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House GOP’s crypto pointman is curious but skeptical


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Rep. French Hill has been a leading Republican voice on digital currency oversight the last few years, and he’s now being tasked with chairing the first Financial Services subcommittee dedicated to crypto.

But don’t expect a sales pitch on how the technology will solve the world’s problems.

“I’ve never been a crypto evangelist,” the Arkansas Republican told MM. “I’ve been, I think, a proponent for fintech innovation to be done onshore in the U.S., inside our U.S. regulatory framework.”

You should pay close attention to Hill’s perspective because, as chair of the subcommittee on digital assets, financial technology and inclusion, he’ll play a key role in legislation and oversight of crypto as Washington moves closer to setting new rules for the industry.

Where he stands

“I see the idea of blockchain and digital payments as emerging technologies that may be here to stay — if those innovations produce a use case that the business community and consumers prefer to non-blockchain, non-distributed ledger, non-digital token forms of payment and commerce.

“It’s something that potentially has a future, and therefore we want to have an environment where people can consider those use cases, consider the use of that and develop it, but do so in a way that’s consistent with American laws and tradition and commercial practices.”

Where he draws the line

“I’m certainly skeptical of what I’ve read from the progressive left that somehow digital currencies or that kind of thing are the end-all, the be-all to greater access to wealth and equity.”

“I don’t think there’s a silver bullet to expand opportunity for people to have financial independence, or that, in any way, some fintech innovation or cryptocurrency innovation is going to lead to nirvana in that financial equity space.”

“I do believe that lowering the cost and improving the accessibility of core financial products for people helps people of all incomes.”

Where to begin

“[House Financial Services Chair] Patrick McHenry has digital asset oversight as a principal goal of his for this Congress. And secondly, our staff and our full House Republican team, all the members, were very engaged last August through October working with House Democrats on an idea around stablecoin definitions and regulation. So I think that is a logical starting place.”

“But I believe the Congress also has many different viewpoints now following the FTX collapse. And we have more engagement from the Senate than we would have had last summer which is a positive thing, I believe.”

The broader fintech portfolio 

“You’ve got the data ownership issue. The idea of open banking — who owns the data.”

“You have the idea of tri-party authentication and abandoning username and passwords so that you have a much more cyber-protected, defined authentication process as to who is engaging in the transaction.”

“That’s directly connected to what? Data privacy. … I would hope a privacy bill, a privacy standard, would be a possibility in this Congress.”

I’ve never been a Tuesday evangelist — But I love news tips. Please send potential scoops and announcements to [email protected] and [email protected].

Biden will meet with Democratic congressional leaders … Acting Comptroller of the Currency Michael Hsu talks financial stability during a Goethe University conference at 6:05 a.m. … The CFPB’s Appraisal Subcommittee holds a hearing on appraisal bias at 10 a.m. …

The latest on the debt ceiling

— Senate Majority Leader Chuck Schumer on Monday dared House Republicans to propose plans to cut the budget. “Put your proposals for debt ceiling on the floor, let the entirety of the House debate it and vote on it, and let the American people see and assess these cuts for themselves.”

— President Joe Biden will meet with Democratic leaders from the Hill today.

— Senate Republicans are happy to leave the debt ceiling problem to Speaker Kevin McCarthy.

— Incoming House Budget Chair Jodey Arrington told our Budget & Appropriations colleagues that the U.S. “won’t default” but that “we cannot move forward with our Democratic colleagues and this president with a new line of credit with no strings attached and no guardrails.”

— China criticized the U.S. for its “catastrophic debt problem.

— Sen. Elizabeth Warren’s debt ceiling fix: Raise taxes on the ultra-wealthy and giant corporations.

McHenry backers brush off diversity controversy — Republicans close to the Financial Services Committee believe the diversity and inclusion flap between Chair Patrick McHenry and a handful of conservative pundits won’t amount to much, and that the criticism he’s getting misses the point of his committee reorganization.

For those not up to speed, McHenry is eliminating Democrats’ dedicated Financial Services diversity and inclusion subcommittee and instead spreading the issue across the jurisdiction of other subcommittees. The move triggered accusations from FreedomWorks and a few commentators on the right that he is advancing a “woke” agenda.

But McHenry’s members aren’t complaining at this point. Rep. Byron Donalds, a Freedom Caucus member who will be the only Black Republican on the committee, told our Eleanor Mueller in a statement that he has “complete confidence” in McHenry’s agenda.

“The diversity and inclusion we plan on addressing are far from the road of woke policies like ESG investing or [virtue] signaling on Wall Street, and any suggestion otherwise is misleading,” Donalds said. “It is beyond time for our country to look at diversity and inclusion as a way to truly mobilize and amplify people rather than practice placation.”

One former conservative House aide also pushed back: “He dismantled the sole subcommittee that was devoted to promoting ESG policies, and now groups and individuals on the far right are attacking him for it.”

— Elsewhere in ESG landState Street CEO says Republicans have ‘left facts aside’ — From Ron O’Hanley’s interview with the FT, where he addressed GOP attacks on environmental, social and governance investing: “For us it is not a political issue. It is nothing more than the proposition that climate needs to be incorporated into our investment risk framework.”