Crypto industry wields its influence in Washington after pouring over $30 million into campaigns
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U.S. Rep. Ritchie Torres (D-N.Y.) called for New Yorkers support of the cryptocurrency market. In a March Op-Ed published in The New York Daily News, titled “A liberal case to cryptocurrency.”
With a multi-billion dollar market value, crypto will be around for the long haul. It is not moving anywhere. New York City needs to embrace cryptocurrency if it wishes to continue being the financial capital in the world,” stated Torres of the House Financial Services Committee.
Torres did not mention the two fundraisers that industry backers had planned for him in April. Crypto investors Ben Horowitz, Anthony Albanese and Chris Dixon — leaders at venture capital firm Andreessen Horowitz — hosted the “Ritchie Torres Ethereum Fundraiser” at the swanky private nightclub Zero Bond in New York City on April 13, CNBC viewed invitations. Invites were promised by one of them Torres invites donors to “cocktails and conversations” with Torres. They ask for donations between $500 to $5,800 in order to be able to attend the event. One invitation requested that donors send ether to Torres, an alternative cryptocurrency which trades at about $2,000.
Dixon, Albanes, and Horowitz did not reply to our requests for comment. A Torres assistant confirmed the details.
According to Federal Election Commission records, Torres’ opinion piece and support for Congress points to the growing influence of the crypto industry in Washington, D.C. The industry has hired over 200 staff and officials from Congress, Congress, Federal Reserve, and political campaigns. In addition, more than $30 Million in contributions have been made by crypto executives to federal campaigns and candidates since the beginning of the 2020 cycle. These investments began to yield dividends. According to congressional aids, crypto executives were able to land hearings at Capitol Hill and secured support for Amendments to President Joe Biden’s $1 Trillion infrastructure bill.
Investors in crypto currencies have made a name for themselves at least two new political action committees just this year,This seeded fund was funded with thousands of millions of dollars and aimed to support industry-friendly politicians in their election to Congress. The primary driver behind Protect Our Future is Sam Bankman Fried, CEO at crypto exchange FTX. raised more than $14 millionThese could help tip the balances in House races in Ohio or Oregon.
According to the lawmaker’s assistant, Fred Wilson, who is a partner in venture capital firm Union Square Ventures and heavily invested in cryptocurrency, hosted another Torres fundraising event in April. According to the aide who requested anonymity because of the private nature of the events, the Wilson fundraising event was rescheduled for April, after it had originally been scheduled to occur in December.
FEC records show that Bankman-Fried and SkyBridge Capital founder Anthony Scaramucci were Trump’s communications director. Brothers Bart Stephens (co-founders) of Blockchain Capital contributed over $20 million to Trump’s 2022 campaign. For example, Bankman-Fried contributed $5 million to the pro-Biden super-PAC Future Forward in the President’s 2020 campaign.
Also, members of the crypto finance group launched and financed GMI PAC this cycle, with aims to spend $20 million to boost congressional candidates. Ryan Salame was co-CEO at FTX Digital Markets. This subsidiary is a cryptocurrency exchange FTX. Dan Matuszewski, cofounder of CMS Holdings, also joined the super PAC as an early backer. SkyBridge Capital was among the backers. originalThe committee’s backers
Bankman-Fried gave $2 million to the super PAC during January
Torres, in an interview with CNBC, stated his support for crypto-backed events and reiterated that he had received only “minimal” contributions by those working in digital currency.
“During the 2020 and 2022 election cycles, I have raised well over $5 million, of which crypto represents a mere 1%— hence the term ‘minimal,'” Torres said in the statement. “Even though all this is true, it’s not surprising that individuals support candidates who are aligned with their policies. This is the typical behavior of donors and voters.
Salame is a key campaign supporter, courting legislators from both parties of the aisle. Salame launched the American Dream Federal Action PAC in April with $4 million in seed money, according to Politico. It funds “Forward-looking Republicans, according to FEC filings.
Bankman Fried, who refused to respond through FTX spokesman Peter Padovano at a hearing titled: “Changing Market Roles” (The FTX Proposal, Trends in New Clearinghouse Models) was testifying before the House Agriculture Committee on Thursday. Scaramucci was not able to respond to our requests. Salame was not contacted by Padovano.
Salame contributed $500,000 to a super PAC by April alignedFEC records reveal that Sen. Thom Tillis (Republican from North Carolina) is a member the powerful Senate Banking Committee.
According to those who heard the comments, Tillis told his friends “I love FTX” privately after he noticed the donation appear in FEC records. The conversation was secret so they did not want to identify themselves.
CNBC received an email from Daniel Keylin. He was a senior advisor for Tillis. Keylin stated that his boss had “voiced concerns about the crypto industry” and that Congress should focus on right-sizing regulations to protect consumers while still allowing innovation to take place.
Bankman Fried told the members of moderate New Democrat Coalition at an April meeting that although the industry supported regulation, it was concerned about how proposals would affect larger crypto businesses.
“His message is consistent with many other industry participants, which was that we need more clarity. Regulation is not something we oppose. Regulation is what we want. We need investor protection regulation. “We need clarity,” Rep. Jim Himes of Connecticut, who is a member the House Financial Services Committee was present at the meeting and spoke to CNBC in an interview.
