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Germany Arrests Suspects in QAnon-Inspired Coup Plot

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German authorities on Wednesday said they had dismantled a QAnon-inspired terrorist cell on suspicion of planning to overthrow the government.

Twenty-five people were arrested in the early hours of the day, 22 of whom are suspected of conspiring to foment a coup, the federal prosecutor said. Their alleged plans included an armed storming of the federal parliament. The other three, including a Russian citizen living in Germany, are suspected of supporting the group, the prosecutor said.

More than 3,000 police officers including special forces conducted raids at 150 properties across Germany, Italy and Austria, in one of the largest operations of its kind in recent history, officials said.

“This organization has, according to our knowledge, set the goal of using violence and military means to overthrow the existing liberal democratic order in Germany,” federal prosecutor Peter Frank told reporters Wednesday.

The far-right group, whose suspected leaders included a former elite paratrooper commander, had been attempting to recruit police and armed-forces members, and had sought to set up terrorist cells across Germany to help it install and maintain a military government, according to the prosecutor.

“The suspects are united in a deep rejection of the Federal Republic of Germany, which has in the course of time developed in a decision to initiate a violent coup for which they had made specific preparations,” the prosecutor said.

“The members of the organization understood that their endeavor could only be realized by using military means and violence against representatives of the state. This includes committing murders.”

“The people who had been arrested subscribe to conspiracy myths composed of different narratives of the Reichsbürger and the QAnon ideologies,” Mr. Frank said.

QAnon is a far-right, loosely organized network and community of believers who embrace a range of outlandish and unsubstantiated beliefs. It has spread worldwide from the U.S. and has been linked to the Jan. 6, 2021, attack on the Capitol.

The German Reichsbürger, or Citizens of the Reich, movement doesn’t recognize the authority of the postwar government. Members have printed their own passports and other documents, and set up their own schools. Some factions seek to re-establish the German Empire that was dismantled after World War I.

Outside the U.S., QAnon online channels have their largest subscriber base in Germany, according to several assessments by extremism researchers. The conspiracy has been spreading rapidly in Germany since 2020, especially in the ranks of critics of the government’s Covid-19 pandemic restrictions, according to the German domestic intelligence agency. 

The agency said it considers the ideology a potential source of violence given its strongly anti-Semitic message, its legitimation of violence and its opposition to the state. In August 2020, protesters opposed to pandemic restrictions, some of them carrying “Q” banners, were blocked by police as they tried to storm the Reichstag building, home to the lower house of parliament.

There was no indication that members of the alleged cell were in contact with QAnon sympathizers in the U.S. 

The people detained on Wednesday included a sergeant serving with the KSK, the special military command of Germany, and a former lawmaker, as well as several former servicemen, including two colonels, officials said.

One of the alleged ringleaders was named by the prosecutor as Heinrich XIII P. R. The website of the Der Spiegel news weekly and other German news publications identified the man as Heinrich XIII Prinz Reuss, a 71-year-old prince and known far-right extremist. In a conference speech posted on YouTube in 2019, Mr. Reuss espoused anti-Semitic views and conspiracies about historic events and German politics.

More than 3,000 police officers conducted raids at 150 properties across Germany, Italy and Austria.



Photo:

TILMAN BLASSHOFER/REUTERS

Calls to a number appearing on what claims to be the prince’s website went unanswered and a lawyer for him couldn’t be identified.

Another alleged conspirator was identified by the prosecutor as Birgit M.-W. Der Spiegel and other German publications said the suspect was Birgit Malsack-Winkemann, 58, a judge in Berlin and a former member of parliament for the nationalist Alternative for Germany party. 

A lawyer who has in the past represented Ms. Malsack-Winkemann declined to comment. 

After leaving parliament, Ms. Malsack-Winkemann resumed work as a judge in March. The Berlin state government later sought to have her removed from the bench, arguing that she had promoted extremist positions online and as a lawmaker. The Berlin administrative court rejected the government’s request in October, saying that it violated the principle of an independent justice.

Ms. Malsack-Winkemann was temporarily suspended as judge on Wednesday after an intervention of the president of the Berlin Regional Court, a spokeswoman for the court wrote in an email Wednesday. The spokeswoman didn’t mention the arrest.

Mr. Frank, the prosecutor, said eight of the people arrested had been remanded into custody by a judge.

One of the suspects arrested was a former police officer who had been involved in securing Jewish sites in the German state of Lower Saxony, according to the American Jewish Committee, a nonprofit.

“It now must be established that there is no security risk [for these sites],” the organization said in a tweet.

The suspected conspirators had set up several chat channels, primarily on social network Telegram, and had congregated in a property that one of them owned, officials said.

Weapons were secured during the raid and investigators are probing an alleged plan by the suspects to storm the German parliament and arrest legislators in an action that they hoped would bring about a collapse of the German government, according to the prosecutor.

It remains unclear, however, whether the group planned an imminent attack, or whether it had the capacity to pull out a coup in the 84-million-strong country. In addition to the 25 people who were taken into custody, there are another 27 suspects who haven’t been arrested, prosecutors said.

The suspects had been meeting in a format they called the council, a mock government cabinet headed by Mr. Reuss and designated ministers, which was supported by a military arm, according to prosecutors. The body was meant to govern Germany with the support of a military arm consisting of several retired officers in their 60s and one active serviceman. 

“The terror organization that was unearthed today was driven by violent takeover fantasies and conspiracy ideologies, according to the current state of the investigation,” said German Interior Minister Nancy Faeser. The police raid was conducted in very dangerous circumstances but fortunately no one was injured, Ms. Faeser added.

Ms. Faeser said that it was “especially bitter” that a former legislator was implicated in the alleged conspiracy.

One of the alleged leaders had established contacts with representatives of Russia in Germany to facilitate the planned takeover, the prosecutor said, adding that there was no evidence that the Russian officials responded positively to his advances. The Russian citizen who was arrested as a helper of the group is suspected of having facilitated such contacts.

There has been no involvement by the Russian government, which only found out about the case from media reports, Kremlin spokesman Dmitry Peskov said.

The Russian Embassy in Berlin said it learned of the raids from the news and was unfamiliar with any Russian citizens connected. Russian diplomatic representations in Germany don’t have contact with members of terrorist organizations, the embassy said.

There are more than 20,000 adherents of the Reichsbürger movement in Germany, including 2,100 potentially violent supporters, according to the latest annual report of Germany’s domestic intelligence agency.

Several police officers and members of the armed forces have in the past been arrested in raids connected to the Reichsbürger and similar groups. While members of such groups from the ranks the armed forces and security and law-enforcement agencies constitute a small minority, the presence of rogue networks within the security establishment is an acutely sensitive matter because of Germany’s Nazi past.

The group that was foiled Wednesday had been set up around November 2021, driven by a belief that Germany is governed by a so-called “deep state” and would soon be freed by a so-called “alliance,” an alleged secret society of officials and military officers from various countries including the U.S. and Russia, the prosecutor said.

The group is suspected of having planned armed attacks on government institutions, said Germany’s justice minister, Marco Buschmann.

“Democracy is defending itself,” Mr. Buschmann tweeted Wednesday.

