5 crypto issues both parties agree on

a16z crypto policy & regulatory teams

During the holidays there’s no shortage of hot-button political issues to debate around the dinner table. With crypto front-and-center this year, it’s bound to be one of them. But here’s how you can maintain peace amongst the family. 

Everyone knows that crypto has become a key political issue, even playing a role in the recent U.S. elections, as we detailed in our 2024 State of Crypto Report. What may be less appreciated is that there’s growing bipartisan consensus about the importance of blockchain networks and the rules the industry needs to thrive, spur innovation, and protect consumers. Yes, crypto is bipartisan.

Soon dozens of new, pro-crypto representatives — both Democrats and Republicans — will enter Congress. We’re very optimistic that a strong bipartisan majority of policymakers will work across the aisle to promote new technologies, accelerate progress, and enable the next generation of the internet to flourish in the U.S.

So to help equip you for an inevitable topic of conversation at your holiday gatherings, we’ve put together a list of five top areas of crypto policy that both parties agree on. 

1. Crypto gives more choice to users, creators, small businesses, entrepreneurs, and others

Hundreds of U.S. representatives are starting to recognize the benefits of crypto and blockchain technologies, including as an alternative — and counter — to Big Tech. They see the potential for decentralized systems to create a democratized, user-controlled internet that promotes competition, while safeguarding user freedoms and rewarding contributors, creators, and other participants. 

Crypto’s value proposition isn’t just hypothetical, it’s tangible: Crypto projects are already giving people ownership over their digital identities, helping creators monetize their work, and providing new ways for small businesses like restaurants to engage with their customers. More and more, policymakers on the left and right are seeing how crypto can help combat Big Tech overreach by democratizing AI, by offering user-controlled alternatives to centralized social media platforms, by decentralizing physical infrastructure like energy grids, and more. 

At the highest levels of both parties, lawmakers are leaning in. “We all believe in the future of crypto,” Senate Majority Leader Chuck Schumer (D-NY) has said: “I want to bring members on both sides of the aisle here in the Senate together…so we can pass sensible [crypto] legislation that helps the United States maintain its status as the most innovative country in the world.” Senator Schumer’s remarks dovetail with recent statements from President-elect Donald Trump, who has pledged to make the U.S. the “crypto capital of the planet.”

2. Government needs to pass laws and enact regulation

Legislators from both major parties acknowledge that the crypto market needs laws — and the time to pass them is now.

Senator Cynthia Lummis (R-WY) and Representative Patrick McHenry (R-NC) say that passing a comprehensive market structure bill for crypto is a top priority. “We just can’t wait anymore, Europe is way ahead of us,” Sen. Lummis says. Their Democratic colleague Senator Kirsten Gillibrand (D-NY) concurs, saying that representatives have been “working hard to develop a comprehensive cryptocurrency framework.” As does Democratic Representative Ro Khanna (D-CA), who underscores the problematic ambiguity of the status quo, saying that crypto builders “are focused on innovating and creating jobs in the U.S. An already difficult task made tougher without clear guardrails or regulation.”

These recent affirmations come amid a wave of progress toward the development of bipartisan crypto market structure legislation. New law would help clarify how regulators should treat digital assets and whose jurisdiction they would fall under. Earlier this year, the U.S. House of Representatives passed one such bill, the Financial Innovation and Technology for the 21st Century Act (FIT21), with overwhelming bipartisan support. Seventy-one House Democrats voted in favor of this landmark bill, which would give blockchain-based projects a pathway to safely and effectively launch in the U.S., while incentivizing decentralization and safeguarding users. 

Congress is now poised to build on this momentum and finally pass market structure legislation. Clear rules of the road would foster decentralized innovation, protect consumers by regulating centralized intermediaries operating in crypto markets, and establish swimlanes for the regulatory agencies overseeing these markets.

3. Stablecoins strengthen the U.S. and advance America’s interests at home and abroad

Stablecoins are tokens whose price is pegged, often to a currency. They offer users a frictionless, low-to-no-fee way to transfer value at the speed of the internet. Millions of people around the world have already transacted trillions of dollars using stablecoins to make cross-border payments, transact online, engage in decentralized finance (DeFi), and more. 

Stablecoins offer opportunities for users and businesses, and also for the country. The vast majority of stablecoin transactions involve two assets: USDT and USDC, both of which are pegged to the U.S. dollar. As foreign sovereign digital currencies compete for traction, stablecoins — 99% of which are denominated in USD, thereby strengthening the U.S. dollar’s status globally — have already found product-market fit.

