The cryptocurrency industry just got what it paid for.
After years of regulatory battles, enforcement actions, and billions in customer losses, the digital asset sector is on the verge of securing favorable federal legislation — crafted with extraordinary input from the very companies that stand to benefit most. The timing is brazen. Several of the industry’s most prominent players remain under investigation or have recently settled fraud charges. And yet Washington is rolling out the red carpet.
Molly White, the independent researcher and critic who runs the widely read blog Citation Needed, flagged the alarming convergence of events in a March 17 post. Her observation was pointed: the crypto industry has spent enormous sums on political contributions and lobbying, and it is now reaping returns that would make any venture capitalist jealous. The legislative vehicles — a stablecoin bill and a broader market structure bill — are moving through Congress with bipartisan support, despite unresolved questions about consumer protection, systemic risk, and the fitness of some of the industry’s leading figures to operate in regulated finance.
The numbers tell a stark story. Crypto-aligned political action committees spent more than $130 million during the 2024 election cycle, according to reporting by OpenSecrets. Fairshake, the industry’s flagship super PAC, became one of the largest outside spenders in American politics. It targeted both Democrats and Republicans who were skeptical of the industry, and it backed candidates willing to support lighter regulatory frameworks. The investment worked. The current Congress is the most crypto-friendly in history.
But friendliness is one thing. What’s happening now is something more specific.
The GENIUS Act — the Senate’s stablecoin bill — would create a federal framework for dollar-backed digital tokens like Tether’s USDT and Circle’s USDC. Stablecoins are the plumbing of the crypto markets, used to move money between exchanges and as a dollar proxy in decentralized finance protocols. A clear regulatory framework for them isn’t inherently unreasonable. The problem is what the bill doesn’t do, and who benefits from those omissions.
As White and other critics have noted, the legislation as currently drafted would allow large technology companies and crypto-native firms to issue stablecoins with less stringent oversight than traditional banks face. Reserve requirements exist on paper but lack the kind of rigorous, real-time auditing that bank regulators impose. The bill would also preempt state money transmitter laws in ways that could weaken existing consumer protections. In effect, it creates a parallel financial system with its own, lighter set of rules.
Who wants that? The companies writing the checks.
Circle, the issuer of USDC, has been lobbying aggressively for stablecoin legislation and has positioned itself as the “responsible” player in the market. Tether, which has faced repeated questions about the composition and adequacy of its reserves, would also benefit from a framework that legitimizes stablecoin issuance without requiring full banking charters. And then there’s the broader crypto industry — exchanges like Coinbase, venture firms like Andreessen Horowitz — that depend on stablecoins as critical infrastructure for their businesses.
The market structure bill, still taking shape in the House, goes even further. It would determine which digital assets are securities and which are commodities, a distinction that carries enormous financial consequences. The crypto industry has long argued that most tokens are commodities and should be regulated by the Commodity Futures Trading Commission rather than the Securities and Exchange Commission. The CFTC has a smaller budget, less enforcement experience with retail fraud, and a historically lighter touch. This isn’t a coincidence. It’s the point.
The SEC, under former Chair Gary Gensler, brought dozens of enforcement actions against crypto companies, arguing that most tokens were unregistered securities. The industry hated it. Gensler became a villain at crypto conferences. His departure and the arrival of a more sympathetic administration have changed the calculus entirely. The SEC has already dropped or paused several high-profile cases, including actions against Coinbase and other major firms, as reported by Reuters.
So the cop is leaving the beat. And the new rules are being written by the people who complained about the old ones.
This is where the conflict-of-interest problem becomes impossible to ignore. President Trump and his family have launched their own crypto ventures, including a memecoin and a DeFi project called World Liberty Financial. The president’s financial interests are now directly aligned with an industry whose regulatory fate he influences. White has been particularly vocal about this entanglement, documenting on her blog the ways in which Trump-affiliated projects stand to benefit from the very legislation his allies in Congress are advancing.
The appearance problem alone would have been career-ending in a previous era. Now it barely registers.
Consider the broader context. FTX collapsed in November 2022, wiping out billions in customer funds. Its founder, Sam Bankman-Fried, was convicted of fraud and sentenced to 25 years in prison. Terraform Labs and its founder Do Kwon destroyed roughly $40 billion in value when the Terra/Luna stablecoin system imploded. Celsius, Voyager, BlockFi — the list of failed crypto lenders is long and grim. Customers in many of these cases are still waiting to recover their money.