Write to Bojan Pancevski at bojan.pancevski@wsj.com

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US

Republicans in Strong Position to Retake House as Counting Continues

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WASHINGTON—Republicans remained poised to win control of the House of Representatives with more than a dozen races still uncalled Monday, as Congress returned to work and new members set to take office next year began orientation.

Democrats are projected to hold their Senate majority after a weekend win in Nevada, giving them the 50 seats needed to control the chamber. A final Senate race, in Georgia, is set for a runoff on Dec. 6 because neither candidate got a majority.

In the House, the GOP appeared on track to win the barest of majorities, nonpartisan analysts said. On Sunday night, additional vote tallies in California and Arizona put Republican candidates in striking distance of victory, though those races hadn’t been called.

“Dems’ dreams of holding the House majority probably died tonight,” David Wasserman, the House editor of the nonpartisan Cook Political Report, tweeted Sunday, referring to shifts toward Republicans in three races in those states.

Republicans currently have won 212 House seats with Democrats at 204, according to the Associated Press tally. A party needs 218 for a majority in the chamber. The GOP could end up only a couple of seats above that number, and the party got a boost Sunday by flipping a seat held by Democrats in Oregon.

Headed into the election, Democrats had a 220-212 majority, with three vacancies.

The possibility of an extremely narrow GOP majority is already creating challenges for Minority Leader Kevin McCarthy (R., Calif.). Mr. McCarthy is running to be speaker assuming Republicans take back the House, but he is meeting resistance from his party’s right flank, which now has greater leverage to influence the vote.

Mr. McCarthy will need a simple majority of his conference during Tuesday’s leadership vote, to be selected as the party’s preference for leader. To become speaker, he will need a majority of the full House in a vote in January.

Rep. Andy Biggs (R., Ariz.) plans to run against Mr. McCarthy for the post, according to people familiar with the matter. The ally of former President

Donald Trump

is unlikely to get enough votes to win, but the candidacy could provide a gauge of opposition to Mr. McCarthy.

Allies of Mr. McCarthy made calls to Democratic Rep.

Henry Cuellar

of Texas over the weekend and asked him if he would switch parties to expand the GOP majority, according to five people familiar with the calls.

Mr. Cuellar turned them down, according to multiple people. A spokesman for Mr. McCarthy said the calls weren’t made at the request of Mr. McCarthy. “Anyone suggesting this is simply exercising in fan fiction,” said spokesman Mark Bednar.

Meanwhile, Senate Minority Leader

Mitch McConnell

(R., Ky.) was also facing pushback from some of his Republican members, who questioned whether the party should delay the leadership election until after the Georgia runoff, in which Republican

Herschel Walker

is facing Democratic incumbent Sen.

Raphael Warnock.

The Senate GOP elections are set for Wednesday.

Senate Minority Leader Mitch McConnell. The Senate GOP elections are set for Wednesday.



Photo:

SARAH SILBIGER/REUTERS

New members are in Washington this week for orientation. Some who hadn’t had their races called were also invited and would be included in leadership votes. House Democrats will vote for their leadership later this month and the Senate is expected to keep their same top leaders.

Democrats had performed better than expected in the midterm elections, even with the anticipated loss of the House majority. They picked up a GOP-held Senate seat and flipped some House seats, including in Washington over the weekend.

Of the remaining uncalled competitive House races, a half-dozen were in California. They included the re-election contests of Democratic Reps.

Katie Porter

and

Mike Levin

and GOP Reps. David Valadao, Mike Garcia and Michelle Steel as well as one open seat. Both parties were also intensely watching close contests in Arizona, Colorado and Oregon.

While the contest for House control continued, Senate Democrats celebrated their victory, and the closely watched gubernatorial race in Arizona between Republican Kari Lake and Democrat

Katie Hobbs

remained too close to call. Ms. Hobbs was ahead Sunday evening by about 1 percentage point, with about 160,000 more ballots expected to be counted.

While Ms. Lake had a path to victory, she would need to overperform in all remaining ballots. The campaign manager for Ms. Hobbs, the Arizona secretary of state, released a statement Sunday night calling her “the unequivocal favorite to become the next governor of Arizona.”

In the key swing states of Arizona, Nevada, Michigan and Pennsylvania, candidates who made false claims about the 2020 election ran for positions that can exert great influence over election administration. Here’s a look at some of the results of those midterm races, and what it means for future elections. Illustration: Laura Kammermann

Write to Eliza Collins at eliza.collins+1@wsj.com. and Chad Day at Chad.Day@wsj.com

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World

Hu Jintao’s Exit from China’s Party Congress Causes a Stir

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Retired Chinese leader

Hu Jintao,

the 79-year-old predecessor to

Xi Jinping,

was the focus of a highly unusual stir at Saturday’s closing session of the Communist Party’s twice-a-decade congress, making an unceremonious exit mid-proceedings.

The departure of Mr. Hu appeared to illustrate how Mr. Xi’s supremacy has been aided by a generational shift in power.

Jiang Zemin,

the 96-year-old who led the Communist Party from 1989 to 2002, didn’t appear at all among the almost 2,300 delegates in the Great Hall of the People, during neither the Oct. 16 opening nor the Oct. 22 closing sessions of the party congress.

Mr. Xi has set the stage to extend his rule into a second decade, and on Saturday the Communist Party announced new names for some top spots as some of his rivals head toward retirement. The congress provides a rare vantage point to observe party elders, who have traditionally played a behind-the-scenes role in power-maneuvering, as 69-year-old Mr. Xi breaks with recent precedent and positions himself to extend his rule.

Footage shows former Chinese leader Hu Jintao being accompanied off stage at the Communist Party congress, where he was sitting next to President Xi Jinping. Beijing didn’t immediately return questions on what happened. Photo: Mark R Cristino/Shutterstock

Midway through the otherwise carefully-choreographed closing session, Mr. Hu was helped out of his chair next to Mr. Xi and inexplicably led out of the hall. During the congress’s Oct. 16 opening session, Mr. Hu’s ashen look and gray mop of hair stood out, and to some China watchers it seemed to illustrate his faded relevance in the Xi era.

Footage shot by foreign media in the hall, which wasn’t included in the official China Central Television broadcast, showed Mr. Hu seemingly reluctant or unable to stand up when an aide tried to lift him off his chair. In the commotion, Mr. Xi leaned toward Mr. Hu and appeared to speak with him. Mr. Hu was ushered off the center dais, briefly looking back at Mr. Xi and patting outgoing Premier Li Keqiang on the shoulder as he departed.

It wasn’t clear why Mr. Hu left or where he went. The incident has gone unmentioned in Chinese state media coverage of the event. China’s State Council didn’t immediately respond to a request for comment.

On Twitter, Xinhua news agency suggested Mr. Hu’s issue was health related. In English, indicating the report was aimed at an international audience, the government-run agency said Mr. Hu “was not feeling well during the session” and left to rest in a room next to the meeting venue. “Now, he is much better,” the account said.

Mr. Hu’s decadelong tenure as party leader and president was notable for a collective leadership of China that Mr. Xi abandoned after taking power in 2012, though Mr. Hu isn’t known to have ever commented publicly on his successor’s political strategy.

