As the crypto faces what many are calling its biggest crisis yet, a slew of new politicians are lining up to take their place on Capitol Hill as more-stringent regulation likely looms.
“It’s difficult to know how these midterm elections will impact the crafting of an overall crypto regulatory framework for the United States,” said Joseph Collement, general counsel at Bitcoin.com. “Some believe that Republicans are more friendly to our industry, while others believe that there is possibly an emerging bipartisan consensus over formulating friendly and pro-growth regulation.”
Issues surrounding digital assets were more important than ever this past election cycle, according to GMI PAC, a crypto-focused group backed by SkyBridge Capital’s Anthony Scaramucci. “Crypto voters,” which pollsters described as owning or considering owning digital assets, make up 44% of US voters, GMI PAC found.
As results continue to trickle in, industry proponents ought to be happy to see many crypto-minded candidates have secured a seat on Capitol Hill, which appears to have come at quite the crucial time.
New names on the Hill
Harriet Hageman, R-Wyo., for example, took over outgoing Rep. Liz Cheney’s seat. The attorney is keen on maintaining the state’s growing autonomy over crypto-related matters, she said during a July debate.
“I think that it’s something that we need to be exploring, but we want to keep the federal government out of it,” Hageman said, referring to cryptocurrency mining operations in Wyoming.
Crypto is “an important states’ rights issue,” she added.
Sen. Cynthia Lummis, R-Wyo., a vocal cryptocurrency advocate, praised Hageman’s win Tuesday night, calling her an “excellent teammate” to have in Washington.
Rep. Jonathan Jackson, D-Illi., will also be making his debut in the House in January, largely thanks to an influx of donations from crypto-related political action committees. Three PACs, DAO for America, Web3 Forward and Protect our Future, were all substantial donors to Jackson’s campaign.
The Protect Our Future PAC is bankrolled by the once-revered crypto billionaire Sam Bankman-Fried. His PAC bought $500,026 in television ads, according to the Chicago Sun-Times, during the last campaign cycle.
Crypto could have been enough to sway some voter’s choice,Bobby Kaple, senior advisor to GMI PAC, said.
“Both parties are in a battle to connect with younger Black and Hispanic men — groups that have shown over the past few cycles to be less calcified in their party preference. These groups also own crypto at much higher rates,” Kaple said. “Connecting with them on crypto issues could unlock just enough support to win some of these tight races.”
Congressional Blockchain Caucus Chairs Tom Emmer, R-Minn., and Bill Foster, D-Illi., both won reelection as well as Caucus members Josh Gottheimer, D-N.J., and Richie Torres, D-N.Y. The group, which “believes in the future of blockchain technology” supports a “light touch regulatory approach,” according to its website.
Meanwhile, New York Governor Kathy Hochul won permanent offices, which may have an impact on bitcoin mining operations in the state. The former lieutenant governor has not yet opted to sign or veto a crypto mining bill, which would impact proof-of-work operations.
Kristin Smith, executive director of the Blockchain Association, is confident bipartisan consensus can be reached, especially given the promising across-the-aisle initiatives seen in the past 18 months. But politicians will not be ignoring the fall of one of the most trusted names in the industry, she warned.
“We had crises in the summer, but this is a different level of crisis, and it’s going to demand [lawmaker’s] attention,” Smith said. “As this continues to be in the headlines, which I think it will for some time, Congress is going to want to respond.”
It is worth noting that Binance and FTX are not US-based exchanges, Smith added, in fact, each launched its own US subsidiary when the companies were forced to halt operations in the country. Binance US rolled out in 2017, followed by FTX.US in 2019.
“US exchanges don’t operate like this… that’s not what they’re doing,” Smith said. “But that being said, I don’t think that’s going to stop Congress from wanting to act.”
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