Pushing for clarity: Can Stand with Crypto sway US lawmakers?
Stand with Crypto Alliance, a new advocacy organization by Coinbase, was launched to mobilize the crypto community to help shape the crypto regulation in the US. Yet, with varying opinions within the community, its success remains uncertain.
A lack of regulatory clarity has been one of the prickliest thorns on the crypto industry’s side since it came into existence. This problem is even more prevalent in the American crypto space, where efforts to enact rules governing crypto and its underlying technology have been slow and piecemeal.
Matters have been muddled even further by the never-ending debate revolving around whether crypto assets should be classified as securities and, therefore, fall under the jurisdiction of the Securities and Exchange Commission (SEC) or as commodities and be under the control of the Commodity Futures Trading Commission (CFTC).
Additionally, the general feeling within the crypto space is that the SEC has chosen a regulation-by-enforcement path to police the industry. The agency maintains that almost all digital assets, barring Bitcoin, are securities, which many in the crypto community disagree with.
However, things could be changing. The new Coinbase organization focuses on organizing a US crypto community to help legislators create new crypto regulations. In the days preceding their August recess, U.S. lawmakers worked on several standalone crypto bills intended to create a more cohesive legal framework for the crypto sector.
Legislation coming up for debate
Some bills that made progress through various House committees include the Financial Innovation and Technology for the 21st Century Act (FIT for the 21st Century Act) and the Clarity for Payment Stablecoins Act.
The FIT for the 21st Century Act aims to clarify the regulatory landscape by setting conditions to determine whether digital assets are commodities or securities.
The Clarity for Payment Stablecoins Act is meant to address the growing concern about the potential for stablecoins, which are often pegged to the U.S. dollar, to undermine the U.S. government’s ability to control monetary policy, as well as questions around the safety of large issuers like Tether and Circle.
Other key bills include the Blockchain Regulatory Clarity Act, which aims to define what constitutes a money-services business; the Financial Technology Protection Act, focused on combating illicit financing; the Digital Assets Anti-Money Laundering Act of 2023, which imposes strict AML requirements; and the CANSEE Act, targeting national security concerns related to crypto.
However, the journey forward for these bills remains to be determined. Many will require both Congressional chambers and the President’s signature endorsements before they become law.
For instance, while the Senate passed anti-money laundering (AML) and know your customer (KYC) amendments to Sen. Jack Reed’s National Defence Authorization Act (NDAA), its fate is uncertain as it will have to align with another version passed by the House on July 14.
Tensions are likely to rise over important issues brought up by these crypto bills, especially since some lawmakers remain skeptical about the value of cryptocurrency.
A new group called Stand with Crypto has been formed in response to this uncertainty. It aims to unite the crypto community to voice concerns about regulation and to urge lawmakers to consider supporting these bills.
What is Stand with Crypto, and why was it formed?
Stand with Crypto is a nonprofit backed by Coinbase, a blockchain-based platform and a community of developers Gitcoin, and the NFT minting platform Zora to rally the crypto community to lobby for passing pro-crypto laws by Congress this fall.
Under the rallying cry, “recess is over,” the campaign’s basic notion is that voicing crypto support to lawmakers and regulators like the SEC will make them more likely to create the clear-cut regulatory framework the industry needs.
The general feeling among crypto enthusiasts is that government functionaries with little understanding of crypto have had too much say over its fate for far too long.
However, the alliance believes that speaking with a unified voice can educate policymakers and sway them to provide a favorable framework for cryptocurrencies.
The campaign’s center point is a blue shield NFT, representing the need to safeguard and advance crypto’s potential. The shields are free mints on Zora, with the proceeds being channeled to several organizations at the forefront of crypto advocacy, including Coin Center, Fighting for the Future, the Defi Education Fund, and the Blockchain Foundation.
NounsDAO, a generative NFT collective on the Ethereum blockchain, had passed a proposal giving an additional $100,000 to the campaign.
The movement is being seen as a means to capitalize on the digital asset industry’s recent legal triumphs, including the determination by a federal judge in New York that Ripple Lab’s native token, XRP, was not a security when sold in secondary markets.
Who is supporting the Stand with Crypto alliance
Going by posts on social media platforms and data provided by alliance partners, Stand with Crypto is gaining traction among members of the crypto community as well as sections of the American political establishment.
Coinbase CEO Brian Armstrong was among the first to mint a Stand with Crypto NFT.