He had been shown by CCTV voting on Saturday alongside other delegates, but commentary and video of his departure from the meeting hall couldn’t be found.

Retired party elders rarely appear in public, but they retain influence in China, and their presence at major party events can signal regime continuity. Mr. Jiang in particular had sometimes also been a counterweight to his successors, Mr. Hu and Mr. Xi, according to political analysts.

China’s leader Xi Jinping, speaking next to the empty seat that had been occupied by former Chinese president Hu Jintao until he was escorted from the Great Hall of the People.



Photo:

TINGSHU WANG/REUTERS

Mr. Jiang was present for the 2017 Communist Party congress and, like Mr. Hu, has an official overseer role, with a seat on a 46-member Presidium Standing Committee along with Mr. Xi, the party leader.

Mr. Jiang’s absence this year will surely fuel questions about his frailty. His American biographer,

Robert Lawrence Kuhn,

said rumors of Mr. Jiang’s “imminent demise continue”—as they have for several years.

Age may be the likeliest explanation for Mr. Jiang’s absence.

He also missed the Communist Party centenary in July 2021, and he last appeared in public during National Day celebrations in Beijing in October 2019, when his giant portrait was carried in a parade.

Victor Shih,

an expert on elite Chinese politics at University of California San Diego, noted by email that Mr. Jiang has needed assistance for some time. He also said Mr. Xi early in his tenure targeted military officials close to Mr. Jiang in his anticorruption crusade, leaving the former leader with little choice but to maintain a low profile.

At the party congress five years ago, Mr. Jiang provided a pointed break in the pageantry of cadres staring blankly ahead, as he used an oversize, illuminated magnifying glass to pore through pages of the party work report. During a three-hour address by Mr. Xi, Mr. Jiang also yawned and appeared to doze off.

Other notable absences at this year’s congress included former Premier

Zhu Rongji,

who turns 94 on Monday and is credited with putting China’s economy on a course toward opening to the world. Other no-shows were a pair of former Politburo Standing Committee members,

Wu Bangguo

and

Luo Gan,

both 81.

Attempts to gauge whether appearances by certain elders actually matter in Chinese officialdom is a reflection of how the party’s secrecy fuels rumors.

Aside from those Chinese officials who end up in prison, cadres typically dye their hair jet black, so Mr. Hu’s gray had already stirred talk, before his departure, that the color was a subtle signal that his time as a force in the party is over.

Mr. Hu’s “appearance suggests a very sedentary lifestyle, but it is unclear whether it is voluntary or not,” Mr. Shih said.

How elders clap, too, is watched for clues, such as in the case of an official who helped usher Mr. Jiang into retirement 20 years ago,

Li Ruihuan.

Mr. Li stood out on Oct. 16 for appearing to withhold applause as Mr. Xi entered the hall just in front of him.

“Li at this point has little influence in the government so his public display of dissatisfaction should be tolerated. He may not be allowed to appear in the next congress though,” Mr. Shih said.

One elder demonstrated his support for Mr. Xi with his presence at the Oct. 16 opening—staunch conservative Song Ping, who at age 105 is older than the party itself.

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World

Biden Administration Pares Back Covid Fight as Funding Push Falls Short

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The Biden administration has stopped paying to mail out free Covid-19 tests and expects to end free vaccines for Americans after Congress dropped billions of dollars for such efforts from a government funding bill last month.

People familiar with the matter said the administration’s Covid-19 task force will remain in place ahead of an expected uptick in cases in the coming winter months. But the team will shift focus from emergency response to longer-term issues, such as boosting domestic manufacturing of personal protective equipment, researching long Covid and supporting genomic sequencing to identify variants, the people said.

The shift means that health insurers and employers will likely pay for Covid-19 vaccines, drugs and tests, as they do for most medical products and services.

The administration on Tuesday released updates to the national biodefense strategy that it said would strengthen surveillance for risky pathogens and preparedness for future outbreaks or biowarfare attacks. Some of the planning is under way, officials said, and other aspects are dependent on $88 billion in funding for pandemic preparedness and biodefense the administration has requested from Congress.

Changes in the administration’s pandemic strategy come as Covid-19 cases are climbing in Europe, which is often a precursor to rising case numbers in the U.S. And the arsenal of available treatments for people infected with Covid-19 has dipped as mutations allow variants to evade them.

The White House had sought $22.4 billion from Congress for more Covid tests, vaccines and treatments.



Photo:

Kyle Mazza/Zuma Press

“Just because we’ve ended the emergency phase of the pandemic doesn’t mean Covid is over,” said

Eric Topol,

executive vice president of Scripps Research, a medical-research facility.

After the coronavirus hit, the federal government funded development of some Covid-19 vaccines and took control of the purchase and distribution of the shots, tests and other products to guarantee sufficient supplies and make sure they went where needed.

Federal officials planned to relinquish their control to the private sector after the emergency subsided.

Eli Lilly

& Co. said in August it planned to start selling its Covid-19 antibody drug after federal supplies ran out and without new appropriations from Congress.

The federal government has also wound down its program of providing free Covid-19 tests to people who ordered them online, though it is still distributing free tests in other locations, such as long-term-care facilities and rural health clinics.

The issue is tricky for the Biden administration. President Biden had campaigned on a promise to get the pandemic under control, and the White House has sought to show progress in combating the virus. Yet many Americans have stopped masking and taking other precautions, which administration officials worry will put them at risk if a new wave emerges during the winter.

The administration had sought $22.4 billion for the Covid-19 response from Congress, and it recently extended the pandemic’s status as a public-health emergency. The White House said the money was needed to pay for more tests, vaccines—including development of new, next-generation vaccines—and treatments.

The money wasn’t included in a must-pass government-funding bill last month.

To build support for new funding, Biden administration officials have been warning about the risks to people if cases surge in the cold-weather months and there aren’t sufficient supplies of Covid-19 products because the federal government lacks the money to buy them.

“We are going into this fall and winter without adequate tests because of congressional inaction,”

Ashish Jha,

the White House Covid-19 coordinator, said recently. “You can’t fight a deadly virus without resources.”

The new bivalent vaccine might be the first step in developing annual Covid shots, which could follow a similar process to the one used to update flu vaccines every year. Here’s what that process looks like, and why applying it to Covid could be challenging. Illustration: Ryan Trefes

Republicans, who opposed including the Covid funds in the spending bill, said there had not been a thorough accounting of how pandemic-relief funds had been spent. Congress had allocated about $4.6 trillion as of August, according to USASpending.gov, which tracks federal-spending information.

“You have been given astonishing amounts of money,” Sen.

Richard Burr

(R., N.C.) said at a recent congressional hearing.

Without a new appropriation, funds for the federal government to buy and supply Covid-19 vaccines are expected to run out by early next year. The administration now is looking into ways to guarantee that about 30 million uninsured people can access future boosters, treatments and vaccines. Foundations, companies and other groups have paid for non-pandemic medicines for some people who don’t have insurance.

The administration is also in talks with various stakeholders such as vaccine makers about how to transition from the government procuring vaccines to more traditional models, such as insurance coverage of shots or treatments.

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The administration is also figuring out how to move forward with efforts to develop a more durable, next-generation Covid-19 vaccine without the boost in funds. Without a vaccine that blocks both infection and transmission, the virus has been able to continue mutating to evade immunity. Members of the White House Covid-19 task force have said a nasal vaccine could be more effective because it targets immune responses where the virus first enters the body, though developing such a shot poses scientific challenges.

Anthony Fauci,

the president’s chief medical adviser, said the National Institutes of Health is giving grants totaling more than $60 million over three years to academic institutions for development of a broad coronavirus vaccine. But more funding will be necessary to finish that work, said Dr. Fauci, who leads the NIH’s National Institute of Allergy and Infectious Diseases.

Some public-health leaders and federal officials say the U.S. is falling behind countries such as China, which has introduced a vaccine that is inhaled through the nose and mouth.

“It’s a national-security risk,” said

Jennifer Nuzzo,

a professor of epidemiology and director of the pandemic center at the Brown University School of Public Health in Rhode Island. “Other countries have looked at how the U.S. is struggling.”

—Michael R. Gordon contributed to this article.

Write to Stephanie Armour at Stephanie.Armour@wsj.com

Corrections & Amplifications
The White House wants to show progress in combating the coronavirus. An earlier version of this article incorrectly said the White House wants to show progress in combating the vaccine. (Corrected on Oct. 18)

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US

China’s Xi Jinping Stakes Out Ambitions, With Himself at the Center

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HONG KONG—Chinese leader

Xi Jinping

cast himself as the decisive helmsman his country needs in surmounting great adversity, pledging to build a more secure, powerful and egalitarian nation as he signaled plans to extend his decadelong rule.

In a Sunday speech, opening a Communist Party congress where he is set to defy recent norms and claim a third term as party chief, Mr. Xi issued a robust defense of his record, shaking off concerns over Covid-19, a sluggish economy and troubled ties with the U.S. He recalled his efforts to curb corruption, rally public support for the party and champion China’s political system as a counterweight to Western liberal democracy.

A campaign of “self-revolution,” marked by forceful crackdowns on corruption and political dissent, Mr. Xi said, has “ensured that the party will never change in quality, change its color, or change its flavor”—party parlance for threats to Communist rule in China.

In televised remarks delivered from Beijing’s Great Hall of the People, Mr. Xi also claimed significant successes in fighting Covid-19, enforcing order in Hong Kong and curtailing what he called separatist activism in the island democracy of Taiwan, which Beijing claims as its territory.

He reiterated that Beijing won’t renounce the use of force in unifying Taiwan, so as to deter outside interference and splittist elements. “The complete unification of the motherland must be realized, and it will be realized,“ he said, drawing loud applause.

Mr. Xi directed parts of his speech to addressing concerns about China’s ties to the rest of the world, amid rising geopolitical tensions and Beijing’s own Covid-imposed isolation, reaffirming his support for globalization and adherence to a decades-old national policy of “reform and opening up.”

While Mr. Xi warned of risks, challenges and “even dangerous storms” ahead, his report to the congress largely promised a continuation of his firm-handed rule at home and a more assertive exercise of power abroad, including by making the military combat-ready.

“The work report was unambiguously about continuity,” Joseph Torigian, a professor in Chinese politics and foreign policy at American University, said on Twitter. “Although historic, this Congress will almost certainly not signify fundamental new policy directions.”

In laying out his economic goals, Mr. Xi renewed his promise of a new era of “common prosperity,” in which the party exercises greater control over private capital and distributes China’s wealth more evenly. Such efforts have unnerved entrepreneurs at home and investors from abroad after sweeping regulatory crackdowns on Chinese tech giants and private businesses in recent years.

President Xi addressed several topics including Taiwan, Hong Kong and the fight against Covid-19 in his speech at the party gathering in Beijing.



Photo:

Mark Schiefelbein/Associated Press

Mr. Xi also trumpeted what he called “Chinese-style modernization,” doubling down on his program of party-led economic planning and development. He reiterated calls for ensuring China’s economic self-reliance, urging more indigenous efforts to develop high-end technologies that can serve the nation’s strategic needs—a demand that comes as the U.S. ramps up efforts to deny China access to critical components such as advanced semiconductors.

Since taking power in late 2012, Mr. Xi has assumed a degree of autocratic authority unseen since the Mao Zedong era and upended recent retirement practices to allow himself to stay in office indefinitely.

By taking a third term as party chief, the 69-year-old Mr. Xi would depart from the decadelong leadership cycle that his predecessor set and dismantle succession norms designed to prevent a return to a Mao-style dictatorship. Political analysts expect Mr. Xi to promote protégés and allies into senior party roles and thereby cement his political supremacy.

Mr. Xi devoted much of his speech to emphasizing how his party aligns itself with the Chinese people. “The country is the people, and the people are the country,” he said. The entire party must always “share its destiny and connect heart-to-heart with the people.”

The party has in recent years increasingly described Mr. Xi as renmin lingxiu, or “people’s leader,” a designation that echoes Mao’s title of weida lingxiu, or “great leader.” Party insiders say the congress could confer more tokens of power on Mr. Xi, such as by formally designating him renmin lingxiu and cementing his claim to being on par with Mao as China’s greatest statesmen.

Another possibility would involve shortening the label of Mr. Xi’s political philosophy, “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,” to simply “Xi Jinping Thought.” This would directly mirror “Mao Zedong Thought,” which the party exalts as a guiding ideology second only to Marxism-Leninism.

Chinese President Xi Jinping has used propaganda to extend his rule and set the stage for a third term. WSJ looks at three moments over his 10 years in power that trace his rise to become the country’s most powerful leader since Mao Zedong. Photo illustration: Adam Adada

Mr. Xi’s speech, lasting about 104 minutes, was roughly half the length of his remarks at the 2017 congress, where he spoke for more than 200 minutes. State broadcaster China Central Television said Mr. Xi’s address on Sunday comprised highlights from a full report that congress delegates will review over the coming week.

In the Sunday speech, Mr. Xi declared that the party had scored “historic victories” under his watch, citing the party’s centennial last year, its stewardship over a “new era” in Chinese socialism, and his campaign to eradicate rural poverty. He also reiterated long-term goals that he first laid out five years ago: ensuring that China achieves a degree of “socialist modernization” by 2035 and becomes a “modern socialist power” by the middle of the 21st century.

Some analysts have cited the 2035 target—when Mr. Xi believes China should have become a more equal and prosperous society with an innovative economy and a modernized military—as a possible timeline for his stint as paramount leader.

The party has pitched its twice-a-decade congress as a triumphant moment for China, even as it confronts wide-ranging challenges. Mr. Xi’s zero-tolerance approach to Covid-19 has throttled the domestic economy with repeated lockdowns and disruptions, exacerbated by a property-market slump.

Tensions with the U.S. and other Western powers have intensified as they challenge Beijing’s push for technological supremacy, territorial claims over Taiwan and continued support for Moscow following Russia’s invasion of Ukraine. Mr. Xi didn’t mention the war in Ukraine during his speech, which wasn’t expected to go into detail on foreign affairs.

