House Hearings Reveal Deepening Party Divide

Parties struggle to get on the same page after more hours spent in crypto hearings


Phil Pasquini/Shutterstock modified by Blockworks


House representatives gathered last week to discuss regulatory gaps in crypto and discuss which regulatory agency should be taking the lead. The hearing revealed what areas industry members should keep an eye on for policy, and uncovered some of the main points of contention between political parties. 

On Wednesday, digital asset subcommittee members from the House Financial Services and Agriculture committees gathered to hear from six witnesses on the state of crypto regulation. Main topics of discussion included identifying the respective roles of the SEC and CFTC and establishing definitions for “digital commodity” and “digital security,” both of which have turned out to be highly politicized. 

Just after the hearing adjourned, a leaked internal memo circulated amongst House Financial Services Committee Democrats revealed the party advised lawmakers to advocate for the SEC as the primary regulator overseeing crypto. The document praised SEC Chair Gary Gensler for his recent enforcement action streak this year, which is on pace to eclipse 2022’s record number of 30 crypto-related actions. 

Crypto industry members find the suggestion troubling, as SEC Chair Gary Gensler continues to take an aggressive stance on crypto token classification. Gensler has said he believes “most” cryptocurrencies are securities, although he faced additional criticism when he was unable to confirm ether’s status during an April Hill testimony. 

Political insiders though caution industry proponents from taking anything in the leaked memos too seriously. 

“Staff memos are created by both parties ahead of every hearing. These memos on the Hill are standard, but leaking them is not,” Ron Hammond, director of government relations at the Blockchain Association, said. “It is not the position of the entire party, just the lead member of that party on the committee.” 

Most Republicans and some Democrats, including Ritchie Torres from New York, support allowing the CFTC to oversee crypto commodity spot markets, including bitcoin and potentially ether, for now. 

Republicans also support having Congress step in to establish definitions for crypto securities and commodities, while most Democrats, including Maxine Waters, D-Cali., and Stephen Lynch, D-Mass., support Gensler’s stance that most tokens are securities. 

Neither side of the aisle however presented any clear test or strategy for determining a token’s status, however. Former CFTC Chair Timothy Massad, a witness on Tuesday, has also said he is unable to determine whether ether is a security, adding additional uncertainty around the issue. 

Committee Republicans have still not formally introduced their stablecoin bill draft to the floor, with several members noting that it is very much a work in progress. 

Waters during an April hearing on stablecoins slammed Republicans for not addressing Democratic concerns in their current draft stablecoin bill. 

The draft “in no way recommends the final work on stablecoins by negotiations between the two of us,” Waters said, adding that Democrats will have to “start from scratch.” In the four weeks since the stablecoin hearing, neither Waters nor her Democratic colleagues have released a draft or timeline for a potential bill. 

On Wednesday, though, Waters took an apparently softer approach, noting in her prepared testimony that issues surrounding crypto “should be bipartisan concerns.” 

“These should be bipartisan concerns, and legislation to address them should have a path to the president’s desk,” Waters said. “I hope this Congress, we can quickly return to developing legislation together.”

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.


Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Cover Vertex.jpg


The proliferation of new perp DEXs has led to fragmented liquidity across various DEXs and chains. Vertex, known for its vertically-integrated DEX that includes spot, perpetual, and integrated money markets, is now tackling cross-chain liquidity fragmentation through horizontal integration with the launch of new Edge instances. Vertex's integrated offerings and cross-margined account structure amplify the benefits of new instances: native cross-chain spot trading, optimized cross-chain basis trading, consistent interest rates, reduced bridging friction, and more.


Partnering with EtherFi and Angle, the fully on-chain perp DEX features bespoke collateral



Gavin Wood introduced the next evolutionary step for the Polkadot network: the Join-Accumulate Machine, or JAM


The side events were the places to be at Consensus 2024, according to attendees


Also, who’s come out swinging in the spot ether ETF fee war — and who could undercut them


I know it is not in their nature, but US regulators could learn a lot by researching the digital asset frameworks that overseas regulators have already gotten right


Also, the ETF hype train can count out at least one member