The crypto industry is making significant strides in Washington, driven by a robust push for favorable legislation and a surge in political influence. This momentum extends beyond the embrace of the sector by former President Donald Trump and is now supported by key figures in both parties. The sector recently demonstrated its political strength by effectively backing candidates who support crypto, which suggests a shift in the legislative landscape.
Democratic Senator Kirsten Gillibrand of New York, a recognized supporter of the crypto industry, has gained influence within her party. She is now leveraging this position to advance several key legislative priorities, including the repeal of a tax reporting rule for digital assets and the passage of a stablecoin regulatory bill. Her role is considered crucial by many in the industry.
Senator Cynthia Lummis, a Republican from Wyoming, is a leading advocate for digital assets on the Senate side and regularly collaborates with Gillibrand. Lummis has emphasized that Gillibrand’s support is vital for moving legislation forward, highlighting the need for bipartisan backing to overcome hurdles in the Senate. Sixty votes are generally required to pass most bills.
“Without her, it doesn’t happen,” Lummis stated, recognizing Gillibrand’s credibility in financial matters and the importance of cross-party alliances. Gillibrand’s bipartisan relationships also include Republican Banking Committee Chairman Tim Scott, another supporter of crypto. The two even participate in a weekly prayer luncheon together.
Gillibrand argues that the country should foster the growing crypto industry, rather than push it offshore through strict regulations. She emphasizes the need for some level of regulation to prevent potential scandals. She said, “If we do nothing, and this industry is left to its own devices, we’ll have more collapses, we’ll have more Sam Bankman-Fried frauds.”
Former President Donald Trump, who has embraced crypto and even issued his own memecoin, has taken a more lenient approach to digital assets. He recently urged Congress to pass legislation on stablecoins and the larger digital assets market, hoping to make the U.S. the “crypto capital of the world.” He stated, “We’re ending the last administration’s regulatory war on crypto and Bitcoin.”
Crypto can only secure lasting legal changes through congressional approval, which requires significant cross-party support. The industry displayed its strength last week when five Senate Democrats on the Banking Committee defied warnings from Senator Elizabeth Warren and backed industry-backed legislation regulating privately issued stablecoins. This was a contrast to the prior years, when past action on crypto-friendly bills was blocked by former Banking Committee Chairman Sherrod Brown.
Fairshake PAC and its affiliates poured money into supporting candidates who aligned with the crypto industry. The industry’s political action committees spent millions to fund candidates who are more sympathetic to crypto. In January, Fairshake announced they already amassed a substantial war chest of $116 million, far in advance of the election.
Jeff Hauser, the executive director of the Revolving Door Project, expressed concerns that the industry’s financial influence is overpowering the need to protect users of digital assets, noting that Democrats have been “freaked out” since crypto flooded money into campaigns, but Gillibrand dismisses the idea that political donations influence votes.
Gillibrand is backing legislation that assures stablecoins are truly stable by requiring one-to-one reserves with oversight at a combination of state and federal levels, including the Federal Reserve. Reserves must be in liquid assets like short-term government debt to prevent a run on stablecoins. Mainstream players, such as Visa, PayPal, and Stripe, are already investing in projects involving stablecoins.
Gillibrand, who spent 15 years as a securities lawyer, compares stablecoins to products like traveler’s checks or department store gift cards. “It’s not meant to be a bank account. It’s not meant to have FDIC insurance,” she said. “It’s a payment system.”
