Is Political Gridlock Good for Crypto?
One of the big bits of news in the political world this week has been the absolute dogfight for the Republican speaker vote in the House. If you're not in the United States, the TLDR is that Republicans took back the house, AKA Congress and last fall's midterm elections. As one of their first orders of duty, they need to elect a speaker to lead them, and this is not gone so well. We are now four days and 12 ballots into the process. Throughout that, Republican Kevin McCarthy has failed to gain the majority required to be seated as House speaker, holding up the swearing in of hundreds of new members and delaying any legislative work. Despite holding a majority in the House, Republicans have been stymied by a group of hard right members of the ultra conservative freedom caucus who defected from their party to endorse several alternative candidates. Now, obviously the ins and outs and rights and wrongs of this are way, way beyond the scope of this show. But the key thing for us to know is that only 15 times since the inaugural Congress in 1789 did House speaker require more than one round of voting to be elected. The last time this occurred was exactly 100 years ago in 1923, when 9 rounds of voting were required to elect a speaker. Again, without a speaker, nothing in the House can move forward, including committee appointments. Hearings are the adopting of new rules for how the chamber will operate. Because of that, this does impact crypto. In December, the House financial services committee convened a hearing to investigate the collapse of FTX. That committee is also responsible for economic stability issues and financial system oversight, as well as being the main body which proposes and refines draft bills related to its policy area. Without a House speaker, no appointments to the committee can be ratified and important legislation around financial services, including crypto policy can not progress. Before Congress concluded last year, there were a number of crypto bills which were being considered with great urgency, a law regulating stablecoins had reached an impasse, but the matter was considered to have serious importance and time pressure. More broad regulatory bills like the lummis gillibrand sponsored responsible financial innovation act and the state now boozman sponsored digital commodities consumer protection act had been proposed in the Senate but would also need to pass in the House as well. So what does this all portend for legislation to come? I don't think it's unreasonable to think that if Republicans who hold the balance of power in the House can't even come together on an agreement on appointing a speaker, there is a serious possibility of pretty substantial gridlock in Congress in general. For the crypto industry, there may be an element that no news is good news here. Without a functional legislative body to enact new regulation, the industry could continue to grow without additional government oversight and restriction.