Regulation
How Wall Street is teaching Washington to love crypto – DL News
- The SAB 121 vote marked a new alliance between Wall Street, crypto and Washington.
- Nancy Pelosi and Chuck Schumer sided with Republicans in the vote, defying President Joe Biden.
- Tether made more money than Goldman Sachs in the first quarter.
Top Democrats broke ranks last week and voted to repeal SAB 121, a controversial crypto accounting rule.
Thanks to the Wall Street banks.
This is according to Bitwise Chief Investment Officer Matt Hougan, who wrote that the vote “signals a much larger trend: the emerging alliance between Wall Street, crypto, and Washington.”
“This is a hugely positive catalyst that I think take crypto to new all-time highs», added Hougan.
Political change
The vote to repeal SAB 121 was an opening to two political bombshells in the industry.
First, the Securities and Exchange Commission has asked applicants for Ethereum exchange-traded funds to resubmit their applications, sparking speculation that the approval is all but a done deal.
Then the Republican-led pro-crypto bill known as FIT21 law passed with a bipartisan vote of 279 for and 136 against.
The votes and potential ETF change came as crypto is increasingly seen as a potential. issue for voters in the November presidential election.
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President Joe Biden sided with anti-crypto party members, while his rival and Republican favorite Donald Trump has established itself in the pro-crypto camp.
Biden appointee Gary Gensler, whose SEC has led the crackdown on the digital assets sector, is often the target of the industry’s ire.
So what happened?
“It’s like someone in the Biden White House made a call and said ‘Guys, we can’t be the party against crypto anymore,'” Mike Novogratz, CEO of Galaxy Digital. said CNBC.
The vote
Biden threatened to veto voting to repeal SAB 21 if approved.
A number of prominent Democrats — including Senate Majority Leader Chuck Schumer — sided with Republicans and challenged Biden to vote for repeal.
Democrat Nancy Pelosi also voted with the majority and sided with Bidendeclaring in a press release:
“Digital currency is already integrated into our economy and will only become more important in the years to come.”
Until then, the Democratic voice on the crypto issue was led by the Massachusetts senator and crypto critic. Elizabeth Warren.
Wall Street intervenes
The success of spot Bitcoin ETFs “made Wall Street realize that there was a lot of money to be made by holding crypto assets,” Hougan said.
For every $1 million in Bitcoin, for example, that banks have on their balance sheet, they must hold $1 million in cash.
Banks and financial firms viewed the crypto-specific SAB 121 rule as costly and hindering the advent of new crypto products for consumers.
Goldman vs. Tether
Banking giant Goldman Sachs reported a net profit of $4.13 billion in the first quarter. Stablecoin company Tether claims to have made a profit of $4.52 billion during the same period.
Hougan pointed out that a coalition of banking lobby groups that under pressure the SEC in February to loosen its grip on crypto regulation.
Wall Street companies are among the largest industry donor to Schumer’s campaign fund, Hougan noted, adding that Wall Street’s pressure on Washington will benefit crypto in the long run.
“If Wall Street cares about crypto custody, things that increase demand for crypto custody – like more ETFs – become more likely. If Wall Street cares about stablecoins, things that increase demand for stablecoins become more attractive,” Hougan said.
“Compared to the overt hostility we have faced from DC over the past decade, this is enormous progress.”
Tom Carreras is a markets correspondent for DL News. Do you have any advice? Contact us at tcarreras@dlnews.com