Broad crypto market structure legislation is hitting another snag this week — this time from the top Republican and top Democrat of the Senate Judiciary Committee.
In a letter sent to Senate Banking Committee Chair Tim Scott and top Democrat Elizabeth Warren on Wednesday, Sens. Chuck Grassley, R-Iowa, and Dick Durbin, D-Ill., voiced concerns over the inclusion of the Blockchain Regulatory Certainty Act, or BRCA, in bill text released this week.
BRCA seeks to clarify that non-custodial software developers, who do not control users' funds, are not considered money transmitters. It would create clear guardrails for when developers and service providers would be exempt from money transmitting laws.
Grassley and Durbin said they should have been consulted before the Senate Banking Committee released its draft legislation on Monday night. The Senate Judiciary Committee has oversight over the Department of Justice, the Federal Bureau of Investigation, and the Department of Homeland Security.
"The Senate Judiciary Committee — which has jurisdiction over Title 18 — was not consulted or given the opportunity to meaningfully review the proposed changes in advance," they said in the letter obtained by The Block on Friday.
The letter marks the latest challenge to the Senate Banking Committee's sweeping crypto legislation that seeks to divvy up authority to the Securities and Exchange Commission and the Commodity Futures Trading Commission.
On Monday, the committee released updated bill text spanning more than 270 pages. Proposed changes to the bill were due on Tuesday afternoon, and over 70 were filed ahead of a planned markup on Thursday. This new draft puts forward controversial new disclosure requirements and includes new sections on how to approach decentralized finance, which some crypto industry insiders have baulked at.
Things went south late on Wednesday after Coinbase CEO Brian Armstrong said the massive crypto exchange could not support the bill, citing concerns about the treatment of tokenized equities, DeFi issues, provisions that he said would "kill rewards on stablecoins," and the role of the SEC.
Bipartisan backing from Sens. Grassley and Durbin could be crucial for the bill’s passage. If legislation clears both the Senate Banking and Agriculture Committees and is combined, it would head to the Senate floor, where 60 votes are needed to pass — potentially requiring unanimous Republican support plus some Democrats.
In a statement to Politico, a Senate Banking Committee spokesperson said that the BRCA falls within the committee's remit, citing the parliamentarian. The parliamentarian provides nonpartisan advice to lawmakers.
Durbin and Grassley say BRCA creates a "blind spot" for local and state law enforcement.
"Finally, this provision would also create a blind spot for state and local law enforcement and state district attorneys’ offices that rely on FinCEN registration information or parallel state law requirements to identify money trails in cases, including but not limited to routine money laundering, terrorism, and drug and human trafficking," they said in the letter.