There’s a new clash over cryptocurrency policy brewing on Capitol Hill, and it could soon create a rift between Sen. Elizabeth Warren and some of her own members on the Senate Banking Committee. Pro-crypto lawmakers are scrambling to get Democrats on board with industry-friendly legislation as they move to quickly advance long-sought regulatory changes that would give more legitimacy to the digital assets sector. As your MM host reports in a story out this morning, some on the left are already signing onto the GOP-led push, setting up a potential conflict between crypto-supporting Democrats and Warren just months into the Massachusetts lawmaker’s tenure as the party’s new leader on the powerful Banking panel. “There’s a number of [Democratic] senators who do want to get involved in this space,” said Sen. Kirsten Gillibrand, a New York Democrat who helped write GOP-led digital assets legislation and is quarterbacking the efforts to get other members of her party on board. The push comes as part of a broad shift in Washington policymaking toward regulatory changes that could benefit crypto. The turn has been driven in part by a political spending spree by top crypto firms and executives, who have dumped hundreds of millions of dollars into influence campaigns designed to take down critics and boost industry allies. Washington’s pro-crypto turn is primarily being driven by Republicans, but a growing number of Democrats appear eager to join in, despite concerns from skeptics like Warren. “I have a very different experience with crypto and understanding of how it fits into our economy,” Sen. Ruben Gallego (D-Ariz.) said in an interview last month about his differences with Warren. Other names to watch include Democrats Angela Alsobrooks of Maryland, Mark Warner of Virginia, Lisa Blunt Rochester of Delaware and Andy Kim of New Jersey, who all sit on Senate Banking. “I’m looking to engage on this topic,” said Warner, a longtime Senate dealmaker who is a senior member of the committee. He added that “having some kind of regulatory format makes sense.” The issue is coming to a head quickly. Banking Committee Chair Tim Scott (R-S.C.) hopes to mark up GOP-led legislation that would create a regulatory framework for stablecoins — digital currencies that are pegged to other assets like the U.S. dollar — before the Senate’s March recess, according to a spokesperson. And more immediately, the panel’s digital asset subcommittee is set to hold its first-ever hearing this afternoon, which will provide a preview of how some Democrats plan to address the issue. MM readers will recall how Warren has fought fiercely with moderate Democrats in the past over financial regulation issues, namely the 2018 rollback of rules put in place by the Dodd-Frank law. Crypto is presenting an early test of how she will handle differences with others in her party now that she is the Democratic leader on Senate Banking. “I believe that Democrats understand the importance of consumer protections and anti-money laundering curbs in any new financial product,” Warren told reporters last week. “All we’re looking for is a level playing field between crypto and all of the other financial systems.” Two Democrats — Gillibrand and Alsobrooks — are already supporters of the stablecoin bill that Republicans want to move. Gallego says he is looking at the legislation, and Gillibrand said last week that “at least seven” Democrats “are reading the bill right now.” Warren has signaled some openness to working on stablecoin legislation but indicated she is opposed to the existing proposal, which is led by Sen. Bill Hagerty (R-Tenn.). “Any forward movement in the crypto area needs to have strong consumer protections and guardrails against money laundering,” she told reporters last week. “I’m concerned about the lack in both areas.” IT’S WEDNESDAY — Send Capitol Hill tips to jgoodman@politico.com. As always, you can find Sam at ssutton@politico.com.
| 
