- Lawmakers on both sides of the aisle are flirting with crypto after years of skepticism.
- Momentum has picked up even quicker than the industry thought.
- But doubts linger than Democrats will fully embrace crypto.
It’s not just Donald Trump: Politicians in both parties are increasingly coming around on crypto.
After being staunchly anti-bitcoin, Trump rebranded himself as the crypto candidate last year, and plans to launch a strategic reserve for digital assets. Republicans fell in line.
The surprising part is that Trump’s arch-enemies are also reconsidering their anti-crypto positions. While many Democrats are still skeptical about digital assets, crypto lobbyists in Washington say they’re less antagonistic of the industry than they were previously. The anti-crypto arguments, like the one espoused Elizabeth Warren in January, are going out of style.
“Embrace is too strong a word,” Seth Hertlein, the global head of policy at crypto firm Ledger, said of Democrats’ stance on crypto. “I think there has definitely been a thaw, though.”
After one development this week, “thaw” may actually be an understatement.
On Tuesday, the US Senate resoundingly passed a measure blocking a Biden-era regulation that would require tax reporting by certain decentralized finance firms, which crypto advocates argue would be overbearing. A staggering 18 Democratic senators (19, including an Independent who caucuses with Democrats) voted with Republicans, pushing the final tally to 70 to 28. Hertlein had told BI that he thought only two or three Dems would be on board.
Bitcoin surged 8% in the hours after the initial vote, and other tokens also gained ground. The moves reflected a sentiment shift, and a sign that the crypto world is anticipating more positive developments ahead.
Voters gave a clear verdict on crypto, proponents say
Historians will likely debate for decades why Trump won and Democrats lost in 2024, though the crypto community is convinced that the president’s support for their cause made a difference.
“It was a huge issue in the last election,” Hertlein said of crypto at the Bitcoin Investor Week conference in late February. “And I don’t think that’s lost on anyone in Washington.”
Pro-crypto candidates appeared to outperform during last fall’s elections, including an upset win by Republican Bernie Moreno over Democrat Sherrod Brown, who’s a crypto skeptic.
Many associate crypto with the political right, and not just because Trump is infatuated with it. Stand With Crypto, an advocacy group backed by crypto broker Coinbase, has determined that 256 Republicans in office are supportive of crypto, compared to 89 Democrats.
But that doesn’t have to be the case. In fact, some crypto believers say the Democratic platform, known for its skepticism of Wall Street and big business, is a natural fit for decentralized finance.
“This is not a politicized asset class,” Federico Brokate, the head of the US business at crypto investment product issuer 21Shares, told BI.
He added: “There’s different aspects of the crypto value chain that are happening in traditionally red states or traditionally blue states, as well.”
Perhaps the most pro-crypto politician in DC is Cynthia Lummis, a first-term Republican senator from Wyoming. She was reportedly the first Senator to own bitcoin, and was fiercely critical of the Biden administration regulations that she saw as a threat to the industry.
“Everywhere you looked in the regulatory framework, it was hostile,” Lummis said on stage at the Bitcoin Investor Week conference. “And the hostility was pointed at not just bitcoin, but other digital assets: ethereum, cardano, solana — all this stuff. But bitcoin was caught up in it.”
A Democratic Party representative didn’t respond to Business Insider’s request for comment.
Lummis thinks attitudes toward crypto are now shifting, and she’s looking to have conversations with Democrats and Republicans about how the US should approach this growing industry.
Will Dems get their arms around crypto?
While some believe Democrats are warming up to crypto, others aren’t holding their breath.
Anthony Scaramucci, a major crypto investor and an avowed Trump critic, said at the bitcoin conference that he agreed with Lummis’s assessment about Democrats. Under Biden, he said the party was “really out to lunch” last year when it came to crypto and blockchain technology.
“Mark Cuban, Michael Novogratz, and I last summer descended into the White House, descended into meetings in Washington with senators, policymakers, assistant secretaries to the Treasury,” Scaramucci said at the conference. He said the tech leaders told Biden’s team: “‘What are you guys doing? You’ve got to get off the anti-crypto brigade.’”
This outdated stance is “the best thing that Trump has going for him,” Scaramucci remarked.
“The fact that the Democrats didn’t see that and didn’t see the power of this industry is a sign that they are derelict in their duties right now and aren’t really understanding what’s going on in the marketplace,” he said.
The SkyBridge Capital founder is trying to turn the tide, so that he doesn’t have to begrudgingly give Trump props. He told BI last fall that the 45th president’s win greatly helped his portfolio, even if didn’t want it, and joked at the conference that he should buy Trump a Christmas card.
In Scaramucci’s mind, Democrats were wrong about crypto, rudderless, and pulled off a last-second candidate switcheroo — yet still kept the presidential election close. He thinks they’ll perform better in future elections if they follow Republicans on crypto, but he’s not sure they will.
“The Democrats are not ready to do that,” Scaramucci said of embracing crypto. “I think they’re going to have a lot of problems if they don’t do that. But if I were them, I would be at least neutral on bitcoin.”
In democracies, voters speak, and politicians either adapt accordingly or risk losing their seats. Emboldened crypto supporters are confident their agenda will advance — one way or another.
“Crypto is here to stay,” Hertlein said. He added: “There is a recognition that it can’t just be ignored or killed. It is something that leaders of both parties are going to have to deal with.”
