shevin, Fast Company
“Why India Should Buy Bitcoin,” Balaji Srinivisan
“Decentralized Finance: On Blockchain- and Smart Contract-Based Financial Markets,” Fabian Schar, St. Louis Federal Reserve
“Ex-CFTC Chair Christopher Giancarlo Stumps for Digital Dollar,” Danny Nelson, CoinDesk
“SEC Commissioner Peirce Says Market Is Ready for a Bitcoin ETP,” Danny Nelson, CoinDesk