A version of this story appeared in CNN Business’ Nightcap newsletter. To get it in your inbox, sign up for free here.
“Crypto week,” the legislative bonanza in DC, is being treated like a victory lap by some, and causing others to research subsistence farming in case the global economy collapses as a result (Not kidding. Keep reading!)
There’s so much money pouring into crypto — bitcoin topped $120,000 for the first time this week, having doubled in value over the past year — and that money is ensuring the industry’s staying power as a force in finance and politics. So here I am to offer up my understanding of what’s going on with the crypto bills.
After some procedural stumbles tied to intra-GOP squabbling, three major crypto bill all cleared the House on Thursday.
Here’s a brief summary of the bills:
- The GENIUS Act, which already cleared the Senate in June, would regulate a kind of crypto called “stablecoins.” These tokens are the lifeblood of crypto. Their values are pegged to regular currencies like the dollar, and they act as a bridge between traditional and blockchain-based financial worlds. (My colleague John Towfighi has this excellent explainer.)
- The Digital Asset Market Clarity Act is arguably the biggest prize for crypto advocates. It would attempt to establish a regulatory framework for digital assets, and divvy up oversight of those asset between the Commodity Futures Trading Commission and the Securities and Exchange Commission.
- The Anti Central Bank Digital Currency Surveillance State Act is designed to prevent the Federal Reserve from getting in on the action with its own digital currency. This bill is the weirdest of the bunch, because the Fed has shown zero interest in a CBDC, so they’re trying to stop a threat that is purely hypothetical.
If you ask crypto advocates, these bills are long overdue rules of the road that will foment innovation, democratize finance and protect American investors.
After the Clarity Act cleared the House Thursday afternoon, advocacy group Stand With Crypto’s community director Mason Lynaugh said the vote “moves us one step closer to a common-sense regulatory framework” and urged Senate leaders “to take swift action on this legislation and solidify America’s global leadership in the blockchain economy.”
Critics, of course, don’t buy the hype.
The bills “wrap themselves in the flag of innovation, but all they really do is replicate the same mess that led to past financial crises,” Democratic Rep. Maxine Waters wrote in an MSNBC op-ed this week. The bills call for few regulations and place no checks on President Trump’s ability to profit from his family’s vast crypto holdings, she wrote.
Emerging industries, especially in tech, often lobby for their own regulation to stymie competitors and give their products a halo of legitimacy. (See also: Sam Altman advocating for AI regulations, or, in an earlier chapter of crypto, Sam Bankman-Fried.)
A few points in Team Skeptic’s favor: Crypto remains in America, and early-adopter wealth hinges on the numbers going up simply from money pouring in, despite crypto’s limited consumer applications.
And although crypto may have been an underdog 10 years ago, it now boasts one of the most deep-pocketed lobbying networks in the country.
In last year’s general election, crypto firms eclipsed all other industries in political spending, according to a report from the nonprofit watchdog Public Citizen. Nearly half (44%) of all corporate money spent in the election came from crypto backers, and they’re gearing up for more.
Fairshake, a crypto Super PAC, revealed it was going into the midterm election season with more than $140 million in the bank, per data shared first with Politico.
Fairshake is part of a PAC network that dominated political spending in the 2024, plowing $131 million into congressional races to help elect dozens of pro-crypto lawmakers. That includes $40 million to unseat the Ohio senator Sherrod Brown, a crypto skeptic who oversaw the Senate Banking Committee.
In a distant second for political spending after crypto last year was the privately held Koch Industries, which contributed $25 million to its Americans for Prosperity Action and $3.25 million toward electing Republicans to Congress, according to the Public Citizen report.
“It’s no coincidence that the Fairshake crypto super PAC has timed its press release announcing they have $140 million ready for the midterms as Congress is considering three crypto bills during ‘Crypto Week,’” wrote independent journalist and tech researcher Molly White on Bluesky. “Pass our bills, or we will spend millions against you in the midterms.”
Perhaps even more worrying for critics than the potential for corruption, though, are the ways in which the bills expose mainstream finance — including all of us normies with 401(k)s and whatnot — to a speculative digital financial system few people understand, based on a technology, called blockchain, that 1,500 scientists decried in a 2022 letter to Congress as “a solution in search of a problem” and “poorly suited for just about every purpose currently touted as a present or potential source of public benefit.”
While the legislation was largely “written by and for the industry,” the implications go far beyond current crypto holders, said Hilary Allen, a law professor at American University and prominent critic of the industry.
“Essentially, what these bills are doing is trying to take us back to the Wildcat banking era,” Allen said, referring to a particularly scammy period in American history in the mid-1800s, before federal oversight of banks, when state-chartered lenders issued their own money and customers often ended up with worthless notes.
The GENIUS Act, Allen said, would open the door for companies of all stripes to issue their own stablecoins, without being constrained by a bank charter or banking regulations. Essentially, that allows a Walmart or a Meta or X or Amazon to become the functional equivalent of banks — an outcome she previously compared to a “car crash in slow motion,” that could wind up forcing US taxpayers to bail out “too big to fail” tech companies.
“It won’t just be crypto taking advantage, it’ll be everybody,” Allen said in an interview Wednesday. “And then we get to unregulated markets for all kinds of investments, which is where we were in the 1920s, and we saw how that ended.”
At the end of our chat Wednesday, CNN asked Allen if there was anything else on her mind. Our exchange:
Allen: Maybe tell readers to start engaging in sustainable farming.
Nightcap: Sustainable farming? Because it’s all going to collapse? [nervous laugh]
Allen: Yes. [nervous laugh] I mean, I’m saying that tongue-in-cheek, but people ask me what I’m doing — I’m learning how to grow potatoes.