None of this has slowed the legislative push. If anything, the industry has used its own failures as an argument for legislation — claiming that clear rules would have prevented the blowups. There’s a circular logic at work: the industry behaved recklessly in the absence of tailored rules, and now it argues that only industry-friendly tailored rules can prevent future recklessness. The alternative — applying existing securities law more forcefully — is dismissed as unworkable.
Not everyone in Washington is on board. Senator Elizabeth Warren has been a consistent critic, warning that the stablecoin bill could create new channels for money laundering and sanctions evasion. In a March 2025 floor statement, she argued that the GENIUS Act “gives the crypto industry exactly what it wants while leaving consumers holding the bag.” Senator Sherrod Brown, before leaving the Senate, made similar arguments. But the opposition is outnumbered and, critically, outspent.
The lobbying infrastructure the crypto industry has built is formidable. The Blockchain Association, the Chamber of Digital Commerce, Stand With Crypto, and a constellation of company-specific lobbying operations have flooded Capitol Hill with position papers, technical briefings, and campaign contributions. According to Politico, crypto lobbyists held more than 200 meetings with congressional offices in the first quarter of 2025 alone. The revolving door is spinning fast, too — former regulators and Hill staffers are cycling into industry roles at remarkable speed.
And the industry has learned from its mistakes. After Bankman-Fried’s spectacular fall — and the embarrassment it caused his political allies — crypto companies have become more disciplined in their messaging. The new pitch isn’t about decentralization or financial freedom. It’s about dollar dominance. Stablecoins, the industry argues, will ensure the dollar remains the world’s reserve currency in an increasingly digital global economy. It’s a national security argument, designed to appeal to hawks and moderates alike.
It’s also largely unproven. While stablecoins do facilitate dollar-denominated transactions outside the traditional banking system, there’s little evidence that the dollar’s reserve status is threatened in ways that stablecoin legislation would address. The dollar’s dominance rests on deep capital markets, rule of law, and the full faith and credit of the U.S. government — not on whether Tether can issue tokens from its offices in the British Virgin Islands.
But the argument has worked politically. Bipartisan support for the stablecoin bill is real. Even some Democrats who were previously skeptical have come around, persuaded by the dollar-dominance framing or by the pragmatic calculation that some legislation is better than none.
The deeper issue is one of institutional capture. When an industry under active investigation can shape the laws that will govern it — and can do so while its most prominent figures are launching personal financial products that benefit from those laws — something has gone wrong with the process. This isn’t about whether crypto should exist or whether blockchain technology has legitimate uses. It’s about whether the regulatory framework being constructed serves the public interest or the interests of a narrow set of well-funded actors.
White’s work has been essential in documenting these dynamics in real time. Her post on March 17 captured the absurdity of the moment with characteristic precision: an industry that has produced some of the largest financial frauds in recent memory is being handed the pen to write its own regulatory framework, while the politicians facilitating the process have direct financial stakes in the outcome.
The stablecoin bill could reach the Senate floor within weeks. The market structure bill is expected to advance through House committees this spring. If both pass, the crypto industry will have achieved in legislation what it could not achieve in court: a definitive carve-out from the existing financial regulatory apparatus, with lighter oversight, friendlier regulators, and the imprimatur of federal law.
Wall Street is watching closely. Traditional financial institutions have been cautious about crypto, in part because of regulatory uncertainty. Clear legislation — even flawed legislation — could open the floodgates for institutional participation. Banks, asset managers, and payment companies are already positioning themselves. JPMorgan has expanded its blockchain operations. BlackRock launched a tokenized money market fund. Visa and Mastercard have integrated stablecoin settlement capabilities.
The question isn’t whether crypto will become more integrated with traditional finance. That’s already happening. The question is whether the rules governing that integration will protect ordinary investors and the broader financial system, or whether they’ll primarily protect the industry’s incumbents and their political patrons.
Right now, the answer looks like the latter.
There’s a historical parallel worth considering. In the early 2000s, the derivatives industry successfully lobbied to keep credit default swaps and other complex instruments outside the regulatory perimeter. The Commodity Futures Modernization Act of 2000 — passed with bipartisan support and industry enthusiasm — explicitly exempted these products from oversight. Eight years later, those same instruments nearly destroyed the global financial system.
Nobody is saying stablecoins are the next credit default swap. But the pattern is familiar. An innovative financial product emerges. The industry argues it’s too new and too different for existing rules. It spends heavily to secure a bespoke regulatory framework. The framework prioritizes growth and innovation over safety and accountability. And then everyone acts surprised when things go wrong.
The crypto industry has already demonstrated what happens when it operates without adequate oversight. The question now is whether Congress will create oversight with actual teeth — or whether it will hand the industry a trophy and call it regulation.
Based on the current trajectory, don’t bet on the teeth.
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