McHenry announced the move as he announced broader plans for the Financial Services subcommittees and their chairs.
Why is it important?: The creation of a digital asset panel highlights how cryptocurrency is dominating the financial regulation agenda in Congress. The Financial Services Committee has in the past focused primarily on oversight of banks, Wall Street firms and their regulators.
The digital asset industry has emerged as a lobbying force over the past few years as startups have won allies on both sides of the aisle and tried to pave the way for a friendlier regulatory environment. Cryptocurrency firms are on the defensive after the dramatic crash of the past few months and the implosion of the once-giant FTX, which led to fraud charges against the exchange’s top executives.
The new subcommittee will hold hearings and play a key role in drafting legislation.
Putting cryptocurrency regulation at the top of his legislative agenda, McHenry said the panel will be tasked with providing clear rules among federal regulators and developing policies that encourage financial technology to reach underserved communities.
“We need to respond to new asset class oversight and policymaking,” he said.
Meet McHenry’s top lieutenants: McHenry also named other Financial Services subcommittee chairs, a major change in leadership structure. They include:
- Capital markets — Rep. Ann Wagner Missouri State
“Wagner hasn’t been shy about his interest in capital formation — and that’s why he’s in the right position to change policy,” McHenry said.
- Financial institutions and monetary policy — Rep. Andy Barr Kentucky
“Barr brings a rural perspective, but he [also] he’s been a serious politician since he got here,” McHenry said.
- National Security, Illicit Finance and International Financial Institutions — Rep. Blaine Luetkemeyer Missouri State
“China is a looming threat,” McHenry said, and “Luetkemeyer has a unique voice on that.” He also has the “deep knowledge to fully oversee FinCEN.”
- Supervision and Investigations — Rep. Bill Huizenga Michigan
“Huizenga is in the right position to lead our oversight initiative at a time when we have an administration that is out of bounds,” McHenry said.
- Housing and Insurance – Davidson
“By bringing Davidson to the leadership team, he clearly has a deep interest in technology and deep knowledge of cryptocurrency,” McHenry said. “It brings his perspective to a subcommittee jurisdiction where these ideas need to be applied.”
The McHenry Dilemma: The subcommittee chairman’s assignments — under the radar but powerful Washington benches — marked McHenry’s first major challenge as he took the reins of Financial Services. Whatever he decides, he’s bound to disappoint some of his top members, as he must contend with how to handle term limits for Luetkemeyer and Huizenga, as well as the interest of many members — most notably Wagner — to chair the capital markets subcommittee. was
Luetkemeyer and Huizenga hit GOP six-year term limits atop their long-standing subcommittees — financial institutions and capital markets, respectively — and will have new assignments in Congress. Wagner, the only Republican woman on the committee in the last Congress, was previously the top GOP member of the diversity and inclusion subcommittee.
Before Thursday, it was unclear whether McHenry would follow the Republicans’ domestic term-limit mandate, and his decision was the subject of intense scrutiny by lobbyists working with Financial Services.
“I have made it clear to our subcommittee leadership that I will abide by the term limits of this subcommittee,” McHenry said. “It is very suitable for people’s talents and capabilities. … That means we’re bringing new ideas to all subcommittees.”
A new approach to diversity and inclusion: McHenry recuses a diversity and inclusion subcommittee created by Rep. Maxine Waters (D-Calif.), who chaired the committee when Democrats held the majority.
Instead, McHenry mandated each subcommittee to identify best practices for strengthening diversity and inclusion in their respective areas of jurisdiction.
“We have bipartisan concerns about the lack of interest in broadly defined diversity initiatives in our economy, inclusion initiatives, the nature of equity in our society,” he said. “So it should be across our jurisdiction. Frankly, my fellow Democrats should see this as a huge victory. We didn’t have to do that. … But in talking to my members and watching these subcommittee hearings, there’s a lot to learn, and there’s a lot to learn from the experience of the subcommittees. You can’t have this conversation separately from the rest of politics.”