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Crypto’s long winter in Washington is coming to an end.
Last year, the digital asset industry faced a regulatory crackdown after the collapse of leading crypto companies and the indictments of their executives. Fast forward to this past week, when presidential contenders from both sides of the aisle took an interest in the sector and calls to replace its chief nemesis, Securities and Exchange Commission Chair Gary Gensler, grew louder.
“It’s been a remarkable turnaround in how people perceive the industry,” Kristin Smith, CEO of the Blockchain Association, told Semafor. “If you had told me a year ago we would be in the place where we were today, I’m not sure I would believe you.”
Former President Donald Trump was the keynote speaker at the national Bitcoin Convention on Saturday, when he floated several crypto-friendly proposals that represented a change from his past skepticism of the industry. They included a presidential advisory council on digital asset regulation and a taxpayer-backed Bitcoin reserve in an effort to make America “the crypto capital of the planet.”
Meanwhile, presumptive Democratic nominee Kamala Harris is making her own moves. A source close to the Harris campaign told Semafor there have been conversations between her team and industry stakeholders. The vice president, though, recently declined an invitation to speak at the Bitcoin conference. Billionaire Mark Cuban, a Bitcoin proponent, said he’s received questions from the Harris campaign on digital tokens.
Sheila Warren, CEO of the Crypto Council for Innovation, said the Harris team is “quietly curious” about crypto.
“There’s awareness that Harris and her team historically don’t know a lot about this topic,” Warren told Semafor.
Also at the Bitcoin conference, a group of House Democrats announced they sent a letter pushing the Democratic National Committee to adopt a pro-crypto stance ahead of the party’s convention in Chicago next month to match the Republican Party platform.
Democratic Rep. Wiley Nickel of North Carolina, who led the DNC letter, told Semafor he’s spoken with Harris’ campaign to push for a “reset” on crypto policymaking. “I’m hopeful that we’ll get a different outlook from her versus what we’ve seen from the [SEC],” Nickel told Semafor, adding that her California roots would be an asset in recruiting support within Silicon Valley, a hub for crypto investors.
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A trio of crypto firms are pouring campaign cash into congressional races through super PACs, and intend to spend as much as $150 million. Wealthy crypto backers are targeting close races of incumbent Democrats, like Sen. Jon Tester, D-Mont., and Sen. Sherrod Brown, D-Ohio.
“The Biden-Harris Administration wages all-out war on the crypto industry for 4 years,” Tyler Winklevoss, a crypto investor and donor, said in a recent X post. “Our industry won’t forget this. We will show no mercy in November.”
Some prominent Democratic senators derided crypto as “bullsh*t” in the wake of the 2022 FTX collapse. Yet there are signs some of them are now tempering their past scorching criticisms of the industry.
“I think we’re in a process of finding out — dot some ‘I’s and ’T’s and crossing them, all that stuff,” Tester told Semafor in June. “But look, it’s 21st century stuff. I thought fax machines were BS too.”
The financial heft of the industry is part of the reason it has growing appeal in Congress, experts say.
“Politicians, like everyone else, respond to incentives,” Lee Reiners, a lecturing fellow at the Duke Financial Economics Center, told Semafor. “So certainly, you would want some of that money, or at the very least, you wouldn’t want that money to be spent against you.”
Industry players are keeping a close eye on Harris to see, if she is elected, whether she would adopt the Biden administration’s aggressive crackdown on crypto firms. High on their wish list: Cutting out the SEC and giving the bulk of policing responsibilities to the Commodity Futures Trading Commission, since crypto proponents argue that digital tokens are a commodity rather than a security.
Meanwhile, many Republicans have swiftly embraced crypto as the next frontier in innovation. At the Bitcoin Conference, Sen. Cynthia Lummis, R-Wyo., one of the industry’s biggest cheerleaders in Washington, touted new legislation to authorize the US government to buy one million Bitcoins — currently worth $68 billion— to counter the decreasing purchasing power of the dollar.
Joseph’s view
The political landscape for crypto supporters has become more favorable since 2022, and they’ve notched some major victories recently. Back in May, the House passed legislation setting a regulatory framework with rules viewed as tilted towards the industry. Seventy-one House Democrats teamed up with Republicans in that vote, including prominent Democrats like former Speaker Nancy Pelosi. It’s an indication that Sen. Elizabeth Warren’s crypto-skeptic views isn’t resonating with a substantial swath of the Democratic Party for now.
Room for Disagreement
Sen. Warren is still pushing a bill to prevent crypto from being used to dodge foreign sanctions and launder money. It is strongly opposed by the crypto industry, and it shed a Republican co-sponsor last week.
“Crypto mines can be used by our adversaries to spy on our military bases, or to bring down our power grid, or to move around in and out of the country in secret,” Warren said at a Senate Banking hearing last week. “It is time for us to pass the laws that Treasury needs.”