Crypto companies ask Democrats for easier legislative stance

Bothered by a US Securities and Exchange Commission crackdown, cryptocurrency companies are renewing their efforts on Capitol Hill to reap support for legislation that they hope will control the organization and provide the sector regulatory clarity.


According to 6 executives, the Blockchain Association, Chamber of Digital Commerce, Crypto Council for Innovation, and Coinbase Global are among the parties trying to convince Congress to provide support by both parties for a draught law before a crucial vote in the coming weeks.

While cryptocurrency businesses have grown in Washington over the past two years to fend off increasing regulatory attention, the most recent industry scramble demonstrates how recent high-profile SEC enforcement efforts have had a negative impact.

It appears to be even another incentive to stand there and impart knowledge. The SEC has slowly asserted its control over the cryptocurrency business despite the fact that the majority of cryptocurrencies were initially operating in a legal limbo and weren’t subject to its investor protection regulations. When the SEC sued cryptocurrency exchanges Coinbase and Binance for failing to register some crypto assets, that effort intensified last month. The two contest the charges.


The majority of crypto businesses contest the SEC’s authority. They contend that cryptocurrencies are more closely related to commodities than securities and urge Congress to pass legislation to that effect.


The Republican leaders of the House Financial Services and Agriculture committees, Patrick McHenry and Glenn Thompson, have developed a discussion paper bill that would specify whether a cryptocurrency is a security or a commodity. The SEC’s authority would be made clear while the Commodity Futures Trading Commission’s regulation of the cryptocurrency industry would be expanded.


Among all the various crypto legislation launched in recent years, this one has the best chance of becoming into law. The reason for this is the close coordination between the committees in charge of the CFTC and SEC, which are frequently accused of competing for control over cryptocurrency. If Democrats backed the bill, it might have a chance to pass in the Senate.


Anything that wants to take off needs assistance from both parties. Market participants are therefore intensely interested in how they, as an organization, and the sector, can help promote that. Although it is not perfect, the bill is a great place to start.

Senior Republican policy staff stated that the plan is being reviewed with cryptocurrency companies, regulators, and Democrats with the aim that the committees will vote on it before the August break. According to a Thompson representative, they are “coordinating closely.”

Democrats, though, are wary about cryptocurrencies after some significant businesses, including FTX, went out of business last year. It is uncertain whether the bill will receive the support of Maxine Waters and David Scott, the senior Democrats on the Financial Services and Agriculture committees, respectively.

It suggests a complicated framework with underlying structural problems that would limit our federal financial authorities’ ability to effectively oversee and control a sector already replete with volatility and fraud.


However, crypto lobbyists think Vicente Gonzalez and Sylvia Garcia, two Democrats on the committees who have not yet taken a position on cryptocurrency, could be convinced that the law would support preserving American innovation and jobs.


Lobbyists admit that the FTX incident and Sam Bankman-Fried’s high-profile indictment have seriously damaged the reputation of the cryptocurrency business and put them on the defensive. It was unquestionably a major blow, especially considering how involved Sam Bankman-Fried was personally in Washington.

The sector has been working to fix the problems. According to OpenSecrets, it spent about $6 million on federal lobbying in the first quarter, setting itself up for another record year after spending $21.6 million in 2022. With $700,000 in spending during the first quarter, Coinbase was the biggest buyer.

Kara Calvert, head of US policy at Coinbase, added that “It’s not just Coinbase that cares about crypto; it’s hundreds of thousands of people across the United States.” The business is also waging a grassroots effort pushing cryptocurrency users to contact lawmakers.