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Rep. French Hill has been a leading Republican voice on digital currency oversight the last few years, and he’s now being tasked with chairing the first Financial Services subcommittee dedicated to crypto.
But don’t expect a sales pitch on how the technology will solve the world’s problems.
“I’ve never been a crypto evangelist,” the Arkansas Republican told MM. “I’ve been, I think, a proponent for fintech innovation to be done onshore in the U.S., inside our U.S. regulatory framework.”
You should pay close attention to Hill’s perspective because, as chair of the subcommittee on digital assets, financial technology and inclusion, he’ll play a key role in legislation and oversight of crypto as Washington moves closer to setting new rules for the industry.
Where he stands
“I see the idea of blockchain and digital payments as emerging technologies that may be here to stay — if those innovations produce a use case that the business community and consumers prefer to non-blockchain, non-distributed ledger, non-digital token forms of payment and commerce.
“It’s something that potentially has a future, and therefore we want to have an environment where people can consider those use cases, consider the use of that and develop it, but do so in a way that’s consistent with American laws and tradition and commercial practices.”
Where he draws the line
“I’m certainly skeptical of what I’ve read from the progressive left that somehow digital currencies or that kind of thing are the end-all, the be-all to greater access to wealth and equity.”
“I don’t think there’s a silver bullet to expand opportunity for people to have financial independence, or that, in any way, some fintech innovation or cryptocurrency innovation is going to lead to nirvana in that financial equity space.”
“I do believe that lowering the cost and improving the accessibility of core financial products for people helps people of all incomes.”
Where to begin
“[House Financial Services Chair] Patrick McHenry has digital asset oversight as a principal goal of his for this Congress. And secondly, our staff and our full House Republican team, all the members, were very engaged last August through October working with House Democrats on an idea around stablecoin definitions and regulation. So I think that is a logical starting place.”
“But I believe the Congress also has many different viewpoints now following the FTX collapse. And we have more engagement from the Senate than we would have had last summer which is a positive thing, I believe.”
The broader fintech portfolio
“You’ve got the data ownership issue. The idea of open banking — who owns the data.”
“You have the idea of tri-party authentication and abandoning username and passwords so that you have a much more cyber-protected, defined authentication process as to who is engaging in the transaction.”
“That’s directly connected to what? Data privacy. … I would hope a privacy bill, a privacy standard, would be a possibility in this Congress.”
Biden will meet with Democratic congressional leaders … Acting Comptroller of the Currency Michael Hsu talks financial stability during a Goethe University conference at 6:05 a.m. … The CFPB’s Appraisal Subcommittee holds a hearing on appraisal bias at 10 a.m. …
The latest on the debt ceiling —
— Senate Majority Leader Chuck Schumer on Monday dared House Republicans to propose plans to cut the budget. “Put your proposals for debt ceiling on the floor, let the entirety of the House debate it and vote on it, and let the American people see and assess these cuts for themselves.”
— President Joe Biden will meet with Democratic leaders from the Hill today.
— Senate Republicans are happy to leave the debt ceiling problem to Speaker Kevin McCarthy.
— Incoming House Budget Chair Jodey Arrington told our Budget & Appropriations colleagues that the U.S. “won’t default” but that “we cannot move forward with our Democratic colleagues and this president with a new line of credit with no strings attached and no guardrails.”
— China criticized the U.S. for its “catastrophic debt problem.”
— Sen. Elizabeth Warren’s debt ceiling fix: Raise taxes on the ultra-wealthy and giant corporations.
McHenry backers brush off diversity controversy — Republicans close to the Financial Services Committee believe the diversity and inclusion flap between Chair Patrick McHenry and a handful of conservative pundits won’t amount to much, and that the criticism he’s getting misses the point of his committee reorganization.