Others, like Cypher Wallet founder Kuberan Marimuthu and crypto whale Meta CFO, soon followed suit.
Zagabond, the Twitter handle of Alex Xu, the creator of the widely used NFT collection Azuki, also updated its profile image to feature the Coinbase logo to show his support for the campaign.
Even retired Pennsylvania senator Pat Toomey has lent his voice to the campaign. The veteran politician and businessman took to X, asking fellow crypto enthusiasts to sign up for the cause.
According to the NFT minting platform Zora, more than 162,000 NFT shields symbolizing the Stand with Crypto movement have so far been minted.
In addition, an accompanying on-chain petition urging Congress to support pro-crypto legislation had collected nearly 190,000 signatures at the time of writing.
Interestingly, the campaign’s website has a rating system for lawmakers that indicates how pro or anti-crypto they are. It uses publicly available data, such as the official legislative record, press releases, social media posts, caucus membership, and open letters, to evaluate the opinions of politicians toward cryptocurrencies.
For instance, Josh Gottheimer, who previously sponsored two unsuccessful efforts to provide clarity in the crypto industry, has been classified as “very supportive.” Gottheimer’s bills included one that would designate crypto tokens as non-securities and another that would authorize the creation of a national policy for the study and advancement of blockchain technology.
Elizabeth Warren and Brad Sherman are rated “strongly against” crypto.
Per information from the Coinbase public policy database, Sen. Warren has made more than 20 anti-crypto statements since 2021. She has also sponsored at least two failed bills that targeted crypto, including the Digital Asset Sanctions Compliance Enhancement Act of 2022.
In March 2023, Sen. Warren hinted at raising an “anti-crypto army.” The legislator said she was getting positive feedback after reaching out to conservative Senate Republicans and traditional finance lobbyists who also want to rein in the unfettered growth of the crypto sector.
The Massachusetts Democrat has largely centered her anti-crypto sentiments on national security concerns, consumer protections, and the industry’s impact on the environment.
But despite the criticism against Warren, there seems to be a creeping realization that some of the bills she is fronting, including the Digital Asset Anti-Money Laundering Act, jointly sponsored by Roger Marshall (R-Kan), may have a significant role to play as far as U.S. national security is concerned.
Alongside the CANSEE Act, the Warren-Marshall bill seeks to extend the Bank Secrecy Act (BSA) responsibilities on crypto firms and advocate for a more comprehensive KYC process for the industry.
Can divided crypto community influence policymakers?
Among crypto enthusiasts, there have been those critical of certain aspects of the Stand with Crypto campaign. One X user wondered why the NFTs signifying support for the movement weren’t privacy-preserving.
CryptoKid, another X user, criticized Stand with Crypto’s use of the Ethereum (ETH) blockchain to mint its shield NFTs, saying it could have used less expensive networks to enable more crypto supporters to afford gas fees.
Such pushback, while seemingly innocuous, could be a testament to the diverse outlook of the wider crypto community, which rarely speaks with one voice on issues.
Azeem Khan, Head of Impact of Gitcoin, sees the differences in opinion as a positive thing. Khan’s organization has been running policymaker education and regulatory advocacy rounds for years, and it has distributed millions of dollars to groups pushing for clarity in web3 regulation.
“It’s natural, and even a positive thing, that there are different opinions on how we should go about it. Stand with Crypto is less supposed to be a centralized force, from my understanding of things, and more about leaning into being a decentralized way to allow more grassroots involvement. This lets communities get in touch with their respective lawmakers in different places,”
Azeem Khan, Head of Impact at Gitcoin, told crypto.news.
According to Khan, one of the biggest issues facing the Stand with Crypto cause is the need to inform people quickly enough about bills being voted on after lawmakers return from recess.
“There is already legislation out there that will be voted on in September or October. And not enough people know there is tangible legislation we can support at the moment. Being able to move quickly enough in getting people to understand not only what’s going on, but also to be ready to act, is definitely the difficult thing,”
Azeem Khan, Head of Impact at Gitcoin.
Some experts believe that the FIT for the 21st Century Act has a good chance of becoming law. This bill will merge ideas from the Financial Services and Agriculture committees into one complete package before it goes to the House for a vote.
As the bill progresses, it’s expected to get a thorough review from all 435 House members. It is these lawmakers that Stand with Crypto hopes to reach and influence.
