Sen. Kirsten Gillibrand (D.N.Y.) is “very optimistic” that the Senate Agriculture Committee’s latest bill regulating cryptocurrencies will move forward, even though Republicans have yet to reach an agreement with Democrats.
“Senators have been working pretty hard over the last six months on a bipartisan basis. We have two different bills,” Gillibrand said in an exclusive interview with CNBC.
He said one bill is in the Agriculture Committee, which oversees the Commodity Futures Trading Commission, and the other is in the Banking Committee, which oversees the Securities and Exchange Commission and banking issues.
“These types of digital assets have the characteristics of both a commodity and a security, so they require regulation by both commissions,” Gillibrand said.
Although the Democratic senator is not a member of the Senate Agriculture Committee, he has been involved in negotiations regarding the structure of the cryptocurrency market. She explained that two bills addressing different parts of the cryptocurrency market structure are being worked on simultaneously.
“I think the senators on the Banking Committee and the Agriculture Committee are working in good faith on a bipartisan basis,” he said.
On Wednesday night, the Senate Agriculture Committee released updated legislation that builds on a previously released bipartisan discussion draft. The bill would give the CFTC new powers to regulate digital assets.
Committee Chairman John Boozman (R-Ark.) acknowledged in a statement that “disagreements remain on fundamental policy issues,” but said the bill “is built on a bipartisan consultation draft with input from stakeholders and will require several months of work.”
“While we are disappointed that we were unable to reach agreement, we are grateful for the cooperation that has made this bill better,” Boozman said, adding, “Now is the time to move this bill.”
A hike in the Senate Agriculture Committee bill regulating digital goods is scheduled for January 27th.
The Senate Banking Committee’s hike hearing on draft regulations for digital assets was scheduled for January 15, but was postponed at the last minute due to opposition from the crypto industry, including Coinbase.
Asked if she thought the Senate Agriculture Committee hearing could also be delayed, Gillibrand told CNBC that there are still areas where bipartisan resolutions are needed, but she believes the price increase will happen on Tuesday.
Gillibrand noted that the Senate Agriculture Committee’s draft is still under consideration, adding, “I look forward to senators working in a bipartisan manner to amend the draft, making it stronger and improving it, and continuing negotiations in areas where there were no resolutions.”
He said the earlier draft submitted by the Agriculture Committee contained many bipartisan compromises, some of which were omitted. “My hope is that senators will go back to the drawing board and try to reintroduce some of the compromises that I thought were very strong,” Gillibrand said.
Senate Banking Committee bill pending
Bipartisan negotiations continue on the Senate Banking Committee’s draft Cryptocurrency Market Structure bill, according to R.S.C. Chairman Tim Scott.
“I have been speaking with leaders in the crypto industry, the financial sector, and my Democratic and Republican colleagues, and we are all working in good faith at the table,” Scott said in a statement.
A new date for the Senate Banking Committee’s hearing on the virtual currency market structure bill has not yet been set.
“People are going to be at work for the next few weeks,” Gillibrand told CNBC. “People want this to be over now.”
During an appearance on CNBC’s “Squawk Box” at the World Economic Forum’s annual meeting in Davos, Switzerland, on Tuesday, Coinbase CEO Brian Armstrong continued to press the Senate’s efforts on crypto legislation. He said the company’s legal team and executives had begun to notice “some pretty serious problems with the draft text” of the Senate Banking Committee’s bill, and there appeared to be no plan to fix those problems.
“We felt we had an obligation to advocate for our customers’ rights and say, ‘There are some issues here,'” Armstrong said.
In a post on X, Armstrong said the bill would be “significantly worse than the status quo.”
Armstrong also outlined some of the issues Coinbase had with the Senate Banking Committee’s draft proposal, including “an amendment that would kill stablecoin rewards and allow banks to prohibit competition.”
The Senate Banking Committee document would have prohibited stablecoin issuers from offering rewards for holding stablecoins. Instead, these rewards must be delivered through the completion of a transaction or rewards program.
The banking industry is asking Congress to close a loophole in the GENIUS stablecoin bill that prohibits stablecoin issuers from paying interest directly. Banks claim this will lead to an outflow of deposits from the insured banking system. Some cryptocurrency companies, particularly Coinbase, have pushed back on that claim.
Ms. Gillibrand was the lead Democratic senator on the GENIUS Act and helped guide the regulatory framework through Congress. President Donald Trump signed it into law in July.
Asked what he thought about the banking industry’s claims that there are loopholes in the GENIUS Act, he said, “I’m optimistic that we can find bipartisan, common-sense language that meets everyone’s concerns on this issue.”
“We thought we had it done at GENIUS, but if more work is needed, we will continue to work on it,” she added. “We have issued very strong language to the effect that while we have no problem with rewards, points and other programs, we cannot offer products like interest on stablecoins,” she said.
Gillibrand said lawmakers want to give the crypto industry a chance to show it can abide by the rules of the road, adding that lawmakers don’t want bank deposits.
“Stablecoins are not FDIC-insured, so we wanted to make sure consumers weren’t confused about what a stablecoin is and what dollars are in their bank account,” he said, adding that stablecoins have a variety of protections in place.
“We made sure that all stablecoins are backed by the U.S. dollar or U.S. dollar equivalent, so we thought the compromises and language we made in the bill were very strong,” Gillibrand added.
Republican ally announces retirement
The Democratic senator has been pushing for crypto legislation since 2022, when he and Sen. Cynthia Lummis (R-Wyo.) introduced the Lummis Gillibrand Responsible Financial Innovation Act, a bipartisan cryptocurrency regulatory framework.
In December, Lummis announced that he would step down at the end of his term this year. Lummis chairs the Senate Banking Committee’s Virtual Currency Subcommittee, which also led the passage of the GENIUS Act. Both senators are currently negotiating legislation as part of their support for the industry, which calls for broader regulation of digital assets.
“This is a huge loss for the U.S. Senate and a personal loss for me,” Gillibrand said of Lummis’ expected retirement.
Despite Lummis’ retirement, Gillibrand said her support for digital assets remains the same. She stressed that she is “committed” to cryptocurrencies because she believes they offer opportunities for entrepreneurship and innovation.
“We don’t want China or Asia or other parts of the world to benefit from these industries because we’re unwilling or unable to regulate them,” Gillibrand said.
“If you want to protect consumers and protect traditional financial services, the best way to do that is … to regulate it. That’s the only thing that will actually allow it to compete in the world,” she added.
Gillibrand emphasized that lawmakers must remain at the negotiating table and continue working in a bipartisan manner to create a comprehensive regulatory framework for digital assets.
