Ex-Senator Who Once Shepherded Crypto Legislation Sees No Path in Current Congress

Former Sen. Pat Toomey is pessimistic about legislation moving through this term, but it may be more likely in the next Congress.

AccessTimeIconSep 21, 2023 at 6:31 p.m. UTC
Updated Sep 25, 2023 at 2:43 p.m. UTC
  • One of crypto’s best friends in the previous U.S. Senate, Pat Toomey, says he doesn’t see how this Senate will move on crypto.
  • Coinbase’s policy chief counters that the lack of a clear position from Senate Banking Committee Chairman Sherrod Brown might be a good thing.

Former U.S. Sen. Pat Toomey, who tried and failed to push his own crypto legislation through Congress before leaving at the start of the year, can’t see how the current Senate will have any better luck, despite recent progress in the House of Representatives.

Though the digital assets industry is desperate for regulatory clarity in the U.S., and is fighting legal skirmishes with the Securities and Exchange Commission (SEC) while it waits for answers, the long-awaited congressional solution isn’t coming any time soon, Toomey predicted at a Georgetown Law seminar Thursday on national security and digital assets. And the fact that the House Financial Services Committee has cleared multiple crypto bills for floor votes probably won’t make a difference, he said, even if they’re approved by the overall House.

“I don't see a path forward in the Senate, regardless of how the vote goes in the House,” he said, though he thinks a bill on stablecoins would have the best chance.

Any crypto legislation likely needs to clear the Senate Banking Committee, where Toomey was the top Republican. But its chairman, Sen. Sherrod Brown (D-Ohio), hasn’t made any moves toward legislating, even as fellow members pitch crypto bills and the House Financial Services Committee keeps churning out its own.

Brown has been highly critical of the consumer dangers posed by cryptocurrencies, but he’s been careful not to mention or touch any specific legislative response. That may actually be a good omen, says Faryar Shirzad, the chief policy officer at Coinbase Inc. (COIN).

“He hasn't committed at all on what to do,” Shirzad said in an interview on Thursday. “I might actually take that as a really good sign,” he said, because despite Brown’s criticism, he hasn’t just dismissed it.

“Those of us who've been involved in legislation, it's really kind of a one-day-at-a-time exercise,” Shirzad said.

However, Brown urged regulators in a letter last week to use their existing powers to crack down on crypto firms skirting the laws – reinforcing Securities and Exchange Commission (SEC) Chair Gary Gensler’s view that his agency needs to deal now with the businesses in breach of securities regulations. And the SEC seems happy to comply with Brown, as demonstrated by its crypto enforcement chief saying this week that the regulator has every intention of continuing its enforcement assault against more industry players.

Toomey, who now sits on the global advisory council at Coinbase, sees some hope for resolving the major sticking point of stablecoin legislation: the fight over how the issuers should mainly be regulated, whether by the Federal Reserve or the state agencies. The Biden administration has been insistent, according to those familiar with the legislative negotiations, that the Fed have the dominant role.

“I do think it’s possible to reach an agreement with the administration,” he said. He added that “it’s not impossible to bridge that divide,” and he said he thinks Democratic lawmakers including Rep. Maxine Waters (D-Calif.), the House Financial Services Committee's ranking Democrat will get on board once the White House is happy.

Still, he said he doesn’t see the stablecoin effort surviving this Congress.

“In the next Congress, I think it's quite possible to get something done,” Toomey concluded.

Edited by Nikhilesh De.


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Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.