For those not up to speed, McHenry is eliminating Democrats’ dedicated Financial Services diversity and inclusion subcommittee and instead spreading the issue across the jurisdiction of other subcommittees. The move triggered accusations from FreedomWorks and a few commentators on the right that he is advancing a “woke” agenda.
But McHenry’s members aren’t complaining at this point. Rep. Byron Donalds, a Freedom Caucus member who will be the only Black Republican on the committee, told our Eleanor Mueller in a statement that he has “complete confidence” in McHenry’s agenda.
“The diversity and inclusion we plan on addressing are far from the road of woke policies like ESG investing or [virtue] signaling on Wall Street, and any suggestion otherwise is misleading,” Donalds said. “It is beyond time for our country to look at diversity and inclusion as a way to truly mobilize and amplify people rather than practice placation.”
One former conservative House aide also pushed back: “He dismantled the sole subcommittee that was devoted to promoting ESG policies, and now groups and individuals on the far right are attacking him for it.”
— Elsewhere in ESG land — State Street CEO says Republicans have ‘left facts aside’ — From Ron O’Hanley’s interview with the FT, where he addressed GOP attacks on environmental, social and governance investing: “For us it is not a political issue. It is nothing more than the proposition that climate needs to be incorporated into our investment risk framework.”
Warren Davidson: Stablecoin is lightest lift among crypto bills — The incoming vice chair of the House digital asset subcommittee told MM’s Sam Sutton that stablecoin legislation is “probably the thing that’s easiest to get out of committee.” (You can watch part of the interview in this video.)
Davidson said he’s hopeful the legislation will include provisions that would “grandfather in” stablecoin issuers who have already registered with state agencies like the New York Department of Financial Services.
“We were so close last Congress to getting there. I think that’s it’s kind of like the crawl, walk, run phase,” the Ohio Republican said. “Hopefully, we can pull it off. When do kids crawl? In about six months? Hopefully within about six months we can find a way to do it.”
Digital euro too big for blockchain — POLITICO’s Bjarke Smith-Meyer in Brussels reports that blockchain technology is unlikely to have enough processing power to support a digital euro that caters to 350 million people, according to the official who leads work on the issue for the European Central Bank.
“Bitcoin does a few thousand transactions a day,” the ECB’s Fabio Panetta said. “Every transaction takes a long time. Your coffee will be cold before you can use it.”
Biden to nominate financial research chief— The White House said Monday that Biden plans to nominate former CFPB official Ron Borzekowski to lead the Office of Financial Research, our Victoria Guida reports.
Bank merger critic to advise DOJ — The Capitol Forum’s Patrick Rucker scoops that Jeremy Kress, a former Fed official who has advocated for tougher controls on bank mergers, will advise DOJ’s antitrust division.
First in MM: Manufacturers want SEC to scale back climate disclosure rule— More than 50 manufacturing trade associations are calling on Congress to put pressure on the SEC to rewrite its climate risk disclosure proposal, which the groups call “impractical and overbroad regulation.”
Bloomberg settles with SEC over disclosures— Our Declan Harty reports that Bloomberg Finance agreed to pay $5 million to resolve SEC charges that it failed to disclose necessary information about a bond-pricing product.
Big banks plan digital wallet— WSJ: “Wells Fargo & Co., Bank of America Corp., JPMorgan Chase & Co. and four other banks are working on a new product that will allow shoppers to pay at merchants’ online checkout with a wallet that will be linked to their debit and credit cards.”
Yellen presses China on debt relief— FT: “US Treasury secretary Janet Yellen called on China to agree to a rapid restructuring of loans to Zambia, saying Beijing was a ‘barrier’ to ending the debt crisis in the southern African nation.”
U.S. confronts China over firms’ ties to Russia’s war in Ukraine — Bloomberg: “The Biden administration has confronted China’s government with evidence that suggests some Chinese state-owned companies may be providing assistance for Russia’s war effort in Ukraine, as it tries to ascertain if Beijing is aware of those activities, according to people familiar with the matter.”