Two important pieces of crypto legislation in Congress – the stable coin bill and market structure bill – may be in jeopardy after staunch ally and House Financial Services Chairman Patrick McHenry announced his retirement. 

McHenry shepherded both bills out of the Financial Services Committee where they are now waiting for a vote by the full House of Representatives. Yet the way Washington works as a presidential election year looms may mean the legislation gets forgotten. 

There’s a “small window of time to pass this legislation,” according to Patrick McCarty, the founder and president of McCarty Financial LLC who was also head of government affairs at ICAP and worked at the Securities and Exchange Commission and Commodity Futures Trading Commission.  

“We’re going into a presidential election in November 2024, so the House and the Senate will stop passing bills around May or June, unless they absolutely have to be passed,” McCarty said in an interview. “If you don’t have people on the Senate side who want to do something, it’s an uphill battle.”

McCarty, who served as counsel for the House Financial Services Committee and helped write parts of the Dodd-Frank Act, said the likelihood of these crypto bills becoming law is “probably 40 percent or less.” 

“They were trying to take the fast route to getting this done by attaching it to the National Defense Authorization Act (NDAA), but it looks like they’re going to have to have a standalone vote in the House of Representatives,” he said. “If they’re able to get a strong bipartisan vote in January, the Senate and Senate Banking Committee Chairman, Senator Brown, have to recognize that and move forward with it.”

Crypto industry leaders have been advocating for Congress to take action on regulatory legislation as the SEC has taken the approach of regulating though enforcement actions. That leaves U.S. crypto companies in the dark about what may be illegal until it’s too late. At the same time, members of Congress such as Senator Elizabeth Warren are advocating for crypto to be regulated out of existence. 

Read more: Coinbase CEO Brian Armstrong: “We Need to Make Our Voice Heard as an Industry” in Washington DC 

McCarty said it’s time to move forward so the industry can know what rules it needs to follow. 

“Let’s just accomplish the next step,” he said. “We need to set up an appropriate regulatory and market structure approach. I’m not a fan of some things in the FIT Act and the stable coin bill, but we need to move forward. The only way to solve this regulatory impasse is to pass comprehensive legislation and not ignore it.”

McCarty said the current situation reminds him of the Dodd-Frank days, during his time in the Senate Agriculture Committee. “The House passed Dodd-Frank, then it got to the Senate and the Senate was playing around with it – dealing with cross-jurisdictional issues between Senate Banking and Senate Agriculture Committee. There was a big argument about jurisdiction and about substance, but until the bill got out of the House, the Senate was really in a waiting period.

“It’s a similar situation to what we have here today. If the House passes something and they get a good vote, the Senate may say it's worth our time and effort to do this. But we've only got four or five months, January through to May, to get this done.” 

While there are vocal crypto critics on the Senate, McCarty hopes Senator Tim Scott, the ranking member on Senate Banking Committee will help lead the vote, since he’s dropped out of the 2024 presidential race. Representative Jim Himes, Richie Torres and other Democrats also side with McHenry in terms of voting for both bills. 

“Jim Himes, who is viewed as one of the smartest Democrats on financial services, has said he’s voting for these bills, and we need to move forward with something which will improve on the current status quo,” McCarty said. “He's got a lot of respect, in the administration, and in the House. It’s amazing that the U.S. Congress has not addressed this issue. We’ve ignored this for 15 years, thinking it might go away or it's just going to remain a niche product.” 

Moving forward, McCarty said, means a clear federal regulatory structure, not 50 state regulators, so the industry can thrive as imagined: international in scope, with national innovation right here in the U.S.