Policymakers from both major parties are recognizing the need to update rules in light of stablecoins’ adoption. During a recent Securities and Exchange Commission oversight hearing, the House Financial Services Committee’s ranking Democrat Maxine Waters (D-CA) called a stablecoin bill “long overdue” and asserted that “we can reach a deal that prioritizes strong protections for our nation’s consumers and strong federal oversight.” Representative McHenry agreed, responding that he aims to “come to terms on stablecoin legislation this Congress.”

Effective stablecoin legislation would advance America’s interests and help foster secure, transparent, and consumer-friendly markets at home and abroad. Commonsense protections would include requiring issuers to fully back their tokens with high-quality liquid assets such as cash or U.S. treasuries, and requiring their reserves to be regularly audited by independent third-parties. Rules for stablecoins would also establish robust requirements for anti-money laundering (AML) and know-your-customer (KYC) compliance, and they would use the inherent traceability of blockchains to combat illicit finance. 

Crucially, legislation should also allow builders to create decentralized stablecoins, since these can rely on assets that exist natively on a blockchain where they are generally free from the counterparty risks that arise from custodying assets with intermediaries. Without third parties, such stablecoins can achieve true decentralization, taking advantage of its numerous benefits.

4. Everyone has the right to a bank account — even crypto companies 

Operation chokepoint (1.0) was a concerted effort by the Department of Justice, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) to shutter controversial businesses by cutting off their access to the banking system. In its initial manifestation, the operation targeted payday lenders, coin dealers, gun shops, and marijuana dispensaries — all of which are legal businesses.

Leveraging similar tactics, Operation Chokepoint 2.0 has sought to curtail the crypto industry by restricting crypto businesses’ and their associated individuals’ access to banks. Pressure from policymakers including Senator Elizabeth Warren (D-MA), agencies such as the Federal Reserve, FDIC, OCC, and others have attempted to cut off crypto businesses’ access to the banking system. On multiple occasions, federal banking agencies have also asserted that issuing or holding crypto as principal is likely inconsistent with sound banking practices. Certain banks were even advised to limit their own crypto offerings, according to documents obtained through the Freedom of Information Act. 

As with Operation Chokepoint 1.0, crypto businesses are not being punished for breaking the law, but rather for being out of favor with certain policymakers and regulatory agencies. Fortunately, lawmakers are now aware of the overreach. In a Senate Banking Committee hearing, Senator Bill Hagerty (R-TN) asserted that “there’s been a coordinated chorus of regulators talking about severing crypto from our financial system,” while drawing a comparison to the original Operation Choke Point. 

There is now emerging bipartisan consensus that federal agencies have effectively — and capriciously — restricted crypto firms’ access to banking services. Regulators should immediately end this approach, which constrains legitimate businesses’ access to essential financial infrastructure.

5. We need to fight bad actors and curb illicit activity

Media coverage of crypto too often emphasizes allegations of money laundering, while ignoring the technologies’ exciting and innovative uses. These stories mislead: Blockchain analytics firms estimate that transactions associated with illicit activity made up only 0.34% of all cryptocurrency activity in 2023 and 0.42% in 2022 — and these figures equate to just a tiny fraction of the dollar’s use in illicit finance.

Of course, bad actors may still use blockchain networks for illicit transactions, just as cyber criminals use computer networks to steal people’s data and bank robbers use cars and highway networks to conduct heists. Crime is not the fault of these technologies. Criminal activity can be addressed through tailored, effective, law enforcement efforts that mitigate illicit finance risk while realizing the benefits of these technologies. 

Perhaps the most pressing threats that need to be addressed are cybersecurity-related hacks and thefts by sanctioned state actors like the DPRK. Lawmakers agree that better guardrails are required to combat bad actors — especially rogue states such as the DPRK — from exploiting crypto for their gain. The Treasury Department has already signaled support for several steps that the government can take to stem attacks by bad foreign actors, which we’ve outlined here. That includes augmenting the government’s ability to crack down on foreign bad actors by amending the International Emergency Economic Powers Act (IEEPA) and the Bank Secrecy Act (BSA) to clearly authorize extraterritorial jurisdiction under certain circumstances. It also includes enhancing Treasury’s enforcement capacities to address compliance failures.

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Crypto is bipartisan. Democrats, republicans, and independents share common ground on many of the industry’s most pressing issues. We hope that this list helps clarify that, while Americans may disagree about a lot of things, crypto shouldn’t be one of them. Broad and growing support for the industry now exists, as well as a commitment to providing the regulatory clarity needed for crypto to deliver on its promise of creating a democratized user-controlled internet.

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