Crypto chaos crashes the House

Politico

16-07-2025

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Quick Fix
The House has been thrust into a sudden state of crypto chaos.
Conservative hardliners staged an unexpected rebellion on the House floor that brought down a procedural vote to allow the chamber to take up a slate of digital assets bills, briefly hijacking a long-planned 'crypto week' from GOP leaders in a bid to avoid getting jammed by the Senate.
And then, in a story that is becoming increasingly familiar about this House Republican conference, President Donald Trump swooped in and got the holdouts to flip. This time, he apparently made quick work of it.
The president wrote on Truth Social late Tuesday that after a 'short' Oval Office discussion, the holdouts 'have all agreed to vote tomorrow morning in favor of the Rule,' referring to the procedural measure that the House must adopt to begin debate on legislation.
The surprise vote on the floor Tuesday represented another setback in an increasingly fraught GOP-led legislative push to enact industry-friendly crypto regulations that has become rife with drama and intra-party tensions on both sides of the aisle.
The main source of the GOP rebels' objection was ostensibly a move by House Republican leaders to accept a Senate-passed bill to regulate so-called stablecoins without changes. Some hardliners said they were concerned that the measure would become law without banning a central bank digital currency, which is a government-issued digital dollar that conservatives say would open the door to privacy invasions.
But the move was also indicative of broader frustrations among House conservatives over getting repeatedly jammed by the Senate. Republicans in the upper chamber forced the House to accept their approach to the 'big, beautiful bill' and are eyeing changes to a House-passed rescissions package.
'The House is kind of used to not really being given any deference when we send things to the Senate. There are people that are sort of frustrated with that,' said Rep. Warren Davidson, an Ohio Republican who sometimes aligns with conservative hardliners but voted 'yes' on the procedural vote Tuesday. 'Some of it's just an anti-just-take-whatever-the-Senate-sends-you-and-do-it sentiment.'
House GOP leaders, including Financial Services Chair French Hill (R-Ark.), considered packaging stablecoin legislation with a broader crypto market structure overhaul, but they opted to send the Senate's bill to Trump's desk as-is following a public pressure campaign by the president and Senate Republicans who want a quick win.
The House is set to vote today on the Senate stablecoin measure, known as the GENIUS Act, according to a statement Tuesday night from House Speaker Mike Johnson. He added that the House will advance additional crypto legislation — which includes Hill's sweeping market structure bill and a CBDC ban bill — 'in the coming days.' (GOP leaders had initially planned to vote on the GENIUS bill Thursday and the other two measures today.)
Now, all eyes will turn to House Democrats, who are expected to split over the bills. As your host reported Tuesday, GOP leaders are facing headaches with them, too.
Hill's market structure bill, the CLARITY Act, is in danger of winning fewer Democratic votes than a similar GOP-led proposal earned on the floor last year, an outcome that could damage the measure's viability in the Senate. The GENIUS bill, however, is poised for a big bipartisan vote.
'Stablecoin has often been less controversial than market structure,' Rep. Ritchie Torres (D-N.Y.), who supports both measures, told MM. 'And Donald Trump has made market structure more controversial, not less.'
IT'S WEDNESDAY — What do you make of this crypto mess? Let me know at [e-mail]. As always, send MM tips and pitches to Sam at [e-mail].
Driving the day
Fed Governor Michael Barr speaks at a Brookings Institution discussion on 'Booms, Busts, and Financial Regulation' at 10 a.m. … House Financial Services' National Security subcommittee holds a hearing on 'U.S. Policy on Investment Security' at 10 a.m. … Sen. Elizabeth Warren (D-Mass.) speaks at the Exchequer Club at 12:30 p.m. … The National Bureau of Economic Research holds its SI 2025 Digital Economics and Artificial Intelligence Conference beginning at 1:30 p.m. … House Financial Services' Housing and Insurance subcommittee holds a hearing on 'Modern Solutions to the Housing Shortage' at 2 p.m. …
PCAOB chair to step down — Public Company Accounting Oversight Board Chair Erica Williams told staff in an email Tuesday that she is stepping down from the top U.S. audit watchdog after SEC Chair Paul Atkins asked for her resignation, Declan Harty reports.
Williams, a former SEC staffer who took over as PCAOB chair nearly four years ago, will leave the board next week, according to the email, a copy of which was obtained by POLITICO. In her email, Williams wrote that while staff may have questions about what is next for the PCAOB, she does 'not have the answers you deserve.'
