WASHINGTON, DC – APRIL 30: Senate Minority Leader Charles Schumer (D-NY) (L) and House Minority … More Leader Hakeem Jeffries (D-NY) rally with fellow Democrats to mark the first 100 days of President Donald Trump’s second term in the White House on the East Steps of the U.S. Capitol on April 30, 2025 in Washington, DC. (Photo by Chip Somodevilla/Getty Images)
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If Washington officials and the crypto native industry normalized discussions about risk, could that create a more comfortable place in the sector for Democrats who want to have a different conversation about how to unleash the power of blockchain and cryptocurrency, while also safeguarding market participants?
The partisan backlash over stablecoin legislation that has played out in the U.S. House and Senate for the most part has been around risk. There were as many as 100 amendments during debate of the GENIUS Act. Members, such as Senator Ruben Gallego (AZ), who pushed back with real concerns in the end voted in favor of the bill after transparent, good faith negotiations.
Normalizing topics about risk, just as we have done with issues like privacy in crypto, may lead to more substantive deliberations and the advancement of a policy and regulatory framework that ensures entrepreneurs and small business owners can innovate here in America.
US Democratic Congressman Jared Polis of Colorado uses a Robocoin machine to purchase bitcoins … More during a demonstration on Capitol Hill in Washington, DC, April 8, 2014. Robocoin is the world’s first bitcoin kiosk for buying and selling the digital currency. AFP PHOTO / Saul LOEB (Photo credit should read SAUL LOEB/AFP via Getty Images)
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Democratic Lawmakers Champion Crypto
There is already a track record of common ground. The refrain that Democrats are anti-crypto is a misnomer. Democratic officials have been champions for a long time, which is why there have been so many significant policy strides.
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In a twist of fate, it was President Obama’s Commodity Futures Trading Commission in September 2015 that first classified Bitcoin and Ethereum as commodities. This decision was justification for an enforcement action that, in hindsight, ended up being a landmark decision that even former Securities and Exchange Commission Chair Gary Gensler could not dismantle during his regulation by enforcement tenure.
A year later, then Democratic Congressman Jared Polis (CO-02) launched the Congressional Blockchain Caucus in September 2016, along with Republican Congressman Mick Mulvaney (SC-05).
“The blockchain has boundless potential. From cryptocurrencies to supply chains to banking to property titling, blockchain-based solutions have the ability to decentralize cybersecurity and revolutionize many industries. It’s vital for Americans, businesses, and members of Congress to learn about blockchain technology so the U.S. can continue to secure its stance as the global leader of ingenuity. The Blockchain Caucus will focus on raising awareness, advancing ideas that foster growth, and safeguarding consumers,” U.S. Rep. Polis said back in 2016.
Congresswoman Stacey E. Plaskett (VI) would later become the first female, and Congressional Black Caucus Member, to join that Caucus in 2019.
UNITED STATES – FEBRUARY 07: Del. Stacey Plaskett, D-V.I., leaves the Capitol after the last votes … More of week on Friday, February 7, 2020. (Photo By Tom Williams/CQ-Roll Call, Inc via Getty Images)
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Financial Inclusion Is Simply No Longer Enough
How did things shift? Creating a financial system that is open and accessible to everyone is a guiding principle of the 2008 Bitcoin white paper, and has been central to crypto’s narrative from the beginning. So, why has the prospect of financial inclusion not overruled dissenters like Congressman Brad Sherman (CA-32) and Senator Elizabeth Warren (MA)? They declared war on crypto during COVID and positioned themselves as the unofficial voices for Democrats on all matters relating to crypto.
The answer may simply be that Democratic policymakers and rulemakers have been burnt before. Leading up to the 2008 financial crisis, predatory payday and subprime lenders lobbied Congress under the guise of financial inclusion and enlisted prominent civil rights groups to amplify their message. A crisis of their own making? That was the implication in a 2009 analysis by the Center for Public Integrity that stated, “Congress paved the way for the creation of the subprime lending industry in the 1980s.”
Balancing Innovation With Guardrails
Today, many Congressional Democrats may be skeptical when industries make bold claims about any type of inclusion. In the 1990s, the internet industry lobbied Congress and made the case that the world wide web would be a decentralizing medium. Yet, a handful of wealthy now control Web2, and lack of inclusion in Silicon Valley has been the subject of many Congressional inquiries.
History may have shown that it is safer to tread cautiously. Washington Democrats certainly have taken a more tempered approach to the crypto industry – focusing on risk, scams, and illicit use of cryptocurrencies. This should not be too surprising since research shows that communities of color have tapped digital assets for wealth creation.
Derisking Debates About Risk
On a more extremely level, Senator Warren, Congressman Sherman, and their supporters have weaponized valid questions and concerns around anti-money laundering, ransomware, and fraud. Their crusade even imprinted on the Biden Administration, which broadly claimed the current rules were sufficient, contributing to the lack of clarity plaguing the industry today. But they do not compromise a majority of Democratic lawmakers. Most want an honest debate that is not contentious – deliberations where they can ask tough questions and have productive exchanges about solutions.
The stake are high. Diverse consumers and nontraditional retail investors – including women, young people, the working class – are leading national adoption of cryptocurrency. These market participants have a higher risk appetite and embrace alternative financial instruments. This growing trend does warrant a deeper focus on financial education and digital tools to help consumers to identify scams. As financial and technological innovations become more accessible and easier to use, developers may need to integrate risk mitigation in design and development as enhanced product components. Some builders are already exploring these types of features.
Debates about risk do not have to be feared as covert attempts to undermine or derail the sector. It is past time to stop treating risk like the third rail – code for anti-crypto. In fact, the path to greater bipartisanship in crypto policy may be normalizing risk mitigation as core to the innovation paradigm, thereby creating a more comfortable access point for Democratic officials.
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