Crypto’s Washington Power Play
The cryptocurrency industry is making significant strides in Washington, D.C., with powerful allies on both sides of the political aisle. This marks a substantial shift, as the industry demonstrates its political might and navigates the complexities of regulatory frameworks.
One of the most significant developments is the rise of Senator Kirsten Gillibrand (D-NY), a long-time supporter of the crypto industry. She has ascended in her party’s leadership ranks to head election fundraising, putting her influence behind efforts to repeal a tax reporting rule on digital assets and pass legislation for stablecoins.
Fellow Senator Cynthia Lummis (R-WY), a leading Republican voice on crypto issues, emphasizes the critical nature of Gillibrand’s backing. “Without her, it doesn’t happen,” Lummis said, highlighting Gillibrand’s credibility on financial matters and the importance of bipartisan alliances.
Gillibrand’s cross-party relationships extend to Republican Banking Committee Chairman Tim Scott, another known crypto supporter. The two even participate in a weekly prayer luncheon together, exemplifying their collaboration on key initiatives.
Stablecoin Legislation and Shifting Alliances
Crypto-friendly stablecoin legislation is poised to advance in the Senate after years of regulatory stagnation. This progress reflects the industry’s growing clout, as seen recently when five Senate Democrats on the Banking Committee defied warnings and backed industry-supported stablecoin legislation.
This represents a significant turnaround from the past when then-Banking Committee chairman Sherrod Brown, a known crypto skeptic, hindered progress on industry-friendly bills. However, crypto leaders are changing the landscape.
Political Spending and Influence
Crypto titans have poured millions of dollars into political action committees (PACs). This investment is yielding results in the form of legislative support. Fairshake PAC, along with affiliated entities, has amassed a warchest of over $100 million. This substantial financial commitment underscores the industry’s focus on influencing the outcome of upcoming midterm elections.
Consumer advocates express concern that the industry’s financial influence is overwhelming the need to protect digital asset users and the financial system from potential risks.
Money is talking very loudly.
Senator Gillibrand, however, dismisses the idea that political giving affects senators’ votes. She argues that her focus is on cultivating the crypto industry rather than driving it offshore through overly burdensome regulations.
Trump’s Perspective and Future Outlook
Former President Donald Trump, who has embraced crypto and even issued his own memecoin, has expressed support for crypto regulation.
“We’re ending the last administration’s regulatory war on crypto and Bitcoin,” Trump said. He believes that legislation on dollar-backed stablecoins will help the U.S. become the global “crypto capital.”
Gillibrand seeks to assure stablecoins are truly stable, with requirements for one-to-one reserves with oversight at the state or federal level. Reserves must be in highly liquid assets like short-term government debt or similar instruments, in an effort to prevent a run on a stablecoin.
Mainstream players such as Visa, PayPal Holdings Inc., and Stripe Inc. are making investments in projects involving stablecoins. She pitches stablecoins to her Senate colleagues as akin to the traveler’s checks tourists used to carry abroad or department store gift cards.
“It’s not meant to be a bank account. It’s not meant to have FDIC insurance. It’s a payment system,” she said.
