Senate Democrats negotiating a major cryptocurrency bill told key Senate Banking Republicans this week they hope to strengthen prohibitions on stablecoin yield payments and further address concerns about illicit finance, according to a summary of a counteroffer obtained by POLITICO.
The document, which summarizes requests that Democrats sent to Senate Banking GOP negotiators on Monday, came after Republicans sent an initial offer late last week for a compromise market structure bill, titled the Responsible Financial Innovation Act.
“We have accepted significant portions of RFIA – including meaningful concessions on major elements like token classification – in an effort to meet Republicans where they are,” the summary of the Democratic counteroffer said. “However, despite these substantial compromises, the offer Republicans sent on December 4th still fails to meet the core principles Democrats released in September.”
The group of Democrats working on the crypto bill “is concerned that payments of interest or yield on stablecoin balances could pull deposits from the banking system, especially from community banks that play a pivotal role in supporting underserved communities and operate under Community Reinvestment Act obligations,” the document said. “Yield also incentivizes risky behavior and could threaten the financial system if a stablecoin were to lose its value.”
The document also said the working group is “committed to ensuring full slates of commissioners at the” agencies that will be tasked with overseeing digital assets under the bill, the Commodity Futures Trading Commission and the Securities and Exchange Commission.
It also said Democrats are pressing for “limits on elected officials and their families from issuing, endorsing, or profiting from digital assets while in office.” It additionally included an array of illicit finance provisions and token classification provisions that Democrats are seeking to include in the measure.
Banking Chair Tim Scott (R-S.C.) is pressing to hold a markup before lawmakers leave for the holiday break at the end of next week, but Democrats are pushing back, casting uncertainty over the timeline for the effort. Crypto-friendly Democrats exited a closed-door meeting Wednesday morning pessimistic about the possibility of a committee vote next week.
“We’re not ready for it,” said Sen. Catherine Cortez Masto, a centrist Nevada Democrat who sits on the Banking panel. “We’ve still got to work through illicit activity, money laundering issues that need to be addressed.”
Sen. Mark Warner (D-Va.), a senior Banking Committee member, said “we have wide swaths where we don’t have agreement — even any language.”
A spokesperson for Scott said in a statement that “Republicans on the Senate Banking Committee have spent months negotiating in good faith, circulating multiple rounds of bipartisan text, soliciting extensive stakeholder feedback, and feedback from their Democratic colleagues.”
“Chairman Scott remains committed to a bipartisan path forward, but progress requires coming to a compromise on legislative text, not press statements or shifting objections,” said the spokesperson, Jeff Naft.
The comments come amid a flurry of crypto activity on Capitol Hill. Sen. Ruben Gallego met Wednesday with White House crypto adviser Patrick Witt, along with staff from the Treasury Department.
Lawmakers involved in the talks are discussing a potential bipartisan member-level meeting on Thursday, according to two people with knowledge of the matter who were granted anonymity to discuss closed-door negotiations. Democrats are also set to meet separately with big bank CEOs on Thursday about the crypto bill.
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