Crypto-Friendly Lawmakers On House Digital Assets Subcommittee

Crypto industry supporters in the House of Representatives have been named to a new congressional committee on digital assets. The committee will be headed by a crypto industry veteran.

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Rep. Patrick McHenry (R., N.C.), in one of his first acts as chairman of the House Financial Services Committee, has created a subcommittee on digital assets, financial technology, and inclusion. FTX's implosion last year prompted lawmakers to create the panel as they scrutinize the industry after the collapse of the trading platform. As Mr. McHenry has stated, Congress should create a regulatory framework that will allow the crypto market to grow and protect investors at the same time.

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In the 2022 midterm elections, seven of the 10 Republicans and four of the eight Democrats named to the panel received direct campaign donations from crypto companies and entrepreneurs, according to campaign finance data analyzed by TradeAlgo from the Center for Responsive Politics. Subcommittee membership accounts for only 4% of the membership in the House, but it accounts for 17% of the crypto industry's campaign donations to House members.

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It should be noted that the majority of members of the subcommittee have favorable scores from the Crypto Action Network, a group funded by the crypto industry that grades lawmakers from "A" to "F" based on how friendly they are to the industry. In the face of regulatory crackdowns by regulators, crypto firms have lobbied for new legislation to give them a more lenient treatment, which they have seen as crucial for their growth prospects in the U.S.

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Having said that, it seems unlikely that the House panel will be able to craft crypto legislation that will also pass the Senate Banking Committee, which is led by Democrats who are generally skeptical of the industry.

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FTX had emerged as one of the most significant contributors to the congressional campaigns of 2022, prior to its collapse. Members of the House subcommