George Leonardo
Good morning and happy Friday. With Congress in recess this week, we take a deep dive into vice presidential candidate Senator J.D. Vance's crypto-related policy positions.
Senator J.D. Vance has been generally supportive of crypto and fair access to banking, while opposing SAB 121, a U.S. CBDC, and overly expansive tax reporting requirements for digital asset brokers.
The House is slated to consider an appropriations bill next week that includes provisions to defund SAB 121, defund Treasury's efforts to build a CBDC, and defund certain crypto enforcement actions until there is more legal clarity; additional crypto-related amendments are pending in the House Rules Committee.
Earlier this week, former President Trump selected Senator J.D. Vance (R-OH) as his running mate. Senator Vance was sworn into the U.S. Senate in January 2023 at the start of the 118th Congress.
Here’s a look at Senator Vance’s crypto policy positions over the last few years.
SAB 121
Senator Vance cosponsors a Senate resolution to repeal SAB 121 and voted for repeal on the Senate floor.
Market Structure
Senator Vance is reportedly working on a crypto market structure bill that would take a more industry-friendly approach towards crypto regulation than FIT 21. It is unclear if and when that text will be released.
While we wait for details of that bill, Senator Vance shed some light on how he thinks about blockchain and crypto regulation at a Y Combinator event earlier this year.
There, Senator Vance argued the SEC's current approach to crypto creates perverse incentives by essentially banning tokens that have utility, while ignoring tokens that don’t have utility.
According to Senator Vance, this approach is particularly concerning because innovative companies may need to rely on high-utility tokens to challenge Big Tech incumbents.
Senator Vance also told the audience he worries about "financialization" and "whether much of the crypto stuff is fundamentally fake."
It's worth watching the 2 minute clip here.
Full remarks for more color on his thoughts on tech policy more generally here.
CBDCs
Senator Vance cosponsors a Senator Cruz bill that would prohibit a U.S. CBDC: the CBDC Anti-Surveillance State Act. It is the companion bill to Rep. Tom Emmer’s bill, which passed the House on May 23 by a 216-192 vote and is currently stalled in the Senate.
Tax
As a candidate for U.S. Senate in 2021, Vance voiced opposition to an amendment to the Infrastructure Investment and Jobs Act regarding new tax reporting requirements for digital asset brokers. Based off the press release issued at the time the amendment was being considered, Vance would likely be supportive of narrowing reporting requirements.
From the Press Release:
“The Biden endorsed, Portman-Warner-Sinema amendment being proposed in the infrastructure bill to regulate cryptocurrencies picks Big Tech as the winners and Ohioans are the losers. Not only would this bill lead to mass surveillance of those in the cryptocurrency community, experts in the field warn that it could amount to a backdoor ban of Bitcoin and other popular cryptocurrencies.”
Access to Banking
Senator Vance is a cosponsor to the Fair Access to Banking Act. While not a crypto-specific bill, the bill would prevent banks from denying financial services to any person unless the bank can point to documented, “quantitative, impartial risk-based standards established in advance.” § 8(b).
Last September, the Senate Banking Committee advanced the SAFER Banking Act out of committee. Section 10 of SAFER includes language aimed at making it harder for banking regulators to pressure banks to debank politically disfavored customers.
While Senator Vance voted against the bill at markup (citing concerns it could inadvertently expand banking access to even fentanyl traffickers), he voted in favor of a Senator Mike Crapo (R-ID) amendment that would have tightened up Section 10. Specifically, the amendment would have narrowed the conditions under which a banking regulator could pressure a bank to debank certain clients. The Senator Crapo amendment failed by a 8-15 vote.
Separately, in 2022, in response to a clip of Canada’s Deputy Prime Minister explaining that banks and financial institutions could immediately freeze or suspend bank accounts under a new law, Senator Vance tweeted:
Bitcoin Holdings
Senate Vance reportedly holds between $100,000 to $250,000 in Bitcoin.
Also Notable:
In 2022, Vance told CoinDesk:
“At the end of the day, the thing that I really do worry about is that we have an economy that is rigged by the government to favor special interests…The cryptocurrency world is very new, but it could provide an avenue for creating prosperity that the special interests in Washington won’t control.”
After a federal court sanctioned SEC attorneys for making false statements to the court in a case against DEBT BOX, LLC, Senator Vance led a letter to the agency, stating in part:
“Regardless of whether Commission staff deliberately misrepresented evidence or unknowingly presented false information, this case suggests other enforcement cases brought by the Commission may be deserving of scrutiny. It is difficult to maintain confidence that other cases are not predicated upon dubious evidence, obfuscations, or outright misrepresentations.”
Senator Vance introduced a bill this Congress aimed at mitigating potential abuses of power across financial regulators.
Specifically, the Financial Regulatory Accountability Act of 2023 would create a special inspector general within the Department of Treasury to investigate any abuses and misconduct at financial regulators (e.g., SEC, CFTC, FDIC, etc.), including any ideological biases demonstrated by an agency or employee.
Closing Thoughts
If former President Trump were to win the election, it's unclear to what extent Senator Vance would be in the driver's seat on crypto policy. But based on the GOP platform, and recent statements by Trump, both appear aligned towards keeping crypto innovation in the U.S. and opposing a U.S. CBDC.
Remember, regardless of who wins the White House, crypto legislation would still likely need bipartisan support to: (1) get through Congress, particularly to overcome the Senate's 60-vote filibuster threshold, and (2) withstand the test of time and future political swings.
House
Next week, the House is slated to consider four appropriations bills, including Financial Services and General Government (“FSGG”).
House Rules will start considering the bills and pending amendments on Monday at 4pm.
As drafted, the bill includes sections to defund certain crypto enforcement actions by the SEC (§ 560), defund Treasury's efforts to develop a CBDC (§ 131), and defund SAB 121 implementation (§ 558).
Hearings
House Financial Services: Tuesday - 10 AM
AI Innovation Explored: Insights into AI Applications in Financial Services and Housing
See recent Staff Report on AI from House bipartisan working group.
Senate Homeland Security: Tuesday - 3:30pm
Bitcoin Conference
Thursday July 25- Saturday July 27
Former President Trump, Robert F. Kennedy Jr., Senators Bill Hagerty (R-TN) and Marsha Blackburn (R-TN), and Rep. Ro Khanna (D-CA) are speakers.
Potential Democratic Ticket Views on Crypto
“Where does Biden's VP Kamala Karris stand on Crypto?” (Thomas Carreras, dlNews). TLDR: Not clear if/how her views would diverge from the Biden Administration's.
“Where The Top Six Potential Biden Replacements Land On Crypto” (Veronica Irwin, Forbes Contributor).
RNC Convention
While crypto didn't make it into prime time speeches, here are a couple articles covering the crypto presence in Milwaukee this week:
“Crypto firms are making their case to GOP power brokers at RNC” (Jasper Goodman, Politico).
“Trump is winning votes by supporting crypto, say digital-asset fans at GOP convention.” (Victor Reklaitis. MarketWatch).
Market Structure
Senate Ag Chairwoman Debbie Stabenow (D-MI) continues to circulate a draft crypto bill with Senate offices that would grant the CFTC spot market jurisdiction over digital commodity trades, though it's unclear when the bill will be ready for public release.
Tax
The Treasury Inspector General for Tax Administration published a report on “How Virtual Currency Tax Compliance Enforcement Can Be Improved.”
Spot Ether ETFs
“Spot ether ETFs likely to begin trading July 23, industry sources say.” (Article by Suzanne McGee and Hannah Long, Reuters).
Worth the Read
Vitalik Buterin, co-founder of Ethereum, published an article arguing:
Last Week's A: Chicago has hosted the most national party conventions.
This Week's Q: Which U.S. Senator did J.D. Vance work for as a clerk on the Senate Judiciary Committee while he was a student at Yale Law School?
Thank you for reading and please enjoy your weekend.
-GSL
