Eyes and ears on DC

Going forward, this newsletter will primarily focus on the politics and policy around cryptocurrency (or as our government friends prefer to describe it: digital ledger technology).

Why it matters: It's clear that regulatory clarity is a major source of friction for this industry, a leading impediment in the way of reaching whatever potential it might have.

• Crypto entrepreneurs and DC (especially the Securities and Exchange Commission, or SEC) are at loggerheads.
• The former are quite vocal about their frustrations, while the latter speaks the most precisely through lawsuits.

Catch up quick: All the way back in 2022, the Biden administration, via the Financial Stability Oversight Council (FSOC), did in fact call on Congress for regulatory clarity.

• It urged action on regulation for non-security token trading, addressing the risks of regulatory arbitrage, and studying vertical integration of crypto trading firms (which is quite different from how traditional markets work).
• The SEC signed off on it.
• But as sources in DC have pointed out to us, nothing Biden's White House has done within its power has been encouraging.

State of play: The House passed a big piece of relevant legislation, FIT21, which the Senate now needs to consider.

• The Senate was thought more likely to take up a bill from Agriculture Committee Chair, Sen. Debbie Stabenow (D-Mich.). But they bailed.
• Someone may try to stir it up again next month, but don't count on anything happening.

Friction point: We're entering into a point in an election year where it's not very likely that we'll see more legislative activity.

• A lame duck session of Congress is coming, but none of our sources have strong opinions right now about what to expect in such a time.

If former president Donald Trump wins: He has promised to horde bitcoin (BTC) seized by law enforcement and fire Gary Gensler.

• Both promises will be tough to keep, however, there are things he can do.

If Vice President Kamala Harris wins: We really have no idea right now what she might do, because she has officially said nothing about the industry.

• Crypto leaders who lean D have an online rally scheduled for Wednesday night (maybe it will get DDOS'ed too).

💭 Our thought bubble: As Harris strategically moves to the center, she's likely looking to make moves that will still please her long time progressive supporters without alienating the lion's share of average voters.

• If Harris wants to be conciliatory, one can imagine some kind of legislation passing in the lame duck session and getting signed by President Biden — just to get it off her to-do list.
• Yes, but: With so many crypto leaders avowedly on Team Trump and the wind at her back, conciliating crypto sounds chancy.