By David Yaffe-Bellany, Theodore Schleifer and Erin Griffith
A cryptocurrency supporter leading the Securities and Exchange Commission. A presidential committee filled with industry proponents. And new legislation allowing crypto firms to operate without hindrance in the United States.
Following a long period of isolation in political affairs, cryptocurrency executives are rushing to implement a policy agenda that could drastically alter the industry’s presence in the U.S. They are heavily lobbying President-elect Donald Trump and his close associates, aiming to influence critical appointments in the forthcoming administration and halt the regulatory assault on crypto businesses.
Numerous high-ranking executives are trying to win over Howard Lutnick, a bitcoin advocate who leads the financial firm Cantor Fitzgerald and is co-chair of Trump’s transition team, according to over a dozen crypto executives, some of whom chose to remain anonymous due to the sensitive nature of these political efforts.
Coinbase, the cryptocurrency exchange, has been collaborating with Trump’s transition team to facilitate a meeting between Lutnick and Brian Armstrong, the company’s CEO, as per two individuals familiar with the discussions. Brad Garlinghouse, the CEO of Ripple, another crypto company, mentioned that he had conversed with Trump’s associates regarding personnel choices for the new administration. Executives at Circle, another significant U.S. crypto business, have also engaged with the transition team, according to an informed source.
The primary focus for the industry is revamping the SEC, which has been aggressively targeting crypto firms legally. Among potential candidates for the agency’s leadership is Dan Gallagher, the chief legal officer of Robinhood, the trading and crypto application, as indicated by three individuals knowledgeable about the situation. Chris Giancarlo, a previous regulator who has acted as an advisor to crypto businesses, is another industry-backed candidate, one of the sources noted.
After every election, corporate leaders make vigorous efforts to sway the transition processes. However, the crypto sector has a particular basis for optimism. During the campaign, Trump, who used to loudly criticize bitcoin, announced his conversion to its supporters and vowed to put an end to the SEC’s legal actions. He and his family also launched their own cryptocurrency venture and may gain personally from regulatory modifications suggested by industry leaders.
The likely outcome is a significant pivot in U.S. policy regarding the cryptocurrency sector, which has been marred by financial scandals, company bankruptcies, and white-collar crimes costing consumers billions in lost savings. Prior to the election, a coalition of super PACs funded by crypto executives poured about $135 million into more than 50 congressional campaigns, successfully electing numerous pro-crypto representatives.
On Monday, bitcoin’s price surged to nearly $90,000, reflecting investors’ belief that the industry’s political contributions would lead to more lenient regulations.
The expenditure “illustrates a disturbing instance of influence-peddling,” stated Lisa Gilbert, co-president of the consumer group Public Citizen. “The enormous amount of money spent and its success conveys exactly the wrong lesson to other corporate players.”
Karoline Leavitt, a spokesperson for the transition team, mentioned in a statement that personnel announcements for the new administration would be “made public when available.” A spokesperson for Coinbase refrained from commenting on Armstrong’s engagement with Lutnick.
Under the Biden administration, the crypto sector faced difficulties in gaining traction in Washington. The 2022 downfall of the FTX crypto exchange alarmed some congressional allies, and the SEC filed lawsuits against major crypto companies like Coinbase, which posed a threat of pushing much of the sector off U.S. shores.
Currently, crypto executives express hope that the incoming leaders in Congress and the White House will promote many of the industry’s essential objectives.
“Many individuals are compiling their wish lists and reaching out to the campaign and the transition through various channels,” remarked Kristin Smith, CEO of the Blockchain Association, a cryptocurrency trade organization. She indicated she was set to present at a crypto conference in Miami this week organized by Lutnick’s firm and looked forward to connecting with individuals in his circle.
Other executives are seeking introductions to Trump’s associates, contacting anyone who could assist them in obtaining a position on a crypto advisory council that the president-elect has pledged to create. Sen. Bill Hagerty, R-Tenn., has become a pivotal figure, aiding in connecting industry leaders with Trump’s team, according to two individuals familiar with the situation.
In both public and private discussions, industry leaders have recommended replacements for the SEC’s chair, Gary Gensler, a noted critic of cryptocurrency.
On Thursday, Armstrong from Coinbase stated on the social media platform X that Trump should select SEC Commissioner Hester Peirce to lead the agency. Peirce, a Republican, has often disagreed with Gensler regarding his regulatory approaches to the crypto domain.
In another announcement, Garlinghouse proposed three potential candidates for the chair position — Gallagher, Giancarlo, and Brian Brooks, a former banking regulator who has been involved with Coinbase and served as CEO of Bitfury, a bitcoin enterprise.
Coinbase and Ripple were among the top supporters of the crypto super PAC Fairshake, which invested tens of millions to sway election outcomes. Brooks, Giancarlo, and Peirce did not provide comments. Gallagher did not respond to requests for a statement.
“The Biden administration’s conflict with crypto is drawing to a close,” Garlinghouse remarked in an interview. “This is beneficial for America.”
In Congress, some crypto leaders are advocating for legislation to make trading stablecoins — cryptocurrencies intended to maintain a stable price of $1 — more accessible. Other firms and investors support a bill aimed at complicating the SEC’s ability to pursue legal actions against crypto companies for securities breaches. Gensler has cautioned that such legislation could create regulatory voids and expose investors to “immense risk.”