Despite tightened security and censorship, frustrations with Mr. Xi’s policies boiled over into overt dissent on Thursday, when a protest took place on a highway bridge in Beijing. Dark smoke swirled over protest banners condemning Mr. Xi as a “traitorous dictator”—a rare display of defiance that was quickly snuffed out by local authorities.

More than 2,300 delegates were present at the Great Hall of the People, including retired party elders. Mr. Xi’s immediate predecessor,

Hu Jintao,

occupied a seat on the dais next to the incumbent’s. Notable absentees included

Jiang Zemin,

the 96-year-old former leader who served as general secretary for 13 years until 2002, as well as former Premier

Zhu Rongji,

who turns 94 this month.

Beijing’s Great Hall of the People, where the Chinese Communist Party’s twice-a-decade congress opened on Sunday.



Photo:

Mark Schiefelbein/Associated Press

The congress, which ends Saturday, will vote on the proposed changes to the party charter and elect a new Central Committee, which since 2007 has comprised more than 370 full and nonvoting alternate members, drawn from senior ranks of the party, government, military and state industry.

The new Central Committee will convene the day after to choose the next Politburo and its elite Standing Committee, the party’s top decision-making body. The Politburo has comprised 25 full members since 2007, while the Politburo Standing Committee has featured seven members since 2012, when it was reduced from nine.

The share of seats that Xi allies occupy in the next leadership would offer clues on how much clout the Chinese leader can exert in pursuing his priorities. Analysts say Mr. Xi isn’t likely to designate any potential successors, as doing so would undermine his own authority.

Top state positions, including the next premier and other ministerial roles, won’t be finalized until China’s annual legislative session next spring.

In his Sunday remarks, Mr. Xi didn’t say whether he plans to stay in power to fulfill the vision he outlined. Mr. Xi would turn 74 years old by the end of his third term, two years younger than Mr. Jiang was when he stepped down as party chief in 2002.

Write to Chun Han Wong at chunhan.wong@wsj.com

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Business

SEC’s Gensler Signals Support for Commodities Regulator Having Bitcoin Oversight

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WASHINGTON—Securities and Exchange Commission Chairman

Gary Gensler

signaled that he would support Congress handing more authority to the SEC’s sister markets regulator to oversee certain cryptocurrencies such as bitcoin.

Mr. Gensler, speaking at an industry conference, said Thursday he looked forward to working with Congress to give the Commodity Futures Trading Commission added power, to the extent the agency needs greater authority to oversee and regulate “nonsecurity tokens…and the related intermediaries.”

The remarks come amid an intensifying battle among federal agencies and congressional committees that oversee them over who will regulate crypto.

Cryptocurrencies remain largely unregulated by the federal government, leaving investors without protections from fraud and market manipulation that come with many other types of investments. The competition for jurisdiction heated up in recent months as a meltdown in crypto markets underscored the need for guardrails in the eyes of many policy makers.

The competition also reflects the industry’s ramped-up lobbying presence in Washington and its push to reach more mainstream investors through Super Bowl ads and other high-profile marketing initiatives.

Mr. Gensler, who headed the CFTC from 2009 to 2014, qualified his remarks by saying he welcomed working with lawmakers as long as it doesn’t take away power from the SEC.

“Let’s ensure that we don’t inadvertently undermine securities laws,” he said. “We’ve got a $100 trillion capital market. Crypto is less than $1 trillion worldwide. But we don’t want that to somehow undermine what we do elsewhere.”

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Leaders of the Senate Agriculture Committee, which oversees the CFTC, are pitching legislation that would assign oversight of the two largest cryptocurrencies—bitcoin and ether—to that agency. At present, the CFTC generally has the power to regulate derivatives—such as futures and swaps—as opposed to cash or spot markets where the underlying assets are bought and sold for immediate delivery.

The SEC has declined for years to assert jurisdiction over bitcoin and ether, which proponents say are more “decentralized” than other cryptocurrencies. Mr. Gensler noted Thursday that bitcoin is often likened to a digital form of gold, and that it doesn’t bear all of the characteristics of a security.

The bill from the leaders of the agriculture panel is one of several that lawmakers have offered to more tightly oversee cryptocurrencies. In his remarks, Mr. Gensler didn’t express support for any particular bill.

CFTC Chairman

Rostin Behnam

has asked Congress to pass a law that would allow the CFTC to regulate cash markets for certain types of cryptocurrencies and provide it with funding to conduct additional oversight.

After objecting for years to meaningful federal oversight, cryptocurrency lobbyists have recently shifted their focus to convincing lawmakers and regulators that the CFTC should have primary jurisdiction over their industry. They say the SEC’s rules for traditional securities like stocks and bonds don’t fit because cryptocurrencies aren’t organized as traditional corporations with stockholders.

Jake Chervinsky, head of policy at the Blockchain Association, a crypto lobbying group, said in a statement that “decades of legal precedent shows that most digital assets” are commodities.” He said lawmakers should address the issue.

“This is a matter for Congress rather than regulators, and we’re glad to see consensus in Congress that the CFTC, not the SEC, should regulate spot markets,” he said.

While Mr. Gensler’s comments suggest that his agency shouldn’t oversee bitcoin, he said the majority of crypto tokens are securities that fall under his agency’s jurisdiction and should comply with investor-protection laws. Mr. Gensler also said it is possible some crypto intermediaries would need to be dually registered with both his agency and the CFTC, similar to the way some brokers and mutual-fund firms are overseen by both agencies.

Mr. Gensler has also repeatedly demanded that cryptocurrency-trading platforms such as Coinbase Global Inc. register with the agency as securities exchanges akin to the New York Stock Exchange or Nasdaq. In May, the SEC nearly doubled the staff of an enforcement unit focused on cryptocurrencies.

WSJ’s Dion Rabouin explains why many investors are still betting on crypto, even with the very real threat of losing all their money. Illustration: Rami Abukalam

—Paul Kiernan contributed to this article.

Write to Andrew Ackerman at andrew.ackerman@wsj.com

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US

Biden Planning Student-Loan Announcement Wednesday

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White House officials are planning for President Biden to make an announcement on Wednesday about his proposal for dealing with student-loan debt, according to people familiar with the matter.

The president and his senior aides have for months been weighing whether to cancel some federal student loan debt. Mr. Biden’s top advisers have discussed several proposals, including eliminating $10,000 in federal student-loan debt for borrowers making less than $125,000 a year, the people said.

The White House has kept the details of the decision closely guarded. Only a small group of Mr. Biden’s top aides have been informed of his plans, some of the people said.

As of Tuesday evening, senior Biden administration officials were still ironing out the details of the announcement, according to some of the people familiar with the discussions. Those people said they expected Mr. Biden to opt for $10,000 in debt cancellation with a $125,000-a-year income cap, but cautioned that those figures could change.

The president is also expected to extend a pandemic pause on federal student-loan payments.

Mr. Biden is scheduled to return to the White House on Wednesday from Delaware, where he is on vacation with his family. The president has said he would announce a decision on student loans by Aug. 31.

