The Democratic Party’s disdain for crypto is well known. SEC Chairman Gary Gensler’s conduct regarding crypto has been criticized not only by many members of Congress but by virtually every prior SEC commissioner.
Gensler’s opposition reflects that of most Democrats, including Sen. Elizabeth Warren, who has sponsored several bills to curtail or ban digital assets, and Biden, who not only appointed Gensler to his role at the SEC but most recently has asked Congress to approve a 30% bitcoin mining excise tax. If passed, the tax would eliminate mining in the United States, moving innovation overseas and costing tens of thousands of high-paying, green jobs in 41 states.
The crypto community has grown tired of its treatment in Washington. So, the industry has formed several political action committees and funded them with nearly $250 million, making them the largest financial influencers of the 2024 elections. Their primary targets: Democrats who oppose crypto legislation and regulation. One was Rep. Katie Porter, and she lost her primary race for the Senate.
In her concession speech, she said her loss was “rigged” by “billionaires spending millions” to alter the outcome. (Porter later said she regretted her comment.)
The crypto community and investment management industry are unhappy that no crypto laws or regulations have been approved. It took an appeals court to force Gensler to approve the bitcoin ETFs, and their debut proved that there’s massive investor interest in this asset class: They’ve become the fastest-growing ETF category in history, accumulating $60 billion in assets in less than five months — including more than $5 billion from institutional investors so far.
The crypto community is thrilled. The ETF industry is ecstatic. And the investment advisory field is smiling, too, getting to share in the assets under management and the resulting fees. But one group is very unhappy: the banks.
Thanks to Gensler and Congress, banks are prohibited from providing custody services for crypto.
Meanwhile, Coinbase has $350 billion in assets. So, it’s no surprise that the American Bankers Association is working to change that. Its website states, “ABA is working to help banks safely meet customer demand for digital assets.” That’s code for: We’re lobbying Congress, so we can play, too.
Given all this, it’s not a stretch to imagine that both Wall Street firms and America’s bankers have expressed their views to Sen. Chuck Schumer, the Democratic majority leader who also happens to represent New York. It’s also not a stretch to imagine that Schumer has talked with Biden.
My evidence? Not only did Gensler engage in a sudden and unexpected 180-degree shift to approve the ethereum ETFs, but 71 Democrats in the House just voted to approve the Financial Innovation and Technology for the 21st Century Act. Never before have so many Democrats supported major crypto legislation.
That legislation’s prospects are uncertain; given the congressional calendar, it’s unlikely that the Senate will act this year, and rumors are that Biden would veto the bill anyway. Indeed, some report that his veto promise allowed Democrats to support the bill, protecting them from the crypto PACs while knowing that the bill won’t actually become law.
Meanwhile, presumptive Republican presidential nominee Donald Trump has been advocating strong support for crypto, going so far as to accept campaign contributions in bitcoin, ethereum and several other digital assets. At a recent rally, he said, “I will also stop Joe Biden’s crusade to crush crypto. I will ensure that the future of crypto and the future of bitcoin will be made in the USA, not driven overseas. I will support the right to self-custody to the nation’s 50 million crypto holders. I will keep Elizabeth Warren and her goons away from your bitcoin.”
Bottom line: Crypto has become a campaign issue, and single-issue voters who are focused on crypto pose a threat to Democrats seeking office or reelection.
Ric Edelman is an author and founder of the RIA Edelman Financial Engines (earlier Edelman Financial Services). He now leads the Digital Assets Council of Financial Professionals.
