McHenry Predicts Swift Crypto Deal as Witt Brokers Talks
In a recent CoinDesk Live event at the Ondo Summit in New York City, Patrick McHenry and Patrick Witt shared insights into the rapidly evolving crypto landscape. They discussed the growing momentum for landmark crypto legislation, even as debates intensify over yield, DeFi, and ethics.
McHenry, a former House Financial Services Chair, and Witt, a White House advisor, revealed a potential breakthrough in the crypto market structure. They suggested that a comprehensive bill could be passed within months, with Witt emphasizing the President's personal prioritization of the legislation following the Genius Act's passage.
The White House's efforts are focused on narrowing negotiations. Witt highlighted a recent meeting that led to new areas of agreement while clearly defining remaining red lines. The administration aims to transition from high-level principles to drafting actual legislative language, with Witt's role being crucial in brokering a deal that can withstand Senate and House scrutiny.
The central issue is stablecoin yield, which remains unresolved. Witt noted broad agreement on banning deceptive practices, but the dispute revolves around centralized exchanges' ability to pay passive yield on idle stablecoin balances. Banks and community lenders view yield as a threat to deposit funding, while crypto firms argue that yield enhances platform engagement.
McHenry emphasized the importance of DeFi, stating that market structure legislation is 'foundational' and cannot function without it. He cited decentralization as the source of crypto's efficiency, transparency, and lower costs compared to traditional finance. Tokenized lending products, according to McHenry, are already cheaper than traditional securities lending, indicating strong market demand.
Despite ethics concerns, McHenry and Witt believe they can secure bipartisan support. They aim for a narrower ethics compromise, avoiding the 'grossly over-scoped' proposals that some Democratic initiatives have imposed. Republicans, if necessary, could move the bill forward with partisan votes.
The legislative timeline is compressed, with Witt mentioning that drafting teams are actively 'trading paper' and working through specific statutory language. The White House is urging banks and crypto firms to negotiate in good faith. McHenry anticipates Senate action before Easter, setting the stage for a rapid final passage.
For those who missed the CoinDesk Live event, the recording is available at https://www.youtube.com/live/0nUy1CqB8xY?si=hiplNzO45_Tc8wAL.
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