The Senate will be voting this week on the GENIUS Act. While no bill is perfect, GENIUS would create clear, common-sense rules for stablecoins: fully backed, privately issued “digital dollars” that would keep the U.S. Dollar at the center of world trade, help slash payment costs for families and small businesses in the future, and channel the next wave of fintech jobs and investment to Main Street, not Brussels or Beijing.
Senators from both parties have been engaging in good faith to make this bipartisan crypto legislation happen. But aside from the normal horse-trading and negotiating, the last two weeks have also been characterized by something else: rapid-fire X posts and press releases from innocuously-named “public interest groups” that seek to destroy a critical first step in crypto asset regulation. Before they mislead anyone on a bipartisan bill that deserves real substantive consideration, let us give you some context.
To begin, the tactics of these “public interest groups” were not limited to the Senate. In early May, they enlisted allies to sink a joint House Financial Services and Agriculture crypto hearing by withholding consent. Several Democrats, after theatrically storming out of the hearing room, held their own competingbriefing across the Capitol. Two witnesses, drawing from the same talking points, and nominally representing Americans for Financial Reform, Demand Progress, and the Revolving Door Project, took turns calling crypto “dangerous.” Marketed as spontaneous, the spectacle was really the result of years of quiet planning by allied nonprofit advocacy networks.
As the Senate moves forward on the GENIUS Act, their quixotic journey is growing increasingly frenzied. To understand why, just look at how we got here, and why a small group of revanchists seems hellbent on stopping bipartisan action on crypto. It’s not ideological purity that drives them: it is money, influence, and power.
The Biden Administration was their heyday. Most Americans assume the SEC spends its time investigating insider trading and reining in the excesses of Wall Street titans. But for four years, the activist groups persuaded the SEC to retrain its sights on crypto innovators based in the U.S. The result was a series of agency faceplants, culminating in the SEC earlier this year dismissing virtually all of former Chair Gary Gensler’s marquee crypto enforcement actions.
It’s not an exaggeration to say that these groups, with anodyne names like Americans for Financial Reform, Better Markets, and Equitable Growth, set financial policy for the Biden Administration. The groups didn’t bother with pushing legislation or calling for notice-and-comment rulemaking. Instead, they urged agencies to regulate by enforcement, offloading progressive wish lists to regulators who would willingly operate behind closed doors. Every three- and four-letter financial regulator – most importantly, the SEC – got the memo.
2021: The War Against Crypto Begins
The advocacy groups first took aim at crypto in 2021, and by 2022, the issue had become a centerpiece of their agenda. Their entry point was the perceived energy use of the Bitcoin network. And while they initially framed their advocacy as an environmental concern, their ambitions quickly expanded. There are too many men in crypto. Crypto takes advantage of minorities. The “crypto bros” just seem shady.
During the first four Trump years, they raked in foundation money and secured big donors eager to “bankroll the resistance.” They now needed a new bad guy to stay relevant, and crypto fit the bill. And so, with nary a nod to technical understanding or policy nuance, the groups went on attack. They flooded the public square with breathless pronouncements: crypto is a “systemic risk” to the American economy, a “fraud on the public,” a tool for crime, a threat to the financial system. Their underlying analysis, when it existed at all, was laughable.
Mobilizing Regulators Against Crypto
The most dramatic policy whiplash in crypto’s short history came from Gensler. By all accounts, Gensler doesn’t necessarily harbor any deep personal hostility toward crypto. What he does harbor is aggressive and unbounded personal ambition. Gensler understood where the real power was: not with the president, but with Senator Elizabeth Warren and her orbit of progressive financial advocacy groups. These were the people who might control his own political future and desire to be Treasury Secretary, and he skated to where the puck was going.
So Gensler filled his agency with Warren’s progressive allies. His first policy director, Heather Slavkin Corzo, came straight from Americans for Financial Reform. When the SEC’s pick for Enforcement Director, Alexis Oh, resigned abruptly under pressure after Warren and her network voiced their disapproval,Gensler replaced her with Gurbir Grewal, a New Jersey state prosecutor beloved by the advocacy crowd but lacking any securities law background. Amanda Fischer, a vocal crypto critic from Equitable Growth, became Gensler’s chief of staff in 2023. In an entirely predictable development, she today collects a paycheck from Better Markets while railing against crypto on social media.
Crypto-Blindness Doomed Democrats in 2024
The advocacy groups were so deeply embedded in Bidenworld that the Administration became blind to just how out of step their crypto positions were. By October 2024, crypto wasn’t some fringe obsession. One in five American voters had used crypto, and another 15% intended to buy more in the next year. They were highly motivated to vote for President Trump in November, bolstered by his pledges to fire Gary Gensler and make the US the crypto capital of the world.
Crypto owners ultimately broke for Trump over Harris by a 13-point margin, while non-crypto owners were split evenly. The gap was enough to flip the election. In short, progressive groups, in their zeal to criminalize entrepreneurship, managed to alienate a young, bipartisan group of voters, helping Donald J. Trump, 45th President of the United States, become Donald J. Trump, 47th President of the United States. Who knew that progressive groups could be so good at electing Republicans?
Looking Forward
Thankfully, more Democrats are beginning to realize that ceding economic policy to unelected advocacy groups was a mistake. In the first few months of this year, Democrats and Republicans joined together to repeal a damaging rule that would have required the IRS to collect private identity and transaction information on every American’s digital wallet. It was the highest vote total on any Congressional Review Act resolution – ever.
From New York’s Senator Kirsten Gillibrand and Representative Ritchie Torres to California’s Representatives Sam Liccardo and Ro Khanna, Democrats of all ideological stripes have looked at crypto with their own eyes and decided what they themselves believe. But the danger has not passed. Senator Warren has not left the field and, if anything, has new powers following her ascension to the top ranking job on the Senate Banking Committee. This will be, in the parlance of former President Reagan, a time for choosing for all Democrats.
The choosing starts this week, as the Senate takes up GENIUS, and works to bring a federal crypto regulatory framework into shape. The noise from the nonprofit zealots and their allies will be cacophonous, but America’s financial future and global leadership is on the line.
It’s time for Congress to ignore these unconstructive luddites.
