Bipartisan Consensus On Digital-Asset Legislation Breaks Down Over Trump Family Crypto Dealings

A joint committee hearing in the House of Representatives to consider a bipartisan measure to create a clear regulatory framework for digital assets erupted in chaos Tuesday morning when the ranking Democrat on the Financial Services Committee, Maxine Waters (Calif.), denied unanimous consent for the meeting to proceed. Waters interrupted the chairman of the Subcommittee on Digital Assets, Financial Technology and Artificial Intelligence, Bryan Steil (R-Wisc.), during his opening statement, citing Republicans’ refusal to include a provision targeting the Trump families’ extensive crypto dealings, leading to a brief exchange of raised voices as members talked over one another before Waters and some Democrats walked out of the hearing room.

Under House rules, joint committee hearings require unanimous consent of the members involved to convene. Waters’ objection forced Steil, who was chairing the session, to declare the proceeding a roundtable rather than a formal hearing, meaning no votes or other formal steps could be taken. Witnesses set to testify were redesignated “participants” and were not placed under oath.

The long-planned hearing was to include members of the Agricultural Subcommittee on Commodity Markets, Digital Assets, and Rural Development in addition to Steil’s panel, as well as members of the full Financial Services and Agriculture Committees. It was called to consider a measure that would establish clear lines of authority over digital assets between the Securities and Exchange Commission and the Commodities Futures Trading Commission, and create a process for registering digital-asset issuances to allow the two agencies to regulate them.

Read more: Binance Advises Governments on Crypto Rules and Digital Asset Reserves

The effort to bring clarity to crypto regulation had been proceeding with bipartisan support on both committees. But recent revelations about President Trump and the Trump family’s dealings in cryptocurrency and tokens caused some Democrats involved in the effort to withdraw their support. According to Politico, Waters called the chairman of the Financial Services Committee French Hill (R-Ark.) over the weekend to tell him she planned to object to the hearing.

The New York Times reported last week that a fund in Abu Dhabi would be closing a $2 billion business deal using a crypto stablecoin developed by the Trump family-linked World Liberty Financial, in a transaction that could generate hundreds of millions of dollars for the Trump family. The transaction, between the Emirati-backed investment firm MGX and the crypto exchange Binance, would amount to a major contribution by a foreign government to a private Trump venture, setting off alarm bells on Capitol Hill over potential corruption. Several Democrats at Tuesday’s planned hearing, including Waters, mentioned the deal in objecting to proposed legislation.

A dinner President Trump plans to host at one of his private golf resorts for top holders of the TRUMP memecoin he issued last month has also raised eyebrows on Capitol Hill.

Trump and his sons Donald Jr. and Eric unveiled Liberty Financial last year after the crypto industry poured tens of millions of dollars into the campaign, describing it as a new type of bank that could issue loans in cryptocurrency. It issued the $WLFI coin following the launch, raising $550 million, much of which went into the Liberty Financial coffers. It later issued the $USD1 stablecoin that MGX plans to use to complete the deal with Binance.

Across the Capitol in the Senate, the Abu Dhabi deal and the Trump family’s involvement in World Liberty have also stalled, for now, a bipartisan measure to create rules for stablecoins. The crypto-industry backed measure had divided Democrats, with some signing on as co-sponsors, and others, led by Sen. Elizabeth Warren (Mass.) objecting. But the measure had appeared to have enough Democratic votes to overcome a Senate filibuster.

Over the weekend, however, four of the nine Democrats publicly on board with the measure issued a statement withdrawing their support for the bill in its current form, citing the need for additional provisions on anti-money laundering, foreign issuers, and national security.

Senate minority leader Chuck Schumer (D-NY), who previously had been neutral on the measure, also signaled Democrats would oppose this week’s planned procedural vote to allow consideration of the bill to proceed, in the wake of the Times’ reporting.

The move scuttled, at least for now, Republican hopes to expedite passage of the measure that would allow Trump to sign the bill before the Senate’s summer recess.

On Monday, Senate majority leader John Thune (R-SD) said he was open to amending the bill when it comes to the floor to try to win over Democrats’ support, Politico reported. “Changes can be made on the floor for sure,” Thune told reporters Monday, adding he is “waiting to see what it is [Democrats] are asking for.”