Senate Banking Chair Tim Scott’s push to pass sweeping new cryptocurrency regulations has a Chuck Grassley problem.
The Senate Judiciary chair is raising concerns alongside ranking member Dick Durbin (D-Ill.) about a section of the bill that would exempt some crypto software developers from financial licensing requirements. They say the language would curtail law enforcement's ability to go after money laundering and illicit finance in the crypto space.
Grassley and Durbin wrote in a private letter to Scott and Senate Banking ranking member Elizabeth Warren (D-Mass.), obtained by POLITICO, that language in Section 604 of the crypto bill “is precisely the type of legislative change that falls squarely within the Judiciary Committee’s jurisdiction,” adding that the panel “was not consulted” about it ahead of a since-postponed markup.
Scott planned to hold a committee vote on the crypto market structure legislation this week, but he delayed the markup amid surprise opposition from a leading digital asset firm and uncertainty about the vote count for the proposal.
The section mirrors standalone bipartisan legislation dubbed the Blockchain Regulatory Certainty Act that is led in the House by Majority Whip Tom Emmer (R-Minn.) and in the Senate by Sens. Cynthia Lummis (R-Wyo.) and Ron Wyden (D-Ore.).
A committee spokesperson for Scott said the South Carolina Republican “appreciates the engagement from Chairman Grassley and Ranking Member Durbin on this issue.”
“As the parliamentarian has ruled, the Blockchain Regulatory Certainty Act falls squarely within the Banking Committee’s jurisdiction,” said the spokesperson, Jeff Naft. “The Chairman remains committed to protecting software developers while ensuring that law enforcement has the necessary tools to prosecute actual illegal money transmission operations.”
Grassley said in a statement he appreciates “the efforts of Chairman Tim Scott and his staff as they work through this important bill.”
“We must protect our national and financial security, while ensuring crypto and other novel industries play by the same rules as everyone else,” he said. “I look forward to working with Chairman Scott to reach a sound outcome.”
Grassley and Durbin are warning that the provision in question, which is a major priority for House Republicans and some in the crypto industry, exempts “a dangerously broad category of actors from treatment under” current criminal law. They say the language would have "likely precluded the government from bringing charges against" the founder of a crypto platform known as Tornado Cash that prosecutors said was used to launder money. A co-founder of the platform, known as a mixer, was found guilty of operating an unlicensed money transmitting business last year, though crypto proponents and some congressional Republicans have decried the conviction.