By Tomicah Tillemann and Chris Lehane
The battle for the House and Senate remains too close to call. However, it is clear that the margin of control in both bodies will be sufficiently narrow that advancing a meaningful legislative agenda will require support from Democrats and Republicans.
We’ll be discussing these legislative dynamics and the current politics of web3 in a Twitter Space today with a group of political experts including former John McCain spokesperson Niki Christoff, Democratic strategist Simon Rosenberg, and former Obama campaign press secretary Ben LaBolt. We hope you'll join us.
In the meantime, a few immediate takeaways:
Pending some internal discussions among Democratic committee chairs, the DCCPA may still advance to a markup (kind of like a public editing session) in the Senate Agriculture Committee. To be clear: the bill needs to be improved from the drafts that became public several weeks ago, especially as it relates to DeFi. However, in crafting legislation it is often the case that the meaningful changes come at the end of the process—therefore, we do believe it is important to engage as an industry to see if we can get the language to a point where it will address the important concerns that have been raised rather than just give up, not engage, and run the risk that the DCCPA is passed anyway, and in current form.
In our collective work to improve the bill, it is important to recognize that a key figure will be Ohio Senator Sherrod Brown. Sen. Brown is on the Agriculture Committee and Chair of the Senate Banking Committee. As such, he will likely be a central player in the work to improve the language, especially given that he has historically been focused on both consumer protection issues and policies to expand economic inclusion. We know nearly 20% of voters in Ohio own digital assets and that these are voters who are young, people of color and middle and working class. Going forward, it will be important for Senator Brown, as well as other members, to appreciate that their constituents own digital assets and care about forward looking policies when it comes to web3.
If it makes it out of the Agriculture Committee, the DCCPA will likely be attached to a “must pass” bill such as a continuing resolution to fund the entire government. This would likely occur in mid-December. Should this occur, the bill would not receive a stand-alone vote, but rather be bundled together with many other provisions, most of which will have nothing to do with digital assets. Lawmakers would then vote on the entire package.
In the unlikely (but possible) event Democrats maintain control of the House and Senate, there may be less pressure to move forward with legislation before the end of the year. Lawmakers will face many competing priorities, and some might welcome a bit more time to shape language around issues such as DeFi regulation.
The European Union's recent decision to slow walk rule making related to decentralized finance is providing some cover for American officials who are cautious about pushing extensive legislation too quickly before they have a deeper understanding of the opportunities and risks around DeFi. However, both policymakers and industry leaders increasingly acknowledge that it's time to get serious about creating responsible rules for the broader web3 ecosystem.
The next Congress will also have a chance to create clear rules for stablecoins. That issue is unlikely to come up for a vote prior to the end of the year, but it could be first in line for action when the House Financial Services Committee reconvenes in January.
The events of the last several days underscore that the U.S. has two paths. One option is to create regulations so web3 companies can operate in the U.S. under the rule of law that protects consumers, creates economic inclusion, and helps assure that the next generation of the internet is built here. The other path is to continue with unclear rules that are driving activity off-shore. This does not serve the interests of consumers, reinforces the status quo, and perpetuates a financial system that is not working for far too many. It also incentivizes technologists to build the next generation of the internet outside the United States. We believe there are important economic competitiveness and national security considerations at stake in this debate. We look forward to discussing all of this in today’s conversation.