Bessent wants Powell out next year — Treasury Secretary Scott Bessent suggested Tuesday that Federal Reserve Chair Jerome Powell should step down from the central bank's board when his term as chair is up in May 2026. Powell's term as a Fed governor isn't up until January 2028.
'Traditionally, the Fed chair also steps down as a governor,' Bessent said in an interview on Bloomberg TV. 'There's been a lot of talk of a shadow Fed chair causing confusion in advance of his or her nomination. And I can tell you, I think it'd be very confusing for the market for a former Fed chair to stay on also.'
Trade
Concerns over Nvidia reversal — Lawmakers pledged to get answers after the Trump administration appeared to clear the way for reversing earlier curbs on the sale of some semiconductors from Nvidia and Advanced Micro Devices to China, per Ari Hawkins and Anthony Adragna.
'I'll be seeking clarification from Commerce regarding NVIDIA's statement,' the chair of the House Select Committee on the Chinese Communist Party, John Moolenaar (R-Mich.), said in a statement to POLITICO. 'I strongly supported the Commerce Department's decision earlier this year to restrict exports of the H20 chip to China.'
Inflation up, Trump still wants rates down — Inflation rose in June as Trump's tariffs began to push up the prices of certain goods, undermining his attempts to pressure Fed Chair Powell to lower interest rates, Sam reports.
Trump's tariff rush — Trump and Commerce Secretary Howard Lutnick are rushing to conclude an unprecedented number of national security tariff investigations, which is raising concerns among trade experts about the integrity of probes that could lead to levies on hundreds of billions of dollars' worth of imports in key sectors like commercial aircraft, microchips and medicine, per Doug Palmer.
On The Hill
Dodd-Frank turns 15 — House Financial Services Republicans continued to voice concern over the burdens that small and community banks face from restrictions under the Dodd-Frank law during a hearing exploring the past 15 years and the future of the law, Katherine reports.
GOP members of the committee pushed for Congress to regain additional control over the CFPB and FSOC. The panel has put forward three dozen bills for consideration regarding Dodd-Frank.
Small Business Democrats push against SBA policy changes — Small Business ranking members Sen. Ed Markey (D-Mass.) and Rep. Nydia Velázquez (D-N.Y.) pressed SBA Administrator Kelly Loeffler for answers on expected field office closures in 'sanctuary cities' and restricting 7(a) and 504 loans, and microloans exclusively to U.S. citizens.
'The combined loan-policy and office-closure actions are unacceptable and will hurt both immigrant communities and the U.S. economy,' the lawmakers write in the letter released Tuesday.
Senate confirms Pettit to senior Treasury post — The Senate confirmed Luke Pettit, former senior policy adviser to Sen. Bill Hagerty (R-Tenn.), by a vote of 69-30 to serve as Treasury's assistant secretary for financial institutions, per Adam Behsudi.
FSB chief Bailey backs Trump banking cop — The head of the Financial Stability Board is backing a former Trump-appointed banking regulator after a senior U.S. lawmaker called for him to be dismissed from the global financial watchdog, Kathryn Carlson reports.
In a letter to U.S. Sen. Elizabeth Warren, obtained by POLITICO, FSB chair Andrew Bailey said Randal Quarles, who last month was chosen to lead a worldwide review of post-2008 financial crisis reforms for the body, is 'a highly regarded previous Chair of the FSB.'
At the regulators
DOJ and CFTC drop Polymarket probes — Federal authorities have dropped a pair of investigations into the betting market startup Polymarket — some of the last vestiges of a Biden-era crackdown against the high-flying industry of prediction markets, per Declan.
The Justice Department and the Commodity Futures Trading Commission sent Polymarket formal letters saying they would be ending their probes into the company, according to a person familiar with the investigations who was granted anonymity to discuss the letters.
Wall Street
Dimon defends Fed independence — 'JPMorgan Chase CEO Jamie Dimon sounded Wall Street's clearest warning against the Trump administration's attacks on the Fed's Powell, describing the central bank's independence as crucial,' per the Wall Street Journal.
'I think the independence of the Fed is absolutely critical,' Dimon told media members in a call after the bank's earnings announcement. 'Playing around with the Fed can have adverse consequences, the absolute opposite of what you might be hoping for.'
—Trump vibe check: When asked whether the Fed's headquarter renovation saga was a fireable offense, he said: '"I think it sort of is.'
Jobs report
Eric Morrissette, a former acting under secretary of Commerce overseeing the Minority Business Development Agency during the Biden-Harris administration, and Narda Jones, former chief of staff at the Federal Communications Commission, have joined the Joint Center for Political and Economic Studies as fellows.