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Crypto Industry Gains Ground in Washington as Political Spending Pays Off
Washington D.C. – The cryptocurrency industry is witnessing significant progress in its legislative agenda on Capitol Hill, fueled by substantial political contributions and shifting regulatory winds. Boosted by millions in campaign spending, a bipartisan cohort of lawmakers is increasingly receptive to crypto priorities, advancing key legislation in both the House and Senate. This shift marks a notable victory for the digital asset sector, which has historically faced scrutiny and regulatory hurdles.
GENIUS Act Advances in Senate Committee
Following a contentious three-hour hearing last month, Senator Ruben Gallego (D-AZ) joined Republican colleagues to support the GENIUS Act, a bill championed by the cryptocurrency industry.
“Digital assets are clearly here to stay,” stated Mr. Gallego after the Senate Banking Committee session, diverging from the committee’s leading Democrat by describing the bill as “a step in the appropriate direction.”
The 18-6 vote, while preliminary and requiring full Senate approval, was hailed within crypto circles as a moment of validation.
Crypto Industry Funding and Political Influence
Senator Gallego is part of a growing group of influential figures in Congress who have benefited from the crypto industry’s considerable financial support. During his closely contested Senate race the previous year, super PACs funded by major crypto firms, including the Coinbase exchange, contributed $10 million to bolster his campaign. These funds were allocated to advertisements showcasing Mr. Gallego’s military background and stance on border security.
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Lawmakers Advance Crypto Priorities in Congress
Currently, Senator Gallego and numerous other legislators backed by these super PACs are actively working in Congress to promote crypto-friendly policies. This concerted effort has resulted in a series of significant, long-sought-after wins for an industry marked by past instances of fraud and instability.
In the Senate, support is coalescing around the GENIUS Act, which aims to establish a framework for businesses to issue stablecoins – digital currencies designed to maintain a consistent value of one U.S. dollar. Concurrently, both chambers have seen votes to overturn a Biden administration rule mandating crypto companies to disclose specific tax information to the IRS.
Increased Political Spending and Rapid Results
While industries seeking to influence Congress through financial contributions are not novel, the crypto sector’s political machinery distinguishes itself through the sheer scale of its expenditures and the swiftness of the outcomes.
The industry has expressed open satisfaction with these developments. Josh Vlasto, a spokesperson for Fairshake, a super PAC that collaborated with affiliated PACs to support pro-crypto congressional contenders, noted that the spending is already “bearing fruit.” He described the change as “a total sea change in terms of how Congress is approaching this industry.”
Regulatory Shifts and Presidential Support
This legislative momentum coincides with a perceived softening of the regulatory stance by U.S. authorities. Federal regulators appear to be scaling back a long-term enforcement drive. Since President Trump’s inauguration, the Securities and Exchange Commission (SEC) has withdrawn lawsuits against prominent crypto entities like Coinbase and Kraken, effectively easing the legal pressures on the industry. President Trump, himself a crypto investor, recently issued an executive order calling for the creation of a national crypto reserve – a government stockpile of Bitcoin and other digital currencies.
Stablecoin Legislation and Potential Benefits for Trump
The stablecoin legislation under consideration has the potential to directly benefit President Trump’s business ventures. Speaking at a crypto conference in March, he asserted that stablecoins would “expand the dominance of the U.S. dollar” and advocated for “common-sense” legislation. Shortly after, World Liberty Financial, a crypto firm with family ties to Mr. Trump, announced its plans to launch a stablecoin called USD1.
Concerns and Opposition from Democrats
The stablecoin bill may reach the Senate floor for a vote in the near future, raising concerns among some Democrats who believe Congress is yielding to industry demands and the interests of Mr. Trump.
Representative Maxine Waters (D-CA), the leading Democrat on the House Financial Services Committee, stated that the crypto industry has “spent a lot of money, and many of our members are beneficiaries.” She added, “Many of them may not have taken the time to really examine what it is we’re doing.”
Senator Gallego Defends Crypto Legislation
While not a sponsor of the GENIUS Act, Senator Gallego has acknowledged the need for adjustments. (The full title is the Guiding and Establishing National Innovation for U.S. Stablecoins Act.) However, he has defended the bill, asserting that it incorporates consumer safeguards.
Jacques Petit, Senator Gallego’s spokesperson, affirmed in a statement, “Senator Gallego believes it is important to engage and collaborate with colleagues across the aisle.” He emphasized that “ensuring proper guardrails are in place remains the senator’s priority.”
Senator Kirsten Gillibrand (D-NY), a co-sponsor of the GENIUS Act, stated in an interview that crypto industry spending had no bearing on the legislation.
Ms. Gillibrand, who did not receive funding from crypto super PACs, remarked, “If your decisions were dictated by financial contributions, you would be ineffective as a member of Congress.”
Turning Point in Crypto Lobbying Efforts
Despite hiring high-profile lobbyists to advocate for federal legislation throughout the Biden administration, the crypto industry initially made limited progress. The 2024 election cycle proved to be a pivotal moment.
Super PAC Spending and Election Outcomes
A coalition of crypto executives and political strategists established Fairshake and two related super PACs – Defend American Jobs and Protect Progress – which collectively spent over $130 million to influence close congressional races nationwide. The majority of this funding originated from Coinbase, the digital currency firm Ripple, and venture capital firm Andreessen Horowitz, a significant investor in crypto startups.
Candidates supported by these super PACs were successful in 53 out of 58 races. Notably, Defend American Jobs spent $40 million in Ohio to support Bernie Moreno, a Republican crypto entrepreneur who defeated Senator Sherrod Brown, the Democratic chair of the Banking Committee and a vocal critic of crypto. Protect Progress allocated $10 million to aid Elissa Slotkin, a Democrat, in winning a Senate seat in Michigan. An additional $10 million from the super PACs supported Mr. Gallego, who had previously expressed positive views on crypto.
Industry Priorities: Stablecoins and Market Structure
Following these electoral successes, the crypto industry is now focused on translating them into legislative victories. Executives from companies such as Coinbase, Ripple, and Binance, a major exchange that resolved criminal charges with the U.S. government in 2023, have actively engaged in Washington, holding meetings with lawmakers and publicly demonstrating their presence at the U.S. Capitol.
Their primary legislative goal is the passage of the bill establishing rules for stablecoins. The second crucial objective is “market structure” legislation that would limit the SEC’s ability to pursue enforcement actions against most cryptocurrencies, reversing the agency’s crackdown during the Biden administration.
Key Lawmakers Positioned to Advance Crypto Agenda
Several lawmakers who benefited from crypto super PAC funding are strategically positioned to advance these aims. Senators Moreno, Gallego, and Jim Banks (R-IN), all supported by the PACs, hold positions on the Senate Banking Committee. Senator Gallego also serves as the highest-ranking Democrat on a newly formed Senate subcommittee dedicated to crypto-related issues.
Concerns Regarding Stablecoin Regulation
While a draft of the crypto market structure bill is still under development, the GENIUS Act, concerning stablecoins, was introduced in February by a group of senators, including Senator Tim Scott (R-SC), the chair of the Banking Committee.
Stablecoin issuers share certain similarities with banks. These digital coins are intended to be backed by reserve assets held by the issuer. For instance, if a company issues one million stablecoins, it should maintain $1 million in reserve to facilitate redemptions by customers at any time.
However, crypto companies have faced scrutiny over the years for alleged failures to maintain adequate reserves. Simultaneously, stablecoins have emerged as a convenient tool for illicit financial activities, enabling criminals to transfer funds across international borders.
Criticism of the GENIUS Act
Theoretically, the GENIUS Act seeks to address these concerns by setting forth regulations for stablecoin issuers. Nevertheless, a coalition of consumer advocacy groups criticized the bill in February, labeling it “a crypto industry wish list, not an adequate regulatory regime.” They argued that the bill’s requirements were insufficiently stringent and posed significant risks to consumers.
Even some within the crypto community have voiced reservations. A provision in the GENIUS Act would potentially allow international companies to circumvent certain regulatory requirements.
During the Senate Banking Committee’s advancement of the bill, four Democrats beyond Mr. Gallego, none of whom received Fairshake support, along with Mr. Moreno, Mr. Banks, and 11 Republicans not backed by crypto PACs, also voted in favor.
A similar bill, the STABLE Act, was recently introduced in the House, prompting Democratic concerns that the proposed regulations could favor Mr. Trump’s crypto business interests.
“The president of the United States of America should not be using the power of the office to create business that will enrich himself,” stated Ms. Waters.
House Committee Advances Stablecoin Bill
Despite these objections, after an extended hearing on April 3, the House Financial Services Committee voted 32-17 to send the STABLE Act to the full House for consideration.
Representative French Hill (R-AR), the committee chair, a long-standing crypto proponent, co-sponsor of the stablecoin bill, and recipient of $100,000 in Fairshake funding, presides over the committee.