The White House declined to comment on the specific timing of the announcement or provide further details. A spokesman reiterated that the president would make his decision before the end of the month.

A move to forgive $10,000 in student debt under certain income thresholds would fall short of progressive Democratic demands for full student-debt cancellation or for canceling $50,000 per borrower, but it could apply to the majority of the 40 million people who hold a total of $1.6 trillion in student-loan debt.

Mr. Biden spoke by phone on Tuesday night with Senate Majority Leader

Chuck Schumer

(D., N.Y.) to discuss the issue, and he separately held a joint call with Sens. Elizabeth Warren of Massachusetts and Raphael Warnock of Georgia, according to people with knowledge of the conversations. All three Democrats have been encouraging Mr. Biden to forgive student debt.

Republicans have opposed broad student-debt forgiveness, saying such a move would be unfair to those who have already paid off their loans or never went to college, and could worsen inflation.

A report released Tuesday from the Penn Wharton Budget Model estimated that a one time maximum debt forgiveness of $10,000 per borrower with incomes of less than $125,000 a year would cost around $300 billion.

Last month, more than 100 Democratic senators and House members from across the party’s ideological spectrum asked Mr. Biden to extend the loan-payment pause beyond its Aug. 31 expiration, citing continued economic hardships. Mr. Biden cited similar reasoning for extending the pause previously, most recently in April.

The Biden administration is nearing a decision on student-loan forgiveness, an issue that could affect millions of Americans and reverberate in the coming midterm elections. Here are some of the key challenges complicating the final decision. Illustration: Ryan Trefes

“Resuming student loan payments would force millions of borrowers to choose between paying their federal student loans or putting a roof over their heads, food on the table, or paying for child care and healthcare,” the Democratic members wrote.

Republicans have opposed continuing the pause, arguing that it constitutes “de facto loan forgiveness.” Senior House Republicans unveiled a bill this month that would end the pause, as well as overhaul other aspects of the federal student-loan portfolio. The bill isn’t expected to go anywhere while Democrats control Congress and the White House.

The White House has left borrowers, loan servicing contractors and the Education Department itself in limbo as Mr. Biden mulled whether to extend the pause. Last month, the administration told loan servicers to refrain from sending out billing notices or other communications related to restarting payments.

Loan servicers are contracted by the federal government to manage student loan payments. They communicate with borrowers about how much they owe, where and how to send payments, and answer questions borrowers have about repayment programs. Typically, they send out billing notices at least 30 days prior to payments starting up, so that borrowers can plan ahead.

On Monday, a group of loan servicers urged the administration to come to a decision, and said that any move this close to the deadline raised the chances of “incidents of borrower miscommunication,” according to a letter seen by The Wall Street Journal.

“You should be aware that any announcement at this late date, less than ten days before the scheduled resumption of September 1, risks operational disruptions,” wrote Scott Buchanan, the head of the Student Loan Servicing Alliance, an industry group.

Write to Andrew Restuccia at andrew.restuccia@wsj.com, Gabriel T. Rubin at gabriel.rubin@wsj.com and Tarini Parti at Tarini.Parti@wsj.com

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Senate Democrats Close In on Passing Climate and Tax Bill

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WASHINGTON—The Senate advanced a climate and tax package past a procedural hurdle in the narrowly divided chamber, as Democrats closed in on passing elements of President Biden’s agenda that have languished on Capitol Hill for more than a year.

After the procedural vote, which was approved 51-50 thanks to a tiebreaking vote by Vice President

Kamala Harris,

lawmakers began an hourslong series of votes on amendments that aren’t likely to change the bill’s contents. Once that process is over, the package could receive a final vote in the 50-50 Senate later on Sunday before it is sent to the House, where lawmakers are scheduled to vote on it Friday.

The legislation, which largely survived a review by the Senate’s parliamentarian, raises more than $700 billion in government revenue over 10 years, with much of that coming from a 15% minimum tax on large, profitable corporations and money generated by enhancing tax-collection efforts at the Internal Revenue Service. Empowering Medicare to negotiate lower prescription-drug prices and imposing a 1% tax on stock buybacks will also add revenue to the government’s budget in the next decade.

About $430 billion of those funds would be dedicated toward incentives for companies and individuals to reduce carbon emissions and an extension of subsidies for health insurance under the Affordable Care Act. The legislation dedicates the rest of the new revenue toward reducing the deficit.

The bill meets “all of our goals: fighting climate change, lowering healthcare costs, closing tax loopholes abused by the wealthy, and reducing the deficit,” Senate Majority Leader

Chuck Schumer

(D., N.Y.) said Saturday. “This is a major win for the American people,” he said.

Republicans say that the bill, known as the Inflation Reduction Act, would do little to combat inflation and contains damaging corporate tax increases that would flow down to households.

Democrats united on their climate and healthcare package after making changes Sen. Kyrsten Sinema (D., Ariz.) demanded.



Photo:

Sarah Silbiger/Bloomberg News

Referencing voters’ worries over inflation, Senate Minority Leader

Mitch McConnell

(R., Ky.) said Saturday that Senate Democrats “are misreading the American people’s outrage for yet another reckless taxing-and-spending spree.”

During the amendment process, Republicans largely targeted the bill’s energy and tax provisions. They also offered an amendment to reinstate a pandemic-era policy known as Title 42, which allows migrants to be turned away at the border without a chance to ask for asylum. The Biden administration has sought to end the policy.

Democrats lined up against the GOP proposals as they sought to prevent any changes that could endanger the bill’s support in the chamber.

Sen.

Bob Menendez

(D., N.J.) said Saturday that he would oppose the legislation entirely if lawmakers voted to add immigration restrictions during the amendment process.

“I urge my Democratic colleagues to stand united and vote no on ALL amendments, regardless of the underlying policy and regardless of which party offers them,” Mr. Menendez said.

As they blocked GOP amendments, Democrats occasionally offered parallel proposals that ran afoul of Senate rules, giving lawmakers the opportunity to vote in support of measures without risking alterations to the bill.

Sen. Bernie Sanders (I., Vt.) gave a lengthy speech in the Senate to call on Democrats to expand the legislation’s measures. He said the current bill was inadequate as written.

“What I am asking today is for all 50 Democrats to come together and begin the process of addressing the major crises facing working families,” he said, adding that the bill “has some good features, but also some very bad features.”

In the first amendment of the night, Mr. Sanders introduced an expansion of the drug-pricing provisions, seeking to begin government negotiation for lower prices sooner and apply it to more drugs. It, along with another proposal from Mr. Sanders to broaden the legislation, failed as Democrats joined Republicans to vote them down.

The open-ended amendment process, called a vote-a-rama in the Senate, is the last obstacle Democrats face to pass the legislation, which Democrats are pursuing through a legislative process called reconciliation. Reconciliation allows Democrats to skirt the 60-vote threshold necessary for most legislation in the Senate, but it also requires lawmakers to comply with a special series of rules and undergo the lengthy amendment process.

The Senate’s nonpartisan parliamentarian made a series of rulings on Saturday that found much of the Democrats’ bill complied with reconciliation’s rules.

