Sen. Kirsten Gillibrand, D-N.Y., is “very optimistic” the Senate Agriculture Committee’s updated legislation to regulate cryptocurrencies will advance, even though Republicans have yet to reach a deal with Democrats.
“Senators have been working on a bipartisan basis for the last six months pretty intensely, and we have two different bills,” Gillibrand told CNBC in an exclusive interview.
One piece of legislation is in the Agriculture Committee, which oversees the Commodity Futures Trading Commission and the second piece is at the Banking Committee, which oversees the Securities and Exchange Commission and banking issues, she said.
“Because these types of digital assets have some characteristics of both commodities and securities, you need regulation under both those committees,” Gillibrand said.
The Democratic senator is not a member of the Senate Agriculture Committee, but has been involved in negotiations on crypto market structure. She explained that the two bills, which address different parts of crypto market structure, are being worked on simultaneously.
“I think both senators on the Banking and Ag committee are working in a bipartisan way and in good faith,” she said.
On Wednesday night, the Senate Agriculture Committee released the updated legislative text, which builds on a previously released bipartisan discussion draft. The bill would give the CFTC new authority to regulate digital assets.
In a statement, the chairman of the committee, John Boozman, R-Ark., acknowledged that “differences remain on fundamental policy issues,” but that the bill “builds on our bipartisan discussion draft while incorporating input from stakeholders and represents months of work.”
“Although it’s unfortunate that we couldn’t reach an agreement, I am grateful for the collaboration that has made this legislation better,” Boozman said, adding that “it’s time we move this bill.”
Markup of the Senate Agriculture Committee’s legislation to regulate digital commodities is scheduled for Jan. 27.
The Senate Banking Committee’s markup hearing on its draft text to regulate digital assets was scheduled for Jan. 15, but was postponed at the last minute after opposition from the crypto industry, including Coinbase.
When asked if she thinks the Senate Agriculture Committee’s hearing is also at risk of delay, Gillibrand told CNBC that there are still areas that need bipartisan resolutions, but she believes the markup will take place on Tuesday.
Gillibrand noted that the Senate Agriculture Committee’s draft is still in review, adding that “hopefully the senators will work on a bipartisan basis to amend that draft to make it stronger, to make it better, to continue their negotiations in the areas where there wasn’t resolution.”
She said that an earlier draft from the Agriculture Committee had a lot of bipartisan compromises in it, some of which were left out. “My hope is that those senators can get back to the drawing board and try to re-include some of those compromises that I thought were very strong,” Gillibrand said.
Senate Banking Committee bill on hold
Bipartisan negotiations are continuing for the Senate Banking Committee’s draft text of crypto market structure legislation, according to Chairman Tim Scott, R-S.C.
“I’ve spoken with leaders across the crypto industry, the financial sector, and my Democratic and Republican colleagues, and everyone remains at the table working in good faith,” Scott said in a statement.
A new date for a hearing on the Senate Banking Committee’s draft of a crypto market structure bill has not yet been set.
“I think that people are going to keep working over the next few weeks,” Gillibrand told CNBC, noting that “people want to get this done now.”
Speaking with CNBC’s “Squawk Box” from the World Economic Forum’s annual meeting in Davos, Switzerland on Tuesday, Coinbase CEO Brian Armstrong kept the pressure on the Senate’s crypto legislative efforts. He said the company’s legal team and executives started to notice “some pretty serious issues in the draft text” of the Senate Banking Committee’s bill and that it didn’t seem like there was a plan in place to rectify those issues.
“We felt like we had an obligation to go out and defend our customers’ rights and say, ‘We have some issues here,'” Armstrong said.
In a post on X, Armstrong wrote that the version of the bill “would be materially worse than the current status quo.”
Armstrong also outlined some of the issues Coinbase had with the Senate Banking Committee’s draft text, including “draft amendments that would kill rewards on stablecoins, allowing banks to ban their competition.”
The Senate Banking Committee’s text would have prohibited stablecoin issuers from offering rewards for holding them. Instead, those rewards would have to be offered through the completion of a transaction or a rewards program.
The banking industry is urging Congress to close what it deemed a loophole in the GENIUS Act stablecoin legislation, which banned stablecoin issuers from directly paying interest. Banks argue this would lead to a flight of deposits from the insured banking system. Some crypto companies, especially Coinbase, have pushed back against that claim.
Gillibrand was the lead Democratic senator on the GENIUS Act and helped guide the regulatory framework through Congress. In July, President Donald Trump signed it into law.
When asked what she thinks about the banking industry claims of a loophole in the GENIUS Act, she said she is “optimistic that we can find some common-sense bipartisan language that satisfies everyone’s concerns on this issue.”
“I thought we had done that in GENIUS, but if it needs more work, we will keep working,” she added. “We had very strong language to that effect that we were fine with rewards and points and other programs, but that you couldn’t be offering interest-like products on stablecoins,” she said.
Gillibrand said that lawmakers wanted to give the crypto industry an opportunity to show that it can follow the rules of the road, and added that lawmakers don’t want to see deposit flights from banks.
“We wanted to make sure that no consumer was confused about what a stablecoin is versus what a dollar sitting in a bank account is because stablecoins are not FDIC insured,” she said, adding that there different protections put in place for stablecoins.
“We made sure that every stablecoin was backed by a U.S. dollar or a U.S. dollar equivalent and so we thought the compromise and the language that we concluded with in that bill was very strong,” Gillibrand added.
A Republican ally announces retirement
The Democratic senator has pushed for crypto legislation since 2022, when she and Sen. Cynthia Lummis, R-Wyo., introduced the Lummis-Gillibrand Responsible Financial Innovation Act, a bipartisan framework for cryptocurrency regulation.
In December, Lummis announced she will retire at the end of her term this year. Lummis chairs the Senate Banking Committee’s crypto subcommittee, and also guided the GENIUS Act to passage. Both senators are currently negotiating legislation as part of an industry-backed push for broader regulation of digital assets.
“It’s a huge loss to the U.S. Senate and it’s a personal loss to me,” Gillibrand said of Lummis’ expected retirement.
Despite Lummis’ retirement, Gillibrand said her advocacy for digital assets will not change. She stressed that she is “committed” to crypto because she thinks it provides opportunities for entrepreneurship and innovation.
“I don’t want China or Asia or other parts of the world to have the benefit of these industries because we are unwilling or unable to regulate it,” Gillibrand said.
“If we want to protect consumers and we want to protect the traditional financial services, the best way to do that … is to regulate it. It’s the one thing that actually makes it possible to compete worldwide,” she added.
Gillibrand stressed that lawmakers must stay at the negotiating table and keep working on a bipartisan basis to create a comprehensive regulatory framework for digital assets.
