But a new generation of progressives, and several other veteran Democrats, are embracing the startup industry. they are arguing against regulations that could stifle what advocates say is a new avenue for financial inclusion and an innovative alternative to traditional banks.
“the project of radically decentralizing the internet and finance seems to me to be a profoundly progressive cause”, rep. Ritchie Torres (D-N.Y.) said in an interview. “No technology should ever be defined by its worst uses. …there’s more to crypto than ransomware, just like there’s more to money than money laundering.”
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A man uses a bitcoin ATM in Hong Kong in 2017. | photo by kin cheung/ap
the latent conflict will intensify in the coming months. President Joe Biden last week called on federal agencies to begin solidifying the federal government’s approach to cryptocurrencies, framing the move as supporting innovation rather than cracking down on the industry. bitcoin price increased on the news. Separately, Democratic lawmakers have begun drafting a series of crypto regulation bills that also expose a wide range of views on the government’s role in the $1.7 trillion digital asset market.
The lack of consensus among Democrats means that Congress is unlikely to act soon to pass major legislation setting the direction of new market regulation. Some Democrats and lobbyists expected initial votes earlier this year, but that deadline has been pushed back.
Crypto watchers got a sneak peek of the divide last year, when Democrats, including Senate Finance Chairman Ron Wyden of Oregon, fought to reduce a tax provision in what became law biden’s bipartisan infrastructure proposal that imposed new reporting requirements on virtual currency trading.
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“It’s fair to say there are different perspectives on how to run the space in general,” the representative said. Josh Gottheimer (D-N.J.), author of industry-backed legislation that would establish rules for cryptocurrencies known as stablecoins, whose value is pegged to an underlying asset like the dollar.
The emerging enthusiasm for cryptocurrency among many Democrats stands in stark contrast to the views of leading progressive lawmakers, such as Warren, Senate Chancellor Sherrod Brown (D-Ohio), and Rep. Brad Sherman (D-Calif.), who have been mounting criticism about the risks to consumers and the financial system.
“It’s fair to say that there are different perspectives on how to deal with space in general.”
warren, who has been discussing the development of a comprehensive crypto bill, recently warned that russian leaders and billionaires may use digital currency to evade sanctions imposed after the invasion of ukraine. the industry responds that the risk is being exaggerated. Treasury officials also say there has been little evidence of the Russians using the relatively small crypto market to circumvent sanctions.
warren addressed a letter to the treasury on the subject earlier this month and was joined by brown, sen. mark warner (d-va.) and sen. jack reed (d-r.i.).
It’s Warren’s latest attempt to highlight what she and other opponents see as a lack of regulation in the market.
“The banks have not served the American public well,” warren told reporters when asked if he saw any social benefits to cryptocurrencies. “There is a reason cryptocurrencies take hold in some areas because banks continue to impose transaction fees at a time when the cost of transactions should be falling rapidly. however, replacing it with an unregulated and unverified system where fraudsters, cheats and terrorists mingle with ordinary consumers and no one can tell who is on the other side of a transaction is not a safe substitute.”
The clash can be explained in part by the growing influence of cryptocurrencies in Washington and in member districts. the industry is amassing an army of lobbyists and recruiting former Democratic lawmakers and regulators to further its cause. It comes as crypto startups have established themselves across the country, with state and local leaders looking to become home to businesses and jobs.
Rep Jim Himes (D-Conn.) said the crypto industry has gotten big enough that “some of us are paying attention to these businesses.” he cited the decision of the digital currency group, a so-called cryptocurrency conglomerate, to move its headquarters to his state.
“I’m not alone,” he said. “All kinds of well-funded cryptocurrency businesses are springing up all over the country. … people are showing a small-town interest because, although we all feel like we won’t know exactly what it’s going to be like, there will be jobs associated with this technology.”
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representative. Jim Himes said that the crypto industry has gotten big enough that “some of us are paying parochial attention to these businesses.” | andrew harrer-pool/getty images
Torres, a freshman member of the congressional progressive caucus, said New York City, which he represents, should embrace crypto if it wants to remain the financial capital of the world. Among local leaders, Mayor Eric Adams is one of the most outspoken cryptocurrency backers in the country, going so far as to convert his salary into bitcoin and ether.
Torres said that cryptocurrencies and the underlying blockchain technology “have the potential to lead to a better, cheaper and faster payment system” that could, for example, help a Dominican immigrant in his South Bronx district. to send remittances with minimal fees and delays.
said regulation should be “surgical” and that significant moves by federal agencies without congressional direction would be a “power grab.” there is a “kind of xenophobia against cryptocurrencies” among some regulators and lawmakers, he said.
“The future of finance and the internet should not be left in the hands of a gerontocracy of regulators who seem to be on a personal crusade against cryptocurrencies,” Torres said. “Congress, which has a new generation of legislators, must have the last word.”
Several Democrats focus on the potential opportunities for cryptocurrencies to reach Americans, particularly people of color, who have traditionally been ignored by the banking system. A survey commissioned late last year by venture capital giant Andreessen Horowitz, a major investor in cryptocurrency startups, found that 30% of African Americans and 27% of Hispanic Americans said they owned crypto, compared to 20% of Americans overall.
“We are already seeing some of the hopeful and optimistic possibilities in cryptocurrencies,” said Sen. cory booker (d-n.j.) told a hearing last month, calling it a “democratizing” force that offers “a lot of hope.”
Morgan Harper, a former Senior Advisor at the Bureau of Consumer Financial Protection, an agency designed and launched by Warren, has touted the potential economic benefits of cryptocurrency for Ohioans while running for the US Democratic nomination. from America. Senate race. She has argued that a decentralized financial system like the one that powers cryptocurrencies could be better for consumers than a system dominated by intermediaries like banks.
“We have some people in washington who have already been elected and who have their views,” he said in an interview. “But there are plenty of other people like me who are in learning mode.”
sam sutton contributed to this report.
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