Setback in Advancing Crypto Market Structure Bill, May 25 Seen as 'Deadline'

On April 27, there has been almost no public progress on the crypto market structure bill over the past month. While it is difficult to predict the outcome of the bill, the window for its passage is narrowing. Many actions surrounding the market structure issue—such as statements from SEC staff—are not permanent guidance. The SEC has time to issue rules that require public notice and comment periods, but this will take time. The market structure legislation aims to codify the goals of the crypto industry and regulatory rules into law, making it more difficult for future governments to overturn these rules. In other words, without the Clarity Act, we could very well still be having the same discussions years from now. Since at least last December, May 25, Memorial Day, has been viewed as the ‘deadline’ for legislative progress, as lawmakers will leave Washington for campaign activities after the summer, leaving little time for the crypto bill (or most other legislation). Before Congress adjourns, the House also needs to consider a bill providing funding for the Department of Homeland Security, while the Senate must decide whether Kevin Warsh will become the next Federal Reserve Chair. The crypto industry is eager for the bill to pass. Over 100 organizations signed an open letter last week urging the Senate Banking Committee to hold a hearing on the bill, which would be the first step in the overall passage process. However, it is still unclear how far the committee is from advancing. The issue of stablecoin yields continues to dominate discussions, and other unresolved issues remain unaddressed at least in the public domain. Even if these issues are resolved, the House will still need to vote on the bill again. Earlier this month, House Financial Services Committee Chairman French Hill stated that many unresolved issues surrounding stablecoins and DeFi sales practices have been addressed in the House version of the bill, and the Senate should be able to find consensus.