- Key insight: Senate Banking Committee Chairman Tim Scott, R-S.C., used his discretion to decide against calling up banks' desired changes to the yield compromise for a vote, meaning the legislation passed with language that bankers have lobbied hard against.
- Forward look: The legislation passed the committee 15-9, leaving it unclear whether proponents will be able to get the 60 necessary votes to bring the legislation to the full Senate floor, although the limited bipartisan support means that the measure could have sufficient bipartisan support.
- What's at stake: Bankers have long argued the legislation's prohibition on yield for stablecoins doesn't go far enough and could drain deposits from the banking system.
WASHINGTON — Crypto market structure legislation passed the Senate Banking Committee in a 15-9 vote after Republicans and key Democrats reached a bipartisan agreement during the markup.
But in a telling moment about the changing power dynamics in Washington, Sen. Tim Scott, R-S.C., the chairman of the Senate Banking Committee, refused to let
Scott said that the amendment offered by Sens. Jack Reed, D-R.I., and Tina Smith, D-Minn., as well as a raft of others, were thrown out for procedural reasons. He did, however, allow in the final hour a number of previously discarded amendments, notably from leading
But Scott flatly refused to let the bank yield provision, supported by community banks and large bank groups alike, be considered by the committee.
The legislation passed with the
Voting on the amendment would have forced senators, particularly Republicans who have long allied with the banking industry, to
Committee ranking member Elizabeth Warren, D-Mass., repeatedly argued with Scott to bring the yield provision, and another amendment from Sen. Catherine Cortez-Masto, D-N.M., concerning anti-money laundering that is backed by law enforcement groups, up for a vote.
"What is the harm in letting us vote two more amendments that we wanted to vote on, one that is supported by law enforcement and one that is supported by community banks?" Warren said at the markup. "We're not here to try to make this a longer process. You still have all the votes. You can keep them out, but we at least like to have an opportunity to vote on these two amendments."
"At 11:05, we informed your team that there was a bipartisan coalition asking for more amendments that I had taken out," Scott said in reply. "I decided to listen to the bipartisan conversation and come to the conclusion that it was worth moving on, and that is what I'm going to do."
Although Scott praised the process for the legislation as open and transparent, the yield portion of the bill was negotiated between lawmakers and in nonpublic meetings between some representatives of the crypto and banking meetings, as well
"The definition of working together at a markup is allowing amendments to be called up and voted upon," Reed said at the markup.
Sens. Ruben Gallego, D-Ariz., and Alsobrooks voted in favor of the legislation. Sens. Mark Warner, D-Va., Cortez Masto, and Raphael Warnock, D-Ga., voted for the last-minute amendments from Lummis, suggesting their votes could also be up for grabs in the full Senate. Sen. Lisa Blunt-Rochester, D-Del., voted for one of those three amendments.
The future of the Reed-Smith amendment, and the legislation as a whole, is still up in the air.
Both Gallego and Alsobrooks said that their votes aren't guaranteed on the Senate floor. The Senate needs 60 votes to invoke cloture to even vote on the bill; even if that threshold is reached, the bill will need to be reconciled with the Senate Agriculture version, and eventually, with the House CLARITY Act.
That said, Senate Majority Leader John Thune, R-S.D., could decide to file an amendment tree on the bill, as he's done with previous banking bills to avoid Republican senators from having to take a politically difficult vote on credit card swipe fee legislation.
"This is it," Warren told reporters after the markup when asked by American Banker if Democrats had a strategy for eventually getting a vote on that amendment. "The committee should have been the place, because ordinarily it is in the markup where every amendment is heard, including an amendment like this one. The community banks are really going to be in trouble if this bill passes as it is currently."
Bank groups have said they're continuing to work on the yield issue.
"The banking industry continues to believe that the Clarity Act should be strengthened further by tightening the prohibition on interest-like rewards for holding stablecoin while also allowing certain payment stablecoin transactions and activities to generate rewards," read a statement from the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum Independent Community Bankers of America and National Bankers Association. "Without the necessary guardrails, stablecoin offerings are expected to draw away bank deposits and threaten local lending and economic activity across the country. In that spirit, we will continue to work with senators in good faith to address this issue and improve the bill and its chances on the Senate floor."
ICBA head lobbyist Paul Merski said that he sees an opportunity to work with Thune on the issue, and that there are opportunities to shape the views of other senators who haven't been working on this issue in particular.
"The [majority] leader has been very sympathetic to working further on this legislation," Merski said. "This is one committee, it's a different ballgame when you get to the entire Senate floor and have to get to 60 votes and you're dealing with many other senators who haven't been engaged on this issue before."