“I’m happy to report to my colleagues that the bill we presented to the parliamentarian remains largely intact,” said Mr. Schumer said.

Mr. Schumer said the parliamentarian didn’t accept one portion of the bill, related to a requirement that drug companies pay rebates if they raise prices faster than inflation for Medicare and private insurance.

The rebate requirements will only apply to Medicare, and not the commercial market, a setback to Democrats’ efforts to limit drug prices more broadly. A push to cap the cost of insulin at $35 a month could face a similar fate as the rebate provision, and Democrats are preparing to try forcing the issue on the Senate floor and putting Republicans on the spot over the sensitive political issue.

After reaching an agreement with Sen. Joe Manchin (D., W.Va.), who has resisted much of Democrats’ broader agenda, after months of failed negotiations, Democrats had to make a series of final changes this week to the bill on Thursday to earn the support of Sen.

Kyrsten Sinema

(D., Ariz.). They agreed to pare back elements of the corporate minimum tax and to drop a proposed tax increase on carried-interest income.

Ms. Sinema hasn’t explicitly committed to supporting the bill, saying she wants to see its final form after the amendment process.

Sen. Joe Manchin (D., W.Va.) has resisted much of Democrats’ broader agenda.



Photo:

Rod Lamkey/Zuma Press

If Democrats are successful in passing the bill, its passage would mark a victory for their party just months before the midterm elections, which polls show will be challenging for Democrats in large part because of public concern over inflation.

Beginning in 2026, the bill would for the first time empower Medicare to negotiate the prices of a limited set of drugs selected from among those that account for the biggest share of government expenditures. It would also cap out-of-pocket drug costs for Medicare beneficiaries at $2,000 a year, beginning in 2025, and starting next year mandate free vaccines for Medicare enrollees. Under the bill, subsidies enacted last year as part of the American Rescue Plan to help people buy health insurance through the Affordable Care Act would be extended for three years, through 2025, at a cost of $64 billion.

On climate change, the bill pumps money into wind and solar projects, along with the batteries to store renewable energy, while also subsidizing technology to capture and store carbon-dioxide emissions. Consumers would benefit from subsidies for certain windows, heat pumps and other energy-efficient products, as well the extension of a $7,500 tax credit to buy electric vehicles.

Builders, homeowners and small businesses could avail themselves of new capital pouring into so-called green banks, which will receive $20 billion to provide low-cost financing for energy-efficient products such as heat pumps, windows, solar panels, insulation and electric-vehicle charging stations.

The most significant climate provisions are tax credits that would channel billions of dollars to wind, solar and battery developments that put clean power onto the grid, according to Rhodium Group, an independent research firm. The group estimated that the bill would cut greenhouse-gas emissions 31% to 44% below 2005 levels in 2030, compared with 24% to 35% under current policy.

Write to Siobhan Hughes at siobhan.hughes@wsj.com and Andrew Duehren at andrew.duehren@wsj.com

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Business

Senate Plan Would Put Bitcoin, Ether Under Commodity Regulator’s Watch

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WASHINGTON—Leaders of a Senate committee are pitching legislation that would assign oversight of the two largest cryptocurrencies, bitcoin and ether, to the federal agency that regulates milk futures and interest-rate swaps.

Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) and top-ranking Republican John Boozman of Arkansas unveiled a plan Wednesday that would empower the Commodity Futures Trading Commission to regulate spot markets for digital commodities, a newly created asset class. Currently the CFTC has authority to police derivatives, such as futures and swaps, rather than underlying commodities.

The bill marks the latest salvo in an intensifying battle among federal agencies and congressional committees that oversee them over who will regulate crypto. Thirteen years after bitcoin was created, cryptocurrencies remain largely unregulated by the federal government, leaving investors without key protections from fraud and market manipulation.

The competition for jurisdiction heated up in recent months as a meltdown in crypto markets underscored the need for guardrails in the eyes of many policy makers. The competition also reflects the industry’s ramped-up lobbying presence in Washington and its push to reach more mainstream investors through Super Bowl ads and other high-profile marketing initiatives.

“‘When there’s a topic as hot as crypto, everybody wants a seat at the table.’”


— Aaron Klein, Brookings Institution senior fellow

“When there’s a topic as hot as crypto, everybody wants a seat at the table,” said

Aaron Klein,

a senior fellow at Brookings Institution who focuses on financial regulation. “The question is, are we going to have regulatory turf paralysis?”

In practical terms, for federal agencies such as the CFTC, Securities and Exchange Commission, and Federal Reserve, adding crypto to their remit would bring bigger budgets, greater influence and more job opportunities for officials who leave public service. For members of the congressional committees that oversee such regulators, a new industry in their sandbox would create another stream of lobbyists and campaign donations.

“We need to treat this seriously and take our responsibilities seriously for protecting consumers,” Ms. Stabenow said in a virtual press conference alongside Mr. Boozman.

Washington has introduced a flurry of bills in recent months to draw jurisdictional lines. Sens.

Cynthia Lummis

(R., Wyo.) and

Kirsten Gillibrand

(D., N.Y.) unveiled a proposal in June that would create exemptions for cryptocurrencies in securities laws, banking statutes and tax code. In July, leaders of the House Financial Services Committee said they were working on a bill to grant the Federal Reserve a greater role in regulating some stablecoins, crypto tokens pegged against the dollar and other official currencies.

When cryptocurrency lending platform Celsius froze user accounts amid a plunge in valuations, it sent ripples across the industry and raised questions about what happens to user assets if a crypto platform files for bankruptcy. WSJ’s Vicky Ge Huang explains. Photo illustration: Jordan Kranse

Agencies also are seeking to claim territory. CFTC Chairman

Rostin Behnam,

a former staffer to Ms. Stabenow, said last week his agency is “ready and well situated” to oversee spot markets for some cryptocurrencies. He has worked with his former boss for months to help craft legislation that would authorize the CFTC to do so, people familiar with the matter say.

Meanwhile, SEC Chairman

Gary Gensler

has repeatedly demanded that cryptocurrency-trading platforms such as

Coinbase Global Inc.

register with the agency as securities exchanges akin to the New York Stock Exchange or Nasdaq. In May, the SEC nearly doubled the staff of an enforcement unit focused on cryptocurrencies.

“Four years ago when I started this job, there were some people that just thought this thing was all going to blow up and go away, that this was sort of a passing fad,” said Kristin Smith, executive director of the Blockchain Association, a trade group representing crypto firms.

Now, she said, “We’ve got all these regulators suddenly vying for control.”

After the SEC alleged in an insider-trading case in July that at least seven cryptocurrencies listed on Coinbase should have been registered as securities, Republican CFTC Commissioner

Caroline Pham

accused the SEC of “regulation by enforcement.”

“The SEC is not working together with the CFTC,” Ms. Pham said in an interview. “They go out unilaterally to try to establish precedent that’s going to dramatically reshape the landscape as to what’s a security and what’s a commodity.”

Ms. Pham has posted photos to her

Twitter

account of herself posing alongside crypto lobbyists and executives including

Sam Bankman-Fried,

the billionaire founder of trading platform FTX.

