Crypto Assets bill unexpectedly stalled, Washington's "Crypto Week" faces setbacks

Originally seen as an important moment for the Crypto Assets industry in Washington - "Crypto Week" - faced an unexpected setback on Tuesday. Three highly anticipated Crypto Assets regulatory bills failed to pass in procedural votes.

The voting results showed 196 votes in favor and 223 votes against. It is noteworthy that 13 Republican representatives voted against along with the Democrats, collectively blocking the procedural motion to debate and advance this decision bill. This means that unless the House passes the relevant procedural rules again, these bills carrying the hopes of the industry will not be able to enter the substantive debate stage.

Earlier this week, the sentiment in Washington's Crypto Assets industry was high, with widespread expectations that these bills would pass smoothly. A key political figure also rallied for "Crypto Week" on his social media platform, portraying it as a critical step for the United States to become the "undisputed, number one leader" in the digital assets space. He called on all Republican representatives to vote in favor, firmly believing that the "GENIUS Act will lead our great nation ahead of China, Europe, and all other countries by light years, as they are endlessly trying to catch up but just can't."

The blocked "package" of Crypto Assets legislation includes three bills that are crucial for the industry:

1. GENIUS Act: This bill on the regulation of stablecoins gained some support from Democrats in the Senate last month and was successfully passed. It aims to provide a clear regulatory framework for stablecoins and is seen as key to unlocking broader institutional adoption.

2. CLARITY Act: The Act aims to clarify the classification rules for digital assets, specifying which assets should be regulated as securities by the U.S. Securities and Exchange Commission (SEC) and which should be regulated as commodities by the Commodity Futures Trading Commission (CFTC), in order to end the long-standing "regulatory gray area" that has troubled the industry.

3. Preventing Central Bank Digital Currency (CBDC) Legislation: This proposal aims to prohibit the Federal Reserve from creating a central bank digital currency, reflecting concerns among some lawmakers about government control over digital currencies.

These bills are seen as the cornerstone of the United States in establishing a comprehensive and predictable regulatory framework in the field of digital assets, which could bring long-awaited certainty to the market, attracting more capital and innovation.

The most striking aspect of this vote was the "defection" of 13 Republican congressmen. According to reports, several Republican congressmen, including Marjorie Taylor Greene, Chip Roy, Michael Cloud, and Anna Paulina Luna, cast votes against.

Marjorie Taylor Greene from Georgia publicly explained her position on social media. She stated that the GENIUS Act failed to include a ban on central bank digital currencies (CBDCs), and Speaker Johnson did not allow related amendments to be submitted. Greene emphasized that a key political figure included a CBDC ban in an executive order on January 23, so Congress must also incorporate it into the GENIUS Act. She believes "Americans do not need a government-controlled central bank digital currency."

House Speaker Johnson is thus caught in a dilemma. After the failed vote, he stated that Republicans "are still in dialogue, answering questions," trying to appease and garner support from these conservatives. However, he also admitted that bundling all three bills into one "big package" is not feasible, with a senior Republican lawmaker bluntly stating: "Packing the vote will only cause these bills to die in the Senate." This comment reflects the strategic dilemma faced by Republican leadership in balancing the demands of different factions within the party and ensuring the feasibility of legislation.

After the news of the voting failure was announced, stocks related to Crypto Assets fell sharply: stablecoin issuer Circle's stock price dropped by more than 7%, a certain trading platform fell by over 4%, and digital asset company MARA Holdings' stock price also dropped by 2%.

House Speaker Johnson has announced plans to restart procedural voting on the crypto legislation on Wednesday local time. The Louisiana Republican told reporters as he left the Capitol that the party is still "continuing to communicate and address concerns" among members, emphasizing that "these crypto bills are a joint priority of the White House, the Senate, and the House." Reportedly, a key political figure is very "angry" about the voting outcome and is communicating with the relevant lawmakers.

Even so, some industry analysts remain optimistic about the future of the bill. TD Cowen policy analyst Jaret Seiberg noted in a report to clients: "We are likely to vote on the rules again in the House tomorrow (Wednesday). If it doesn't happen tomorrow, it may be postponed until next week." Seiberg further stated that he still expects the House to pass the GENIUS Act, citing that "a key political figure is pushing for its enactment." He believes that even if members of the House "Freedom Caucus" oppose accepting the Senate version of the bill, they may ultimately concede at the president's request.

Cody Carbone, CEO of Digital Chamber, is similarly confident in the final passage of the bill. He pointed out on social media that the best way to address the ban on CBDCs is through the "GENIUS Act": "If lawmakers are interested in banning CBDCs and competing with digital currencies issued by other countries, then the way to do that is through the 'GENIUS Act' and allowing the private stablecoin market to thrive in the United States."

This round of setbacks confirms a reality: in Washington, even an agenda strongly promoted by the president may be defeated by the subtle power balance within the party. When technological innovation encounters political games, the "compliance path" of Crypto Assets is destined not to be smooth.