WASHINGTON — The 119th Congress is taking shape, and financial policy (in one form, at least) is back as a top legislative priority.
Lawmakers have been tinkering with various iterations of crypto legislation for years, the
But with the 119th Congress, that momentum is likely to accelerate. This Congress, which was gaveled in on Jan. 3, has an influx of crypto-friendly lawmakers, thanks in part to
President-elect Donald Trump has also
And as with FIT21 — which included provisions for crypto custody banking — crypto legislation is likely to have a big impact not just on fintech and digital assets companies, but for traditional financial institutions as well.
"With a pro-crypto president and bipartisan, pro-crypto Congress, we will likely see smart crypto policy make its way through Washington under the 119th Congress," said Blockchain Association CEO Kristin Smith. "As the United States continues to embrace crypto innovation, the door will also be opened for traditional financial institutions to engage and invest in crypto."
Crypto's newly expanded influence extends beyond the industry's traditional Republican allies.
More than half of senators received the most positive "A" rating from Stand With Crypto, a digital assets advocacy group. Those ranks include newly elected Democrats like Sens. Adam Schiff of California, Andy Kim of New Jersey and Ruben Gallego of Arizona.
Both Kim and Gallego will sit on the Senate Banking Committee, which will take on the first look at banking-related crypto legislation — and, perhaps more importantly, approve bank regulators who will likely be more open to the banking industry interacting with fintechs and digital asset companies.
"Banks will want to see if their regulators give them a little more freedom to engage in crypto-related activities," said Ian Katz, managing director of Capital Alpha Partners. "Some banks may feel more emboldened because of the change in government and regulators, but I suspect that a lot of banks will remain pretty cautious about crypto."
Leadership in both the House and the Senate is also decidedly more innovation-friendly. Sen. John Thune, R-S.D., is the new Senate Majority leader, taking over from Sen. Mitch McConnell, R-Ky., who has struck a tepid stance on the topic in the past.
Thune has been active in the crypto policy space, co-leading the Digital Commodities Consumer Protection Act in 2022, a bill that would have put the power to regulate many crypto assets under the Commodity Futures Trading Commission rather than the Securities and Exchange Commission.
In the House, Speaker Mike Johnson, R-La., has publicly supported FIT21 and legislation opposing central bank digital currencies, while Majority Leader Steve Scalise, R-La., and Majority Whip Tom Emmer, R-Minn., are also both likely to prioritize crypto legislation.
But while positive attitudes among party leadership is important, it's the
"Congress will eventually get back to work on crypto legislation, setting up a regulatory framework for the industry," he said. "I think it will take a while — like, most of this year — to get something through Congress, and even that's not guaranteed."
Crypto isn't the only industry that got a boost from the 2024 elections. The influx of crypto-friendly lawmakers also could signal opportunity for fintech products and services to get some legislative and regulatory relief.
"Given the results of the election, I think moderate Democrats as a whole can recognize the opportunity to work with Republicans to get things done, and that's why fintech, innovation and financial services may be something that bubbles to the top," said Phil Goldfeder, chief executive officer of the American Fintech Council and former aide of Sen. Chuck Schumer, D-N.Y., the current Senate Minority Leader.
Fintech and crypto-friendly regulators went hand in hand during Trump's last administration, and lawmakers who are open to crypto-friendly legislation often want to see obstacles lifted for other kinds of financial products as well.
"Does watching the politics and policy around crypto give me insight into the members and who I think will be targets for what we are trying to do?" Goldfelder said. "I think obviously, yes."
Fintech policies pursued by Congress could have a much more immediate impact for both the banking industry and consumers than crypto ones, he said. Goldfeder cited
"There are safe and responsible products that are being offered today that unfortunately get lost in the big bowl of fintech soup," he said. "That's the biggest challenge I have."
