Here’s a story the crypto industry can relate to: Speaker Mike Johnson’s House collapsed on itself Tuesday afternoon. Then, without much of a reason, it bounced right back.
Conservative hardliners killed a rule that contained much of the crypto sector’s legislative agenda for this Congress on Tuesday. But before 9 p.m., President Donald Trump announced that those same conservatives had decided to play ball. Cool!
Trump hosted most of the holdouts — some from the “Known to Fold” House Freedom Caucus — in the Oval Office on Tuesday night. Following a “short discussion,” Trump announced that “they have all agreed to vote tomorrow in favor of the Rule.”
What have we learned? Nothing! Capitol Hill is irritated and unsurprised by the “Vote no, then fold” exercise. We hope the Oval Office couches were comfortable.
Dig a bit deeper, and there are interesting undercurrents to unpack in crypto politics — among Democrats. Let’s talk about those.
Divisive download. The mood among Democrats on crypto legislation ranges from bitter to teeth-grinding to excited. House Democratic leadership isn’t whipping for or against the bills, a tacit acknowledgement of the diversity of views inside their caucus.
House Democrats discussed the upcoming votes Tuesday morning in a caucus meeting. Rep. Maxine Waters (D-Calif.), the ranking member of the House Financial Services committee, spoke against the legislation, arguing that Democrats needed to stand firm against Trump and his family.
“I’m warning them to be careful,” Waters said in an interview.
But Rep. Angie Craig (D-Minn.), who is running for Senate, spoke in favor of the legislation, arguing the bill wasn’t perfect but that some regulation reining in Trump was better than nothing, according to sources in the room. Craig led a big bipartisan markup of the CLARITY Act last month from her perch on the House Agriculture Committee.
Coinbase has been active here. They sent this letter to House leadership last night, urging passage of the CLARITY Act as a “practical, bipartisan step to modernize digital assets treatment.”
But we expect several Democrats to back the GENIUS Act — which would introduce regulations to stablecoins — but oppose the CLARITY Act. That bill would reorganize the responsibilities of federal financial regulators for crypto.
Rep. Jim Himes (Conn.) is one such Democrat after negotiating with Republicans on market structure reforms for years. The Goldman Sachs alum won’t support CLARITY this week, in part because the legislation fails to stop Trump from enriching himself with crypto.
“I’ve been begging for six weeks for strong conflicts language,” Himes said. “The answer has been no, no, no and no.”
This vote has wide-ranging implications for vulnerable members. Crypto super PACs are a major spending force in elections and have helped elect members of the caucus. The Fairshake super PAC network decided to announce it had $140 million on hand on Tuesday.
But Frontliners also have to watch their left flank. There’s a risk that comes with taking a vote that the base may view as enriching Trump.
“My argument has been, if the barn door is cracked open, you can either close it or swing it wide,” Rep. Sean Casten (D-Ill.) said. “What this is doing is swinging the door wide open.”
