Rep Patrick McHenry on Crypto's Big Week in DC

Bankless Nation, this is probably the biggest week for crypto in DC, the capital of the United States, uh, probably ever. Last week was a massive victory for pro-crypto legislation. You probably heard David and I talking about this on the roll-up. Basically, it was good news. An obscure accounting rule put in place by Gary Gensler's SEC was making it so US companies couldn't even custody crypto. That rule was actually repealed. It's called the SAB 121 repeal. And as we record this episode, that repeal, that bill, is on Biden's desk. He has the option to choose whether to let it pass or to veto it. Vetoing it will mean anti-crypto. Letting it pass might mean he is pro-crypto. And this week is even more consequential because the SEC is slated to either approve or deny the Ethereum ETF. That happens on Thursday, I believe. And on Wednesday, the U.S. House of Representatives votes on probably the largest pro crypto legislation that we've seen. It's called the Fit 21 Act, and our guest is Representative Patrick McHenry. He is one of the key champions behind this legislation, so we brought him on to tell us what it is and why he supports it. And just as a reminder, a vote yes on this bill in DC is pro crypto. A vote no on this bill signals anti crypto.

The stakes are pretty high for politicians these days, because I think the whole DC sphere is finally waking up to the fact that crypto voters are actually a powerful block in a very close election. So we have the potential potentially the power to swing elections. And we're potentially even splitting the Democratic Party right now along generational lines. That's one of the big takeaways from the SAB 121 bill. Uh, since 2024 is shaping up to be the first big crypto election, with both presidential candidates, Trump versus Biden, both have public statements aligning themselves either for or against crypto, something that I think we're going to see even more of as we approach the November election date. So let's go ahead and get right into this conversation with Congressman Patrick McHenry. But first, a moment to talk about some of these fantastic sponsors that make this show possible.

Bankless Nation, we are very excited to introduce our next guest, Congressman Patrick McHenry. He is the chair of the House Financial Services Committee. He's a key supporter of FIT for the 21st Century Act. This is a bill. It's major crypto legislation that's going to Congress for vote this week. Representative McHenry, welcome to Bankless.

Awesome to be with you. Uh fun to listen, but even better to be on with you.

Oh, it's amazing. I we're excited that you're a listener. I don't know how many listeners we have in DC, but uh there's more than a handful. I I guess the topic of DC is uh first and foremost in the crypto listener's mind this week because it feels like it's going to be a big week for crypto in DC. And I just want to remind people a few things as we get into this conversation. There's three big things that are happening this week. First of all, we got the SAB 121 repeal, which you've heard David and I talk about. That bill is going to Biden's desk. So it passed Congress. The big question is, is he going to let this pass or is he going to veto? We also have the SEC approving or denying the Ethereum ETF. That's a decision that's going to happen on Thursday, hopefully. And also we have this House vote on the Fit bill that Patrick McHenry here has been championing, and we'll talk about that. And I want to begin this conversation with I guess a broader conversation, which is um, how about crypto in DC? Like what's the temperature on crypto in DC? Lately, we've had even the crypto, sorry, the political media institutions like Politico saying maybe this is an election issue. There's been polls released by crypto industry groups that that show up to 20% of voters in key swing states identify crypto as a major issue. So the broadest of questions here to kick us off is crypto now a 2024 election issue?

Yes.

The thing that has shifted here is that an industry that they said was dead is not dead.

And once they said it was dead, it was undead. And they said it was dead again. So it's a whole wave of all this stuff.

And um,

you know, the the the last time you know DC assumed everything was dead was after FTX blew up.

And you have a lot of uh my colleagues that got uh

uh implicated in Sam Bankman's freed, uh Sam Bankman Freed's um

uh shenanigans.

I don't know the but I don't know the right way to say it.

It's a good word. We like that word. That's that's acceptable, yeah.

Shenanigans. That's better than uh using profanity, but um

but um

but it it keeps going and you have new innovations

that that are built on this new technology, and then people experience that because they the the populace asks elected officials about it.

I think what we see mainly is is uh is is a generational divide, less of a partisan divide

uh in the House of Representatives.

Those that have uh been more recently elected have been asked this question

uh in their election process, so they had to have an answer and they had to do a little work and research if they didn't otherwise know. And and those election questions make us better policymakers. The questions we get from constituents and from voters uh make us sharpen up our response to them, either in the affirmative or the negative, and really make us work through our arguments. So

I I think uh the fact that we actually have crypto voters,

uh, that is a powerful uh uh enabler of sound public policy and forces Washington to actually uh move.

I really want to get into this uh generational divide versus partisan divide. Uh and because that was really revealed to us, the broader crypto community, with this SAB 121 repeal. Um it was expected to be repealed, but I don't know if it was expected to be the vote to be that split. 6830 is a pretty strong divide, with a number of uh key Democrats actually voting for its repeal, more or less like defecting from like the stated Biden uh I might will intend to veto this. Uh and it really seems to have kind of split the Democratic Party between uh maybe the establishment Democrats, the Biden administration, the Liz Warren types, and the younger Democrats. Uh so what was previously uh the perception of the crypto industry was like it was Republicans versus Democrats on crypto, and it's now seems to be a different divide. Maybe you could kind of share some of your reactions to the 60 38 vote and how you think this has kind of changed the game when it comes to the DC's stance towards crypto.

Well, uh a couple of things. So, first

uh

for for folks that aren't familiar with the Congressional Review Act.

Right, which is like most people.

Um

the Congressional Review Act is um is a law that'll enables Congress to come in,

uh pass a bill

through the House, the Senate, and get it signed by the president repealing a major regulatory action.

So this happened at the beginning of the Biden administration.

In the beginning of the Biden administration, a Democrat House and Senate and a Democrat president repealed Trump

uh major regulations.

At the beginning of the Trump administration, they repealed major, uh we repealed major pieces of Obama's regulatory policy put in place last year in office.

This has been rarely done.

We used the Congressional Review Act to stop the Securities and Exchange Commission's accounting rule,

which is a very precise thing. Accounting rules usually don't get congressional debate.

They don't actually get debate in society because they're really common sense, largely driven by common sense on how you treat assets, how you protect assets, in this discussion,

or how you account for assets and liabilities in the broader sense on accounting policy.

For us to

move legislation out of my committee,

repealing a staff accounting bulletin

out of the Security Exchange Commission

seems very particular,

doesn't seem like it's big policy, but when you explain it and the impact it has.

To the basically says your crypto is not protected like any other asset.

A commodity or securities actually are protected. Um

you have uh even your car is at your car title's better protected uh than uh what the Securities Exchange Commission have put in place with a staff accounting bulletin.

So, number one,

for us to repeal an accounting bulletin means it has to be so egregious and so dumb.

Number one.

Number two, to get Democrats to vote to repeal a major regulation from a Democrat,

or Republican versus unrepublican, right? Is a major thing, especially in our current politics. We had 21 Democrats, and then we had uh

um you know over 10 in the Senate do the same.

That those are big things, huge things

uh for Democrats to do, especially in election year for the Democrat president running for re election. Okay.