Ms. Pham said that crypto is one of the areas she is focused on, and, “I take pictures with everybody. Like, literally, everybody.”

At the heart of the turf war are questions about how cryptocurrencies fit into the definition of a security, the legal classification that includes stocks and bonds.

Coinbase and other firms have lobbied Congress to create a new category for digital commodities and empower the CFTC to regulate it.



Photo:

Shannon Stapleton/REUTERS

A 1946 Supreme Court case created a test that focuses on whether investors buy an asset in hopes of profiting from the efforts of other people. If so, the issuer is required to register with the SEC and publicly disclose any information that may be material to the security’s price.

Even though investors in bitcoin and ether rely on a network of users and programmers to validate transactions and perform software updates, cryptocurrency enthusiasts insist those groups are too decentralized for the assets to be regulated like securities. Instead, they argue, the assets should be considered commodities, which have a broader definition and no full-time regulator.

Firms such as Coinbase, FTX and Ripple have spent millions of dollars over the past year lobbying Congress to create a new category for digital commodities and empower the CFTC to regulate it. The agency has roughly one-sixth the head count of the SEC, and its rules are seen by the industry as easier to comply with than securities laws.

“When you ask the people that are in the industry…almost all feel like the regulator should be primarily the CFTC,” Mr. Boozman said. “The fact that they’re fairly united on that makes it easier on members.”

Crypto skeptics worry that creating a new legal concept for cryptocurrencies could create an alternative to securities registration for a wider variety of assets.

“People who are taking action that could undermine our securities law are playing with fire,” said Dennis Kelleher, president of investor-advocacy group Better Markets. “You may love or hate the SEC, but transparent disclosure, clear rules…and enforcement is what builds trust and confidence in our markets.”

The legislation being unveiled Wednesday would seek to exclude securities from the definition of digital commodities, making it narrower in scope than that of other crypto-related bills floated in recent months, such as the Lummis-Gillibrand proposal.

Ms. Stabenow said she expects the Agriculture Committee to hold a hearing on the bill as early as September.

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How should the two largest cryptocurrencies, bitcoin and ether, be regulated? Join the conversation below.

The bill would require any entity acting as a digital commodity platform—including crypto exchanges such as Coinbase and FTX—to register with the CFTC as trading facilities, dealers or brokers. The exchanges would have to monitor trading, protect investors from abuse and only offer assets that are resistant to market manipulation, among other requirements.

Platforms also would be obliged to disclose some information about the assets they list, such as operating structure and conflicts of interest. Such information would likely fall short of the extensive disclosures required by the SEC for securities.

The derivatives markets the CFTC currently oversees are dominated by professional investors, such as banks and hedge funds. Crypto markets, by contrast, draw legions of small investors who are more vulnerable to scams.

If the agency wins jurisdiction over bitcoin and ether, the CFTC would have to write rules from scratch to protect such investors.

“How robust would they be and how long would that take?” asked Tyler Gellasch, executive director of the Healthy Markets Association, an investor trade group.

Write to Paul Kiernan at paul.kiernan@wsj.com

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Italy’s Mario Draghi Likely to Resign Despite Winning Confidence Vote

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Italian Prime Minister

Mario Draghi

will likely resign despite winning a confidence vote in the Senate on Wednesday, putting an end to a national unity government that lasted almost 1½ years.

Mr. Draghi won the vote, but mass abstentions by three large parties indicated he no longer has the support of a majority of Parliament. Mr. Draghi could resign in the coming days after meeting with Italian President

Sergio Mattarella.

The vote came after Mr. Draghi made an appeal to senators to back him so he could continue with his reform-minded agenda until the next scheduled national election in the spring. Now, elections could be held as soon as late September.

Mr. Draghi initially tendered his resignation late last week after a key party in his coalition boycotted a vote in the Senate. Mr. Mattarella didn’t accept the resignation and told Mr. Draghi to determine whether there was sufficient support in Parliament for him to pull together a majority.

The political upheaval comes at a crucial time for Italy, which like the rest of Europe is facing surging inflation and other effects of the war in Ukraine. The government was in the process of approving and implementing measures to help companies and families deal with surging energy costs when the political crisis started.

In another challenge, Italy is likely soon to be facing higher costs to refinance its debt. Mr. Draghi’s successor at the European Central Bank,

Christine Lagarde,

is expected this week to present the central bank’s first interest-rate increase in more than a decade. The long period of low interest rates has allowed Italy to cheaply roll over its debt, which is more than 150% of the country’s yearly economic output.

Prime Minister Mario Draghi received several rounds of long applause during his speech to the Senate on Wednesday, but some senators heckled him.



Photo:

GUGLIELMO MANGIAPANE/REUTERS

If Mr. Draghi resigns, Mr. Mattarella could appeal to party leaders to see if they can put together a new parliamentary majority so the country can avoid early elections. On Wednesday, that appeared unlikely, based on comments from party leaders. It would be the first time since the end of World War II that Italy has held a national election in the fall, a period in which Parliament is called to approve the budget for the following year.

Mr. Draghi’s initial resignation last week and its rejection set off a flurry of meetings between the prime minister and party leaders in recent days.

When Mr. Draghi took up his post early last year, Parliament confirmed him with a majority that included parties ranging from far-right populists to a mainstream center-left party. Keeping the eclectic group together has proved challenging for Mr. Draghi.

While the prime minister received several rounds of long applause during his speech, some senators heckled him, earning a rebuke from the president of the Senate.

Dozens of Italian senators took turns responding to Mr. Draghi’s speech on Wednesday. One senator told him it was his duty to remain at his post, while others said he should have resigned long ago because he has never faced the voters in an election.

Mr. Draghi read a list of what he said were the accomplishments achieved during his 17 months as prime minister. He noted Italy’s Covid-19 vaccination campaign, which had been languishing before he arrived. He also mentioned reforms he is pushing through in Italy’s judicial and tax systems.

Italy must pass those reforms to continue getting the money the European Union has earmarked to help countries recover from the pandemic fallout. Italy has already received €46 billion, equivalent to $47 billion, with another €21 billion due to come in the coming weeks.

The parties choosing not to vote on Wednesday include

Matteo Salvini’s

far-right League, which has often wavered in its support for the prime minister and has seen its consensus among voters shrink since it joined Mr. Draghi’s government.

Most senators from the 5 Star Movement, a populist group that set off the crisis last week by not voting for Mr. Draghi, also didn’t vote on Wednesday. 5 Star was the largest party in Parliament, but since the last election in 2018 its support has evaporated and many senators have defected, with a large chunk breaking off to form a new party.

Senators from Forza Italia, which is headed by

Silvio Berlusconi,

the media mogul and former prime minister, also didn’t vote on Wednesday.

The difference in how much interest Italy and Germany pay on their newly issued government bonds initially narrowed after Mr. Draghi’s speech when it seemed he might manage to get a majority of Parliament to support him. That indicated investors were more bullish on Italy’s economic prospects with him at the helm. As the day progressed and it became clear Mr. Draghi was losing support, the difference shot up to above where it had started the day.

Write to Eric Sylvers at eric.sylvers@wsj.com

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