The industry failed to convince the Biden administration, despite its increasing influence, that a provision was being dropped in their budget. $1 trillion infrastructure lawThis requires the services of crypto brokers notifyAn IRS Form 1099 for Crypto Transactions is available to you.
According to one congressional aide, “Crypto people started to panic” and they began to flood lawmakers’ offices in an effort to change the provision.
However, executives seem to be able to convince a bipartisan team of senators to lead efforts in Congress to impact the measure.
President of Senate Finance Committee Ron Wyden of D-Ore. And Senate Banking Committee ranking Republican Pat Toomey from Pennsylvania, originally co-sponsored a crypto-related amendment. Sens. Cynthia Lummis (R-Wyo.Rob Portman (R-Ohio); Mark Warner (D-Va.); and Kyrsten Silema, D–Ariz., also signed up to crypto-tied amendments. The White House backedThe Warner, Portman, & Sinema amendment.
Lummis, who is also an industry investor, purchased between $50,001 to $100,000 in bitcoins last year. According to one of her most recent financial disclosure reports, The assets are still allowed by congressional regulations, but it is not clear if she has them.
OneThe provision would have protected miners as well as software developers against the tax changes imposed by crypto brokers. Both would have been. specifically exemptedFrom within the tax provisions of the bill, cryptocurrency miners are those who take part in proof-of-work systems like bitcoin or ether.
These amendments neverIt was included in the final bill, which Biden signed later.
Still, TwitterJack Dorsey (co-founder of Block), thanked lawmakers for all their hard work. Through a series of tweets, Dorsey offered his suggestions for the legislators. He also provided feedback on how to write the legislation.
“To @RonWyden, @SenLummis, @SenToomey, @MarkWarner, @SenRobPortman, @SenatorSinema, @TedCruz, respective staff & everyone who’s worked on the Infrastructure Bill ‘Crypto Tax Reporting’ provision: thank you for your work to get this right. We can offer some practical simplifications. Dorsey tweeted.
Wyden stated in a statement that CNBC had raised concerns about the provision by civil liberties groups and tech experts, as well as “folks from Oregon”, that it could accidentally regulate independent software developers.
He said that after studying the topic, he came to the conclusion that simple clarifications of the terminology would provide the tech community with the clarity they need, and still regulate brokers so nobody uses crypto to avoid paying taxes.
Toomey’s representative declined to comment. Requests for comments were not returned by representatives for Lummis Warner Portman, Sinema, and Portman.
Representative John Garamendi of California, stated in an interview that “there’s a common awareness that the cryptocurrency market, unregulated running wild and doing financial transactions can be used as a means to scam as well to be used to support criminal organizations.” It is an ill-regulated industry.obbying against a bill he co-sponsored that would subject crypto trading platforms to similar regulations as federally insured banks — in an effort to clamp down on RussiansTo evade Western sanctions, you can use digital currency.
At least one factor is in the industry’s favor. It may take Congress years to discuss and approve new rules that regulate complex market issues.
Himes stated that House legislators need to take the time necessary to fully understand the details of crypto industry. So there’s little chance Congress will pass legislation that reins in the industry — at least not in this congressional session, he said.
Himes explained that “I have told people that we are not at a stage where I believe we will start to pass legislation” because it is not near a critical mass for educated members. He added that he doesn’t believe the Congress will pass any legislation, specifically crypto-specific bills.
However, Congress may not be the biggest concern for the industry.
Biden’s administration seems to be leading the fight against crypto. President Obama signed an executive order earlierThe government should examine both the potential risks and the advantages of crypto currencies this year.
This month, the Securities and Exchange Commission (SEC) announced that it would nearly double its revenue. staff Protecting investors in the cryptocurrency markets is his responsibility. Treasury Secretary Janet Yellena call for increasedRegulation to lower the chance of fraud and illicit transactions
Thursday was Yellen’s fourth statement to legislators. She said that during last week’s crypto sell-off, that erasedThe need for federal regulation was evident when the cryptocurrency market generated more than $200 Billion.
“This is among the most painful weeks in crypto history & one we’ll reckon with for a long time to come,” Jake Chervinsky, the head of policy at the crypto lobbying group Blockchain Association, tweeted Friday.
He encouraged policymakers then to use stablecoins in a way that is consistent with the processes outlined by The Blockchain Initiative. [executive order]Develop a bipartisan consensus within Congress and adopt appropriate regulations.”
Terra stablecoin’s value dropped from $8 to under 30 cents due to a ransomware attack. A stablecoin is a cryptocurrency that has a fixed value. It can be either the dollar or another currency, such as gold. The parity it enjoys with the dollar makes it theoretically stable. But volatility on the cryptocurrency market over the last week has challenged this premise.
“We’ve seen a live demonstration of the risk,” Yellen declared, referring the the TerraUSD collapse that started last Monday.
Yellen declared that “we need a regulation framework to safeguard against the risk.” “We need a broad framework that covers all aspects of regulation so there is no gap.”