Regulation
How Wall Street is teaching Washington to love cryptocurrencies – DL News
- The SAB 121 vote marked a new alliance between Wall Street, cryptocurrencies and Washington.
- Nancy Pelosi and Chuck Schumer sided with Republicans in the vote, challenging President Joe Biden.
- Tether gained more than Goldman Sachs in the first quarter.
Last week, senior Democrats broke ranks and voted to repeal SAB 121, a controversial cryptocurrency accounting rule.
Thanks to the Wall Street banks.
This is according to Matt Hougan, chief investment officer at Bitwise he wrote that the vote “signals a much larger trend: the emerging alliance between Wall Street, cryptocurrencies and Washington.”
“It’s a huge positive catalyst that I think will do that take cryptocurrencies to new all-time highs“Hougan added.
Political change
The vote to repeal SAB 121 was the beginning of two political bombshells in the industry.
First, the Securities and Exchange Commission asked Ethereum exchange-traded fund applicants to resubmit their applications, sparking speculation that approval is far from a done deal.
Hence, the Republican-led pro-cryptocurrency bill known as FIT law21 approved with a bipartisan vote of 279 in favor and 136 against.
Both the votes and the potential ETF change come as cryptocurrencies are increasingly seen as having potential problem for voters in the November presidential election.
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President Joe Biden he sided with members of the anti-cryptocurrency party, while his rival and favorite Republican Donald Trump he placed himself in the pro-cryptocurrency camp.
Biden appointee Gary Gensler, whose SEC has led a crackdown on the digital assets sector, is a frequent target of industry ire.
So what happened?
“It looks like someone in the Biden White House made a call and said ‘Guys, we can’t be the anti-crypto party anymore,’” Mike Novogratz, CEO of Galaxy Digital said CNBC.
The vote
Biden has threatened to do so veto the vote to repeal the provision of SAB 21, if approved.
A number of prominent Democrats – including Senate Majority Leader Chuck Schumer – have sided with Republicans and challenged Biden to vote for repeal.
Top Democrat Nancy Pelosi also voted with the majority and he sided against Bidenstating in a statement:
“Digital currency is already integrated into our economy and will increase in importance in the coming years.”
Until then, the Democrats’ voice on the cryptocurrency issue was led by the Massachusetts senator and cryptocurrency critic Elizabeth Warren.
Wall Street intervenes
The success of spot Bitcoin ETFs “has woken Wall Street up to the realization that there is a lot of money to be made holding crypto assets,” Hougan said.
For every million dollars in Bitcoin that banks have on their balance sheets, they must hold $1 million in cash.
Banks and finance companies found the cryptocurrency-specific SAB 121 rule costly and hindered the advent of new crypto products for consumers.
Goldman vs. Tether
Banking giant Goldman Sachs reported first-quarter net profit of $4.13 billion. Stablecoin company Tether says it made $4.52 billion in profits over the same period.
Hougan pointed out that a coalition of banking lobbyists did so under pressure The SEC will loosen its grip on cryptocurrency regulation in February.
Wall Street firms are among them largest industry donor to Schumer’s campaign fund, Hougan noted, adding that Wall Street’s pressure on Washington will benefit cryptocurrencies in the long term.
“If Wall Street cares about cryptocurrency custody, things that increase demand for cryptocurrency custody – like more ETFs – will become more likely. If Wall Street cares about stablecoins, things that increase demand for stablecoins will become more attractive,” Hougan said.
“Compared to the overt hostility we have faced from DC over the past decade, this is tremendous progress.”
Tom Carreras is a markets correspondent at DL News. Do you have advice? Please contact tcarreras@dlnews.com