In recent days, U.S. crypto advocates have observed with enthusiasm as a pair of votes confirmed what they had hoped: Congress is aligned with their interests.
The sector that faced significant scrutiny just three years ago now boasts strong supporters in the White House and among U.S. financial regulators. The recent votes in both the Senate and House concerning an IRS rule illustrate that their backing among Congress members is robust. A notable number of Democrats joined forces with their Republican counterparts, leading crypto proponents to believe they may not have to concede much in future legislative negotiations that could be even more impactful.
Just prior to his departure from office, former President Joe Biden’s IRS finalized a rule categorizing decentralized finance (DeFi) projects as brokers obliged to fulfill extensive tax reporting obligations for their users. Over the past week and a half, both the House and Senate voted, under the Congressional Review Act, to overturn this rule, achieving substantial success thanks to 19 Senate Democrats and 76 House Democrats who defied their party’s administration’s stance.
With more than a third of Democrats supporting the measure in each chamber, it’s reasonable to speculate that these members may also be favorably inclined to other crypto-related issues.
“For too long, we’ve been in a defensive posture — working to safeguard the industry against unsupportive regulators while often compromising, which weakened the eventual legislative outcomes,” stated Kristin Smith, CEO of the Blockchain Association advocating for a friendly crypto policy in Washington. “Now, we can think more broadly about what’s achievable at the federal level.”
The legislative effort most advanced is aimed at regulating U.S. stablecoin issuers. With the House version undergoing review in committee this week and the Senate’s version poised for potential approval by the Senate Banking Committee, both chambers may soon be voting on finalized legislation. In an era marked by intense partisanship, crypto might emerge as one of the few areas of bipartisan agreement.
As negotiations unfold, insiders note that an industry that had previously felt pressured to impose stringent anti-money laundering measures to secure support from some Democrats may now be in a position to advance its agenda without significant compromises.
The larger objective for the industry, however, is comprehensive legislation to establish a clear regulatory framework for U.S. crypto trading and transactions, including the businesses and projects managing digital asset needs. Should Congress pass such a bill, it would eliminate the legal ambiguities faced by federal agencies as they try to apply existing laws to the crypto sector, and would preclude the necessity for judicial interpretations.
Legislators are building upon previous initiatives — particularly the Financial Innovation and Technology for the 21st Century Act (FIT21), which successfully passed the House but stalled in the Senate. Although a replacement bill may be further down the timeline than the stablecoin legislation, it could chart a significantly smoother path through Congress when it begins to move.
Even as lawmakers were gearing up for a politically contentious day with President Trump’s anticipated address, they demonstrated remarkable bipartisan cooperation in the Senate. According to Smith, this “rare and fleeting” collaboration should enable legislators to concentrate on substantive policy matters.
How did the industry reach this point?
After the 2024 elections, Congress saw an influx of new supporters, partially due to the industry-supported Fairshake political action committee, which invested around $139 million to elect pro-crypto lawmakers across party lines. Crucially for ongoing legislative discussions, this super PAC is already sitting on $116 million (and increasing) to continue backing similar candidates next year. As lawmakers prepare to cast their votes this session, they’ll be acutely aware that a pro-crypto vote could lead to financial backing in their campaigns, while opposition could invite spending aimed at undermining their political futures.
The main contributors to Fairshake include Coinbase, a16z, and Ripple Labs, with additional support from Jump Crypto and Uniswap Labs. Coinbase CEO Brian Armstrong mentioned during an interview outside a recent White House crypto summit that his company intends to maintain its support for Fairshake, which he praised for its effectiveness.
“Our supporters in this sector are wholly committed to this political approach,” remarked Josh Vlasto, a spokesperson for Fairshake, in an interview. “We are witnessing it unfold in real time and will continue to push forward.”
He emphasized that the IRS-related votes were a direct consequence of this strategy, which prioritized lawmakers’ stances on crypto issues over their other political affiliations.
“There’s significant political advantage to be gained by supporting the growth and intelligent regulation of this industry,” Vlasto asserted.
Even before the recent elections, FIT21 had garnered substantial Democratic support within the House, and separate efforts to eliminate a Securities and Exchange Commission crypto accounting policy also received bipartisan backing in both chambers. The industry was already making notable progress.
Furthermore, during the last congressional election cycle, there was a marked increase in voter familiarity with cryptocurrencies and a growing consensus on the necessity of regulation in that space. Initiatives like the Coinbase-backed Stand With Crypto have aimed to engage this crypto-savvy demographic.
“This is how we ended up with the most pro-crypto Congress we have ever witnessed,” Armstrong remarked.