US Crypto Lobbyists Target Democrats in New Legislative Push

Executives and crypto lobbyists actively lobby Congress for bipartisan support of forthcoming blockchain legislation.

In response to increased regulatory scrutiny, crypto companies have been expanding their presence in Washington over the past two years. However, recent high-profile SEC enforcement actions have further motivated the crypto lobby to educate members of Congress, said Cody Carbone, the vice president of policy at the Chamber of Digital Commerce.

The SEC has been asserting its authority over the industry, arguing that most cryptocurrencies should be classified as securities and subject to investor protection rules. Last month, the SEC filed a lawsuit against crypto exchanges Coinbase and Binance for failing to register certain crypto tokens. Both companies deny the allegations. Crypto companies challenge the SEC’s jurisdiction, asserting cryptocurrencies as commodities, not securities. They are calling on Congress to pass legislation that clarifies this distinction.

Lobbyists are focusing on a discussion draft bill proposed by Republican representatives Patrick McHenry and Glenn Thompson. The bill seeks to define whether a cryptocurrency should be classified as a security or a commodity. It aims to expand the Commodity Futures Trading Commission’s oversight of the crypto industry while clarifying the SEC’s jurisdiction. According to lobbyists, this bill has the greatest chance of becoming law among the various crypto bills introduced in recent years, as it benefits from the cooperation between the committees overseeing the CFTC and SEC.

Brett Quick, the head of government affairs at the Crypto Council for Innovation, stated, “For anything to really get traction, it has to have bipartisan support. We prioritize facilitating how our organization and the industry can contribute to that goal.

McHenry and Thompson are currently discussing the proposal with crypto companies, regulators, and Democrats. The goal is to have the committees vote on the bill before the August recess. However, Democrats have expressed skepticism regarding the bill, citing concerns that it would undermine the SEC’s powers. Maxine Waters and David Scott, the top Democrats on the Financial Services and Agriculture committees, have yet to announce their support. Nonetheless, crypto lobbyists anticipate persuading undecided Democrats on the committees, like Vicente Gonzalez and Sylvia Garcia, to support the bill.

Despite facing setbacks due to the FTX scandal and the indictment of its founder Sam Bankman-Fried, the crypto industry has been actively working to restore its credibility. Lobbyists have allocated significant funds for federal lobbying and are engaging in grassroots campaigns to encourage crypto users to contact lawmakers. This concerted effort demonstrates the widespread support for the industry across the United States, according to Kara Calvert, head of U.S. policy at Coinbase.

Michelle Price reporting; Additional reporting by Hannah Lang and Douglas Gillison; Editing by Richard Chang