Pro-crypto bill gets chilly Senate reception from Democrats who say digital currency benefits ‘money launderers and the criminal syndicates’

Read more: A ‘wild outcome’: How the Ripple decision scrambles the battle between SEC and crypto industry

But despite optimism that the SEC’s partial loss in its enforcement case against Ripple
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would generate broad bipartisan support for new crypto rules, there’s little evidence so far that this is happening.

Democrats and Republicans have been “working together” to revise a market structure bill under debate, “but those conversations aren’t moving in a positive direction,” wrote Isaac Boltansky, director of policy research at BTIG wrote in a Sunday note to clients, adding that he is “bearish” on crypto market structure legislation becoming law this year.

Republicans in the House appear intent on passing a new law — supported by Financial Services Committee Chairman Patrick McHenry of North Carolina and Agriculture Committee Chairman Glenn Thompson of Pennsylvania — that would expand the role played by the Commodity Futures Trading Commission in overseeing digital assets at the expense of the SEC, a key industry demand.

There are a few Democrats in the House who appear eager to support the McHenry-Thompson bill, but little evidence that party leadership is getting behind the effort and plenty to suggest that it will have trouble getting support in Democratic Senate.

Sen. Sherrod Brown of Ohio, the Democratic leader of the Senate Banking Committee told Politico Monday that his first priority on crypto is doing “whatever it takes to crack down on the money launderers and the criminal syndicates that are using crypto.”

The House bill would need to advance through Brown’s committee before it would have the chance of getting a vote in the full Senate.

Even crypto supporters in the Senate, like Wyoming Republican Cynthia Lummis appear eager to address the fears that crypto aids criminal activity before passing legislation meant to bring regulatory clarity.

“If we can get this part of it addressed from the very beginning, before the regulatory framework is passed, then we’ve taken that concern off the table,” Lummis told Politico. “And we can actually talk about digital assets in terms of how to regulate.”

Last week, Lummis teamed up with South Dakota Republican Sen. Mike Rounds and Democrats Sen. Elizabeth Warren of Massachusetts and Sen. Mark Warner of Virginia to add an amendment to the annual defense authorization bill to prevent the use of crypto assets in illicit financial transactions.

A separate piece of legislation targeting illicit crypto, submitted last week by Rounds and Republican Sen. Mitt Romney of Utah also garnered widespread criticism by industry groups last week.

“We can understand wanting to prosecute persons who facilitate money laundering and sanctions evasion by providing services that are decentralized in name only,” wrote Jerry Brito, executive director of the crypto think tank Coin Center, last week. “However, to blanket ban the publication of open-source code for decentralized crypto protocols…is to cede the field of innovation to the rest of the world.”