The Biden administration began negotiations with the cryptocurrency industry on Wednesday as the White House and Democrats find themselves at odds with leading players in the digital asset space.
Anita Dunn, a senior adviser to President Biden, met with dozens of crypto leaders in her personal capacity on Wednesday at a roundtable hosted by crypto-friendly Democratic Rep. Ro Khanna of California.
Khanna was joined by Sen. Kirsten Gillibrand (D-NY), Rep. Joe Negus (D-CO), and billionaire Mark Cuban, who has supported Biden’s reelection but has criticized the administration’s approach to cryptocurrencies.
Several attendees praised the meeting as “productive” and praised the California Democrat for organizing the roundtable.
“We really commend Congressman Khanna for bringing together over 30 industry leaders and providing the opportunity for a direct dialogue with Dan and ultimately the White House,” said Paul Grewal, chief legal officer at popular cryptocurrency exchange Coinbase.
“It was clear that attendees understood the importance and opportunity that cryptocurrency brings,” said Sheila Warren, CEO of the Cryptocurrency Innovation Council.
“I am hopeful for future conversations and even more determined to defend the system-changing promise of this groundbreaking technology,” she added in a statement.
Grewal said the meeting is a “make or break moment” for the Biden administration to reverse its “almost uniformly hostile stance” toward cryptocurrencies, amid support for the crypto industry from Republicans and former President Trump.
“We’re at a make-or-break point now where the Republican Party has fully embraced crypto and literally written it into their upcoming convention platform in very specific and concrete terms,” he told The Hill. “So I think the administration has a choice to make at this point.”
Republicans released their official platform on Monday ahead of next week’s Republican National Convention, arguing that the party will ease regulations on emerging industries such as cryptocurrency and artificial intelligence (AI).
“Republicans will end the Democrats’ illegal and un-American crackdown on cryptocurrency and oppose the creation of a central bank digital currency,” the platform reads. “We will defend the right to mine Bitcoin and ensure that every American has the right to self-custody and trade their digital assets free from government oversight or control.”
Meanwhile, the Biden administration is widely seen as cold towards the industry, with the Securities and Exchange Commission (SEC) in particular criticised by crypto companies for being overzealous in its enforcement.
“Unfortunately, the majority of the Democratic Party [SEC Chair Gary] “Gensler’s illegal war on crypto is stifling American innovation’s ability to thrive,” Ripple CEO Brad Garlinghouse said in a PlatformX post after the roundtable on Wednesday.
“It’s no wonder Republicans have taken a pro-crypto stance,” he continued. “Gensler will be remembered as the Luddite of his time. Easy to say, hard to act, but necessary. Choose wisely. Voters are paying attention.”
Others in the cryptocurrency industry have also warned that the Democrats’ current stance on the industry could have political consequences.
“I am concerned that the administration has acted thus far while misunderstanding the political dimensions of this issue,” Grewal said.
“I think there was probably an impression that going after the cryptocurrency industry would be supported by constituencies that the administration values,” he continued.
“But when you talk to young people and people from communities of color who are disproportionately involved in cryptocurrency, they see attacks on cryptocurrency as attacks on them,” Grewal added.
Cuban suggested in May that Gensler’s cryptocurrency efforts could hurt Biden’s campaign.
“If @joebiden loses, we can likely thank @GaryGensler and @NewYork_SEC,” Cuban wrote on X. “Cryptocurrency is gaining support from young people and independents.”
“This is also a warning to Congress,” he added. “Cryptocurrency advocates will be heard in this election.”
Some Democrats have disagreed with the administration on cryptocurrency and support the Republican-led bill.
In May, 71 House Democrats joined the majority of Republicans in passing the Financial Innovation and Technology Act of the 21st Century (FIT 21), which established a new framework for cryptocurrency regulation between the SEC and the Commodity Futures Trading Commission (CFTC).
Gensler opposed the bill, arguing that it would “create new regulatory gaps and undermine decades of precedent.” The White House also said it opposed FIT21 for lacking “sufficient protections for consumers and investors,” but stopped short of saying it would veto the bill.
However, Biden vetoed a House resolution that would have rolled back the SEC’s cryptocurrency regulations. More than 20 Democratic senators, including Khanna, on Thursday supported an unsuccessful attempt to override the president’s veto.
