AUSTIN, Texas – The biggest news this year at Consensus seems to be the political sea change happening in the Democratic party over crypto. While President Biden’s administration essentially carried over the same reluctant-to-the-point-of-being-nearly-hostile approach to crypto as its predecessor, ever since the bottoming out of the industry in 2022 (the year from crypto hell) it has been actively hostile. The easiest way to sum up Biden’s “whole of government” attempt to wrangle in the crypto industry is with the catchphrase Operation Choke Point 2.0, coined by VC Nic Carter to describe the apparent debanking of many crypto firms.
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But in a matter of weeks, this has changed. Beginning with the bipartisan vote in the House and Senate to repeal the U.S. Securities and Exchange Commission’s (SEC) much-maligned accounting bulletin (SAB121) and extending to yesterday’s reveal that the Biden administration is reportedly doing outreach to crypto firms in a late-stage attempt to hear what they have to say about what good crypto policy would look like, it has become (nearly) believable that brighter days are ahead on the political, regulatory and legislative fronts for the domestic crypto industry.
The feeling is in the air, probably because everyone appears to be voicing it out loud. For instance, yesterday on the Consensus stage, NYSE President Lynn Martin said that she doesn’t think that crypto will remain a “partisan” issue much longer. In the same way that stock and bonds are mostly apolitical, it doesn’t really make much sense to view crypto as inherently political (in fact, crypto may have a better case for actually being apolitical, given the technical design of protocols like Bitcoin).
However, not everyone is in alignment here. For instance, a big name crypto lawyer who works for a red hot DeFi startup, who asked not to be named given the sensitivity of his work, said he doesn’t think Biden’s apparent change of heart is genuine. “He’ll likely revert back to course, if reelected,” he said. Asked whether he felt any weight off his shoulders at all, or whether his job has or will get any easier, under seemingly improving regulatory conditions, he said “absolutely not.” Today is the same as yesterday.
Austin Campbell, a Columbia University business lecturer who is plugged into the D.C. circuit, echoed this idea when noting that the seemingly parallel change in Congress is not likely permanent. In fact, if you look at how the voting on the landmark Financial Innovation and Technology for the 21st Century Act (FIT21) happened, it largely broke down on age lines. Though this in itself could be a positive, given that younger members of Congress are more likely to “get it,” and despite the fact that U.S. politics is a gerontocracy, the dinosaurs won’t rule the world forever.
This morning, Messari founder Ryan Selkis, who recently spoke with former President Trump at Mar-a-Lago Club, and Uniswap Labs chief lawyer Marvin Ammori, a longtime Democratic operative, actually debated the recent political machinations afoot on the Main Stage. Selkis’ main argument was that any easing up on crypto by the Democrats is largely a result of Trump capturing the “single issue” crypto vote, and that it should be treated as suspect. While Ammori argued that political changes don’t flip like a switch, and that things like SAB121 and FIT21 were the result of real bipartisan collaboration and successful crypto lobbying.
“My point is, we don't necessarily want to be partisan, because that will be a setback in the long term,” Ammori said. In other words, crypto should be wary of aligning itself with any one party or any one candidate – especially considering that campaign promises are rarely kept. For his part, Selkis wanted to step out of wishful thinking (i.e., that Democrats could be suddenly supportive of crypto after so many years) and into the realm of realpolitik (i.e., that if the theory of bipartisan support were true, it’d be because Dems’ needs have shifted).
“Democrats right now are like a cheating spouse; we caught them with their pants down,” Selkis said. “To reward this Democrat, mainstream party at this point in time is not only foolish, but I think it shows a profound lack of self-respect – they need to do penance.”