Emboldened crypto industry seeks to cement political influence and mainstream acceptance
When the Trump administration’s crypto czar, David Sacks, recently held a news conference to announce a new congressional working group to advance cryptocurrency regulation, many digital asset enthusiasts were unimpressed.
"There were a lot of people on X who felt like this wasn’t a mind-blowing announcement," Sacks said on a podcast a few days later, referring to the social media outlet formerly known as Twitter. However, Sacks noted that having the White House and key members of Congress committed to passing key crypto legislation within the next year, possibly within six months, was worth celebrating. "We’ve never had that before, so that is pretty monumental," he said.
Sacks' defensiveness highlights a new reality in Washington: After spending heavily to help elect Trump and other crypto-friendly lawmakers, the industry is emboldened, impatient and eager to cement its influence in politics and mainstream financial systems.
"Time is critical," Ji Hun Kim, president and acting CEO at the Crypto Council for Innovation, said at a recent House committee hearing titled: "A Golden Age of Digital Assets: Charting a Path Forward."
The crypto industry has scored some early wins since Trump took office, including the repeal of an accounting rule by the US Securities and Exchange Commission and an executive order by the president directing a working group to study and propose changes to crypto regulations, as well as the possible formation of a strategic government reserve of cryptocurrencies within 180 days.
As the industry calls for more substantive action, some crypto companies are looking to exert their influence by punishing old enemies.
Tyler Winklevoss, co-founder of the crypto exchange Gemini, said his firm won’t hire any MIT graduates as punishment for the school rehiring former SEC Chairman Gary Gensler to teach classes. "Not even interns for our summer intern program," Winklevoss said on X. The move followed Coinbase’s CEO announcement that his firm wouldn’t work with any law firms that hired any of Gensler’s former deputies who’d committed "bad deeds" towards the crypto industry. The Gensler SEC was the most aggressive financial regulator in trying to police the crypto industry.
Congress has held several hearings in recent weeks where crypto supporters have aired grievances over their treatment during the Biden administration, particularly around how regulators allegedly forced banks to cut ties with crypto companies.
New Republican leadership at the SEC has criticised the agency’s past performance under Gensler and promised a new day, while making it clear that day won’t be tomorrow.
"It took us a long time to get into this mess," SEC Commissioner Hester Peirce, who is leading a new crypto task force, said in a lengthy statement on the agency’s website. "Please be patient."
The SEC recently asked a federal court to pause ongoing litigation against Binance, the world’s largest cryptocurrency exchange, because leadership is now rethinking previous enforcement actions.
Sacks and crypto-friendly lawmakers expect two pieces of legislation to become law. One would set regulations and reserve requirements for issuers of stablecoins, a type of crypto that’s exploded in popularity and whose value is typically tied to the dollar or other traditional currencies.
The other piece of legislation aims to set clear rules for how crypto exchanges and other companies operate, as well as decide which digital assets are regulated as securities, like stocks, and which should be considered commodities, like gold or oil. Securities generally face stricter regulations.
Similar legislation has stalled in past years, but many in the crypto industry expect broad, bipartisan support for passage this time. That’s due in part to the heavy political spending by the crypto industry. Fairshake, the crypto super PAC that was one of the biggest spenders in last year’s election, recently said it has already amassed a huge war chest for next year’s midterms. One of the crypto industry’s biggest wins last year was helping to unseat former Senator Sherrod Brown, a Democrat from Ohio and a crypto critic who led the Senate’s banking committee.
"The Democrats have gotten the message," said crypto investor Anthony Scaramucci, who briefly served as communications director during Trump’s first term, "They don’t want to be in the 2026 campaign having a crypto army against them."
Just like crypto prices, the industry’s popularity and influence are prone to wild upswings and falls. A few years ago, the Super Bowl was packed with celebrities doing commercials for crypto companies and mogul Sam Bankman-Fried had easy access to the top halls of power.
That popularity and influence waned after Bankman-Fried’s company collapsed amid massive criminal fraud, a market meltdown and other scandals — before roaring back with Trump’s victory.
While showing a united front for the election, debates over the crypto legislation and other policy proposals risk exposing fault lines among the industry’s various tribes and strong and eccentric personalities.
The CEO of Ripple, for example, caused waves when he said he’d like to see a US government reserve of crypto include multiple digital assets rather than bitcoin, the world’s most popular cryptocurrency. The idea is a nonstarter for many bitcoin diehards.
A new report from JPMorgan highlighted how some of the proposals in the stablecoin legislation related to how those coins hold reserves could pose a "significant challenge" to Tether, the world’s largest stablecoin.
The CEO of Tether, which recently relocated to crypto-friendly El Salvador, responded on social media by disputing the bank’s findings and calling its analysts "salty."
By RSS/AP
