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Crypto companies are investing in Democrats as they seek to muscle an industry-friendly regulatory regime through Congress and ensure new laws persist.
Cryptocurrency exchange Coinbase Global Inc. added David Plouffe, a former senior adviser to Kamala Harris' 2024 presidential campaign and Barack Obama aide, to its global advisory council. Meanwhile, stablecoin giant Tether Holdings SA recently registered Lilette Advisors, a firm founded by staffers for former President Joe Biden, as their lobbyist, according to public disclosures filed at the end of May. Ankit Desai, a partner of the firm who used to work for Biden, is listed as El Salvador-based Tether's only lobbyist in the registration.
"In the long run, Democrats are likely to take power back in at least one of these chambers or the presidency," said Austin Campbell, an adjunct professor at New York University's Stern School of Business and the head of the stablecoin company WSPN USA. "So if you made this industry explicitly partisan, boy do you have a problem."
Venture capital firm Andreessen Horowitz, one of crypto's largest investors, hired Michael Reed, formerly a top adviser to House Minority Whip Katherine Clark, as a government affairs partner. The founders of what's known as a16z were among the largest donors to Trump's 2024 presidential campaign.
Democrats are essential to advancing crypto legislation in the Senate, where 60 votes are needed to clear procedural hurdles for most bills.
Crypto's massive spending on campaigns aiding crypto-friendly Democratic Senate candidates and opposing crypto skeptics paid off, when the chamber voted 67-27 to cut off debate on landmark stablecoin legislation known as the GENIUS Act. Sixteen Democrats voted with the Republican majority, with final passage of the bill expected, despite Republicans successfully blocking Democratic efforts to amend the measure to block Trump from profiting off of his many crypto ventures.
Crypto companies have become increasingly worried the stablecoin measure, which also must pass the House, might be the only digital asset legislation signed into law. They are pushing to ensure broader market structure legislation - advanced last week by the Financial Services and Agriculture committees on bipartisan votes - doesn't stall.
Banking Chair Tim Scott, a Republican from South Carolina, told Bloomberg News he anticipates holding a hearing on that broader measure. Some other Republicans however want the House to package both bills together.
"Time is your enemy when you're trying to pass a bill," Campbell said. "Everybody comes out of the woodwork to try to staple completely unrelated stuff onto it. That's how we end up with these giant thousand page omnibus bills that do 80 different things."
Democrats initially united to filibuster the legislation earlier amid a furor over Trump's crypto dealings, with progressive Senators Elizabeth Warren of Massachusetts and Jeff Merkley of Oregon leading demands that the president be barred from profiting off his memecoin and a separate stablecoin venture.
Two Senate Republicans voted to filibuster the stablecoin bill. Josh Hawley of Missouri had sought to amend the bill to block large technology companies from issuing their own stablecoins. And Rand Paul of Kentucky wanted to add an amendment requiring an audit of the Federal Reserve. An effort by retailers and their allies in the Senate to mandate competition in credit card processing also failed to get a vote amid Republican infighting. Coinbase has been lobbying to allow interest to be paid on stablecoin accounts, but those efforts have so far been unsuccessful in persuading lawmakers in the House or the Senate.
While hostility to the Biden Administration's regulatory policies led many major crypto participants to support Trump's most recent campaign, the crypto industry has not always leaned Republican. Sam Bankman-Fried, the disgraced co-founder of crypto exchange FTX, was the second-biggest individual donor to Democrats in the 2022 election cycle. Many members of Congress shied away from crypto after his exchange collapsed and politicians ended up returning Bankman-Fried's funds.
The House Financial Services and Agriculture committees advanced the Digital Asset Market Clarity (CLARITY) Act, informally referred to as crypto's market structure bill. The House has been moving swiftly on the far more complicated piece of legislation, but not without rifts between Democrats and Republicans over amendments targeting Trump's crypto profits. The CLARITY Act aims to provide a comprehensive regulatory framework, including delineating responsibilities between the Commodity Futures Trading Commission and the Securities and Exchange Commission.
"Market structure is a whole different kettle of fish," Campbell said. "They're trying to boil the ocean with that bill and it's going to have a lot of knock on effects they have not thought about."
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