Congress’ Crypto Era Is Here

The cryptocurrency industry, once beleaguered by scandals and skepticism in Washington, is now within striking distance of the biggest policy win in its history.

The Senate Banking Committee on Thursday passed digital assets legislation that would create a regulatory structure for stablecoins, marking the first time a Senate panel has ever advanced major crypto legislation. The move, which garnered bipartisan support, marked one of Congress’ most significant steps yet toward giving the crypto sector a long-sought stamp of legitimacy that could turbocharge its growth.

“All the groundwork that we laid during the last four years is now coming into fruition,” said Sen. Cynthia Lummis, a Wyoming Republican who has been dubbed the upper chamber’s “crypto queen” and has pushed for years to advance industry-friendly changes. “It’s time to act now.”

The new momentum illustrates the extent to which the digital assets industry has overcome longstanding concerns about fraud and market volatility that have dogged its quest for legitimacy in Washington for most of its history. Executives think legislation could help crypto, currently used by just a small fraction of the U.S. population, become more mainstream.

The pro-crypto shift has been driven in part by hundreds of millions of dollars in political spending from the industry and its top executives, who have showered Washington in cash in recent years through super PAC spending, lobbying and aggressive public relations and marketing campaigns.

“Things happen slowly, and then all at once,” said Kara Calvert, a former Senate aide who serves as vice president for U.S. policy at Coinbase, the largest U.S. crypto exchange.

The industry has been rewarded by a series of steps taken by President Donald Trump and his hand-picked regulators, who have vastly pulled back from a crackdown the industry faced during the Biden era.

But the crypto firms’ biggest lobbying goals — legislation that would create light-touch regulatory frameworks for digital assets — run through Capitol Hill. Lawmakers in recent weeks have taken their first major steps to boost the crypto sector, with head-turning levels of bipartisan support.

The Senate Banking Committee’s action this week will send a bill that would create a regulatory framework for stablecoins — or digital tokens that are pegged to other assets like the dollar — to the Senate floor with bipartisan support. Five Democrats voted for the GOP-led legislation, despite strong opposition from the party’s leader on the Banking panel, Sen. Elizabeth Warren of Massachusetts.

That came following a pair of big bipartisan votes on the floors of both the House and Senate in favor of a resolution that would kill a Biden-era regulation imposing new tax reporting requirements on some crypto firms.

It’s all coming together to create a “huge moment” for crypto, Lummis said.

The goal for many digital asset firms and supporters is a financial system that is more intertwined with digital assets and blockchain, which is the digital ledger technology that undergirds crypto.

“I think it’s really about the integration of the technology into the existing financial infrastructure, in a way that modernizes faster than we’ve seen before,” said Calvert, of Coinbase.

But critics, largely on the left, are alarmed by the pro-crypto turn. Warren warned against the stablecoin legislation her panel advanced Thursday, saying it lacked necessary consumer protections and anti-money laundering safeguards. She has also warned that cryptocurrencies could present risks to financial stability if they become intertwined with the rest of the financial system, given their volatility.

“I am worried about the United States moving forward on a stablecoin bill that opens up opportunities for drug traffickers and terrorists to evade every other part of the finance system,” she told reporters following the committee vote Thursday.

The crypto momentum has also surfaced broader concerns from lawmakers and some banking groups about the separation of banking and commerce services.

Warren has raised anti-competition and financial stability concerns over the GOP-led stablecoin bills, which she says could open the door to major commercial and tech firms getting into financial services and leveraging their power in one market to dominate another. She said Thursday that the legislation “gives Elon Musk the chance to issue his own X money currency,” flicking at the billionaire’s recently announced plan to have his social media site partner with Visa to get into financial services.

But the level of support for Congress’ early crypto moves illustrates the eagerness lawmakers have to give the crypto industry its way. In addition to stablecoin legislation, industry-friendly lawmakers are also gearing up to advance a broader crypto overhaul that would divvy up oversight of digital assets between regulators.

“It is a really, really important moment,” said Dante Disparte, the chief strategy officer and head of global policy at Circle, a firm that issues a digital token pegged to the value of the dollar and could stand to benefit from stablecoin legislation. “There’s a really significant depth of interest and depth of understanding and depth of industry alignment. That is the basis for creating law.”