Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. MM warned a couple of months ago that crypto isn’t getting a new U.S. rulebook, with opponents emboldened after the fall of FTX. This week is proving why we were pessimistic. The lowest-hanging fruit of crypto legislation — rules for so-called stablecoins — appears to have lost the bipartisan momentum that it had last year. That became clear at a hearing Wednesday when House Democrats complained that Republicans were moving forward on a bill without their buy-in. The public airing of grievances was notable because House Financial Services Chair Patrick McHenry, who is leading the effort, had long stressed that he wanted to work hand-in-hand on the issue with Rep. Maxine Waters, the panel’s top Democrat. The pair hashed out a draft last year when she was chair — a compromise that McHenry at the time called an “ugly baby.” But, as my colleague Eleanor Mueller put it in a new story, the bill “is looking more like an orphan.” “We’re starting from scratch,” Waters said. Republicans came up with “a whole new bill,” Waters said, and so she told McHenry that Democrats would come up with their own proposal. The two sides haven’t gotten together to figure it out, according to Republicans and Democrats. Lawmakers have had to reset work on the bill in part because the crypto world has changed since McHenry and Waters negotiated a draft last year, after the FTX meltdown revealed widespread industry weaknesses. “A lot of things have happened since this draft,” he said as he tried to address Democrats’ concerns, adding that he and Waters believed their initial draft was “imperfect.” McHenry’s challenge is that he’ll need to win over Democrats and rank-and-file members on both sides of the aisle if he wants to, as he says, “make law.” The road will probably continue to be bumpy. “The ranking member and the chairman’s staff are not the people who are going to be deciding this,” Rep. Bill Foster (D-Ill.) told Eleanor. “Anything that succeeds in coming out of committee will probably be a bipartisan thing out of the ideological center. … That doesn’t happen naturally when it’s a leadership-driven thing, compared to a wide discussion.” It’s Thursday — The MM crew is heading to the Milken conference in Beverly Hills the first week of May. Will you be there? Let us know: Zach Warmbrodt, Sam Sutton.
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