WASHINGTON — It's not so easy to register a blockchain business with the SEC, at least not according to consumer investment company Robinhood.

Why it matters: A consistent narrative from the U.S. regulator is that companies in the cryptocurrency industry are simply refusing to follow securities law by registering their businesses with the agency.

• Robinhood's account details how it tried very hard and still failed, despite priding itself on regulatory compliance.

What they're saying: "Nothing is stopping the Commission from moving now to provide tailored relief that allows firms to register (even if provisionally) and continue to innovate in the meantime. It has simply chosen — consistently — not to do so," Daniel Gallagher, Robinhood's head compliance attorney, said yesterday in testimony before the House subcommittee on digital assets.

• "We heard [SEC] chair [Gary] Gensler's call to register loud and clear," he told the subcommittee during the Q&A.

Zoom in: According to Gallagher, Robinhood spent two years, an enormous amount of money and effort (including at least a dozen meetings with SEC staff) to find a way to comply under existing rules.

• It offered suggestions on exemptions that could be crafted. It drafted no-action letters. It held discussions he described as fruitful and intellectually interesting with SEC staff, but it ultimately went nowhere.
• Then in 2023, Robinhood's legal team got what Gallagher called a "perfunctory note" from the SEC chair's office that there was no need to continue the conversations.
• "His office told us there was no path forward," Gallagher said during the hearing. He found it was not possible for Robinhood to register, despite the company being careful not to list anything that might run afoul of securities laws.

The latest: Robinhood received a notification that it was likely to be sued by the agency, joining the ranks of Uniswap, OpenSea and Coinbase, among others.

• "Because the commission has taken a rigid, hostile approach to cryptocurrency and refused to provide regulatory clarity, U.S. customers have suffered as innovation has moved overseas," Gallagher said in his testimony.

In the weeds: Gallagher served in the SEC, including as a commissioner from 2011 to 2015. He is calling on the SEC to write temporary rules for businesses that want to offer cryptocurrency-related services (such as brokers, like Robinhood) under Section 36 of the Exchange Act, which authorizes the agency to be flexible around new kinds of securities.

• He notes that the commission used that authority in 1998 for alternative trading systems.

💭 Quick note: Companies don't often go on the record talking about dealing with the agency behind the scenes, but I've heard similar stories for years — off the record they go even further.

Context: Robinhood began offering trading in bitcoin and ether in 2018.

• At times, cryptocurrency has been a major part of its trading business.

State of play: "We have to look over our shoulder left and right," Gallagher told the subcommittee.

• In his written testimony and on the stand, he urged Congress to step in.

Last night in D.C., crypto's get-out-the-vote effort, Stand With Crypto, wrapped its five-state tour at the Black Cat.

Why it matters: The campaign created enough buzz with its events to generate contact with tens of thousands of voters through its website, where voters can check their registration, register and look up how crypto-friendly various politicians have been.

• "We're taking the voices we've been hearing in the swing states (Arizona, Nevada, Michigan, Wisconsin and Pennsylvania) and bringing it to D.C.," Stand With Crypto executive director Logan Dobson tells Axios.

In the room: It was a full place. There was a long line to get in, a long line for the buffet of what looked like fried chicken and other offerings, a bag of Stand With Crypto swag (one attendee showed us his camo hat) and drinks.

• One attendee was Wayne Chang of SpruceID. He said he's in the space to deal with decentralized data (as opposed to money).
• He said he worries that if governments crack down, for example, on wallets — what individuals use to self-custody their assets — it could also slow down other applications of blockchain, such as controlling your data, or limiting how your personal information is used.

Zoom out: Heavily backed by Coinbase, the country's largest crypto exchange, Stand With Crypto has eschewed endorsements, particularly in the presidential race, but they've chosen to hit the most important places in that race.

• Dobson said that they weren't trying to tell people who to vote for, though, but to "maximize the voices of the crypto voter" in the places where votes matter the most.

What's next: Dobson is looking to local chapters around the country to do grassroots events large and small from now until the election.

🐣 The legal maneuvers enabling a crypto-powered version of one-time mobile phenom, Flappy Bird. (Ars Technica)

🍔 Former President Trump was buying burgers with bitcoin last night in Manhattan, at a bar we've visited several times. (WSJ)

😖 Another September day, another SEC settlement. This time, Rari Capital. (CoinDesk)

🎧 Gensler revisits his resistance to the FIT21 legislation. (Punchbowl — starts at 11:30)

Crypto legislation could move forward as soon as the end of this calendar year, lawmakers said at Axios' State of Play for Crypto on Capitol Hill event this morning in Washington.

Between the lines: Both Rep. Tom Emmer (R-Minn.) and Sen. Kirsten Gillibrand (D-N.Y.) said they were hopeful that some crypto bills could be introduced during the lame-duck session after the election.

• "The one bill that's very well-positioned is the one written through the Ag Committee on the CFTC regulatory oversight for digital commodities," Gillibrand said.
• "They haven't introduced the actual compromise language yet, but I imagine after the election, it's a great time to do so," she added.

Emmer's hope for a "very productive" lame duck is contingent in part on Republicans winning a clean sweep of the presidential race and House and Senate majorities in the upcoming election.

• [During] the lame duck, if [Republicans are] in control, Trump has already said he will be the crypto president," Emmer told Brady on the stage.

Go deeper for more from this morning's event.