This week has been a bit of a bumpy ride, but cryptocurrency firms appear poised to notch a huge win in Congress on stablecoin legislation. For good reason, they believe it will be the first of many victories in Washington over the next few years.
President Trump frequently talks about making the U.S. the “crypto capital of the world.” Gone are the Biden-era agency heads who regularly sparred with crypto executives, launched investigations, and sued digital-asset companies. The 2024 election cemented crypto’s role as a political fundraising force, and the industry has been credited with ousting prominent members of Congress – a warning to sitting lawmakers who continue to oppose the industry’s policy goals.
But even with this favorable outlook, a “golden era” isn’t guaranteed. Upcoming policy and regulatory fights will be pivotal in crypto’s acceptance as a mainstream digital asset, including by investors.
Progress on highly charged political issues is never easy, and the President’s crypto business interests may complicate bipartisan consensus on digital-asset legislation. Even the pending passage of the GENUIS Act, which establishes a regulatory framework for stablecoins, has proved more challenging than many anticipated.
Many Americans remain skeptical of digital assets. A Pew Research Center survey found 63% have little to no confidence that the ways to invest in, trade, or use crypto are reliable and safe. A recent Narrative survey showed one-fifth of investors have no interest in ever trading crypto.
Narrative has worked with crypto stakeholders to bring the industry into the mainstream, which is why we know there is still work to be done. Earlier this year, we assisted the former chairman of Silvergate Bank in publishing a Wall Street Journal op-ed that argued the previous administration’s financial regulators sought to diminish crypto by forcing banks to drop their digital-asset customers.
Of the roughly 300 people who posted comments, almost all had something negative to say about digital assets. Here are a few evocative examples:
“…crypto is not an ‘industry’ any more than Monopoly money or beanie babies are an ‘industry.’ At worst, it’s a Ponzi scheme.”
“Crypto is the modern-day version of Dutch tulip bulbs. Let’s all repeat: crypto has no intrinsic value.”
“Until my mother can go to the stores and buy bananas with Bitcoin, the only real purpose cryptocurrency serves is money laundering and providing average people with a ‘get rich quick’ scheme from the convenience of their phones.”
Journal readers tend to be older and may not entirely reflect broader views on crypto. But this group is generally pro-business and pro-innovation, very informed about markets and investing, and supportive of government policies that help important industries thrive. Crypto firms should want this all-important demographic to be open to digital assets, or at least not dismissive.
There’s reason to believe that more Americans might start trading crypto if firms step up investor education efforts and continue to emphasize that legislation and sound regulation will boost investor protections. Case in point: the Narrative survey found that 11% of investors are “crypto curious.” They are open to investing if the industry can address some of their concerns about security and complexity.
Here are some thoughts on points to keep stressing both publicly and on Capitol Hill:
Safe crypto investing, like all types of investing, requires durable and agreed-upon rules. That only happens if lawmakers pass legislation and federal agencies adopt regulations.
Congress doing nothing on crypto is not an option. Under the Biden Administration, regulators filled the void by taking a very aggressive stance towards crypto. But that just prompted overseas trading on unregulated, noncompliant markets where many got fleeced. Americans are going to trade crypto, so they should trade on U.S. markets, where they are protected.
Lots of people may associate crypto with speculation. But many in the industry are striving to build businesses that will give more consumers access to financial services that are fast, inexpensive, and global in reach. We can’t know how transformational crypto might be until there is institutional adoption by businesses of all sizes. Institutional adoption won’t happen without legislation.
Bottom Line: Extensive political giving, a second Trump presidency, and a new cast of regulators have boosted crypto’s hand in Washington. But long-term success still depends on communicating the genuine value behind digital assets and that the industry isn’t the “Wild West” its critics contend it is.
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Jesse Westbrook is a Managing Director at Narrative. Jesse is the co-founder of Capitol Account and worked as a Managing Director of U.S. Financial News at Bloomberg News. To continue the conversation, reach out to jwestbrook@narrativestrategies.com. |