Crypto gets a bright spot in a stormy summer: Congress

Opinion

It’s been an ugly summer for the cryptocurrency industry everywhere, not just Capitol Hill.

Despite a pile of bad news β€” layoffs at major companies, ongoing hacks, and the failure of several high-profile crypto projects that have devastated Main Street investors β€” the sector is at a premium in Congress.

Just in the last two weeks, a bipartisan group of senators kriptovalyutnogo place markets Commodity Futures Trading Association, the third bipartisan bill since April was the leading role for the preferred regulator of the industry.

Sens. Patrick J. Toomey (R-Pa.) and Kyrsten Sinema (D-Ariz.) have teamed up to make cryptocurrencies exempt from capital gains taxes like a sandwich that can be used for everyday purchases.

And that pair, along with Sens. Mark R. Warner (D-Va.) and Cynthia M. Lummis (R-Wyo.) signed into law last year a provision that would limit access to crypto transactions and strengthen tax reporting requirements. . In introducing the bill, the senators included commendations from eight industry representatives.

“The stack of legislative proposals is a sign that Washington is taking crypto seriously, and that’s a good thing for all parties,” said Sheila Warren, CEO of the Crypto Council for Innovation, an industry trade group.

Taken together, the crypto-friendly regulations represent a dramatic shift from what the industry faced on the Hill a year ago.

Last August, crypto interests were flat-footed when stricter tax enforcement emerged as a source of revenue for a trillion-dollar infrastructure package. In the year Even as the digital asset market quadruples to an estimated $750 billion by 2020, the industry, which spent $2 million on lobbying in 2020, has moved Washington to loosen the rules.

Crypto lobbyists have temporarily halted progress on the package, saying the language applied to the industry is overly broad and stifles innovation. They lost anyway.

His defeat made him stand out. During the year, crypto interests have opened a flood of expenses to collect the political influence machine in a hurry.

“The industry woke up a year ago and decided they needed to engage and educate policymakers, and we’re now seeing the results of those broader efforts,” said Aaron Cutler, partner and former partner at law firm Hogan Lovells. Aide to House Republican Leadership.

The crypto industry has scored a major victory under the long-awaited Senate bill

The industry spent $8.9 million on lobbying this year, up from $7.7 million in all of last year, according to a new analysis by the Center for Responsive Politics. The sector now counts 191 lobbyists among its ranks, up from 50 two years ago, the analysis shows.

Crypto executives are spending even bigger sums on campaign contributions.

They have given more than $61 million to federal candidates so far this election cycle, according to the center’s analysis. 97 percent of this sum came from the leaders of one company, the Bahamas-headquartered crypto exchange FTX. Sam Bankman-Fried, the company’s 30-year-old CEO, donated $38.9 million, making him the nation’s fourth-largest donor. Ryan Salame, co-CEO of FTX Digital Markets, and his wife gave another $15 million, making them the 10th largest donors nationally. FTX did not respond to a request for comment.

“A handful of people in this industry wield incredible influence through seemingly unlimited contributions,” said Daniel Auble, a senior fellow at the Center for Responsive Politics.

Crypto industry plunges into midterms, raising millions to court Democrats

FTX, like much of the industry, has focused its lobbying efforts on ensuring that the CFTC, as opposed to the Securities and Exchange Commission, takes the lead role in regulating digital asset markets.

The latest bill outlining the CFTC’s role, introduced last week by Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) and the panel’s top Republican, Sen. John Boozman (Ark.), would hand the agency jurisdiction over bitcoin and ethereum. Together they make up about two-thirds of the cryptocurrency market.

And online exchanges like Coinbase must register with the agency to trade digital tokens. The platforms

Stabenow says the debate over which agency, the CFTC or the SEC, is in charge of crypto regulation is “not really the question, because we need both.”

The bill has received widespread approval from crypto interests, a fact Boozman said on a call with reporters that he would pass the measure in the Senate. “If you don’t have friends there, it makes it a lot easier on the members,” he said.

Tyler Gelash, executive director of investor trade group Sound Markets Association, said there is an urgent need for the sector to establish the CFTC as an oversight body. “The industry’s first step should be to pull as much away from the SEC as they can because the SEC has dozens of rules that have been built up over decades to protect investors,” he said. “If SEC regulations are applied to crypto, many industry practices will be illegal, and many profits will be lost.”

But crypto insiders and observers agree that what could be a process for lawmakers to write an industry rulebook is just beginning.

Ian Katz, managing director of Capital Alpha Partners, a Washington policy analysis firm, said: “Right now, the SEC feels like they’ve failed on this and their opinion on this is not being heard in the law.” But there’s this game that needs more playing, and it’s not over.

Christine Smith, executive director of the Blockchain Association, said a new Congress would need to hammer out the details. For now, she said, her group is happy that the industry can point to three bipartisan bills, each one supporting the CFTC and crypto interests shaping the debate. β€œIt’s definitely an improvement, and I don’t think it’s going to stop,” she said.

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