House Financial Services Chair Patrick McHenry, who plans to retire at the end of his term, is preparing to ramp up work on cryptocurrency regulation, money laundering rules and China policy in his final year in office. | Francis Chung/POLITICO
House Financial Services Chair Patrick McHenry isn’t planning to coast through his final year in office.
The North Carolina Republican in an interview Friday outlined a series of major legislative and oversight targets that he’ll be driving over the next several months, as he faces a critical window to cement his legacy. McHenry plans to step down at the end of his term after two decades in office.
First things first
McHenry said his top priority is to pass and enact legislation on cryptocurrency, data privacy and capital formation.
He said he’s working with House leadership to find floor time for landmark crypto bills that would revamp the digital asset powers of the SEC and CFTC and also set up a new legal pathway for stablecoins.
McHenry said his biggest challenge on the crypto bills is “politics.” He said Senate Banking Chair Sherrod Brown (D-Ohio) and Sen. Elizabeth Warren (D-Mass.), who have pushed back on his proposals, are leaving consumers worse off.
“It’s just a question of getting enough floor time and focus from policymakers to see why we need market structure, why we need a definition, why we need regulators that are fully empowered and why that’s good for capital formation, why that’s good for consumer protection,” he said. “What we need is broader engagement. And on some of these policies, like with China and with digital assets, a significant challenge is education.”
McHenry said recent Treasury Department recommendations to bolster crypto anti-money laundering rules are “problematic.”
“But they’re showing that there is a need for congressional action to bring clarity here,” he said. “I welcome that, and I welcome the conversation on the proper approach and a balanced approach.”
In addition, McHenry is working with Foreign Affairs Chair Michael McCaul (R-Texas) and Select Committee on the CCP Chair Mike Gallagher (R-Wis.) to hash out a compromise on how to police capital flows to China by the end of the first quarter.
McCaul and his allies are backing legislation that would restrict U.S. investment in certain sectors of China’s economy, including AI and quantum computing. McHenry wants to use company-specific sanctions instead.
He said he opposes McCaul’s bill.
“It’s a deeply flawed approach that limits American business and doesn’t actually have a strong effect against China,” he said.
Republicans on the other side, who are fighting for restrictions on outbound investment into China, say McHenry is outnumbered. But he’s not backing down.
“They thought they could roll me and say nasty things about me in the press and I would cave,” he said. “They can say nasty things if they wish, but that doesn’t make their policy good or effective.”
What’s next for Financial Services
McHenry is planning to tee up a series of additional oversight and legislative targets in the first quarter. January’s focus will be on “rogue regulators,” followed by work in February on “holding bad actors accountable” and a March emphasis on American competitiveness.
— “We’re going to start with a focus on rogue regulators from this administration: the capital rule, the Basel Endgame, the climate rulemaking and the regulatory agenda of the Securities and Exchange Commission.”
— “Then we’ll have a keen focus on AML-BSA policies and China’s abuse of the international finance system. So a lot of focus on OFAC and FinCEN and how we enforce sanctions, how we carry out economic statecraft and how we protect against money laundering at home.”
— “Then we want to pivot into how we enhance our competitiveness. That too entails the Basel Endgame, the rulemaking of the administration and also what we seek to do to make the economy better” via policy.
The “opening act” will have a heavy emphasis on oversight but legislation is also planned, including on sanctions and anti-money laundering rules.
When asked why he’s retiring, McHenry said it’s been a “key year in my service in Congress” and a “helluva ride,” after being a central player in electing a speaker and then temporarily serving in the post himself. He also cited GOP committee term limits, which mean he wouldn’t be able to keep serving as the Financial Services committee’s top Republican after 2024 without seeking a waiver.
“Republican term limits are impactful and matter, and they’re good for the institution and for the Republican conference,” he said. “It’s a net win. In my circumstance, I knew that was the deal going in.”
“I’m not down on the institution in any way,” he added.
What he’ll do after leaving office
“I’m open to what comes next and interested in seeing what’s out there,” he said. “But I knew I had to make the decision and close this chapter before determining the next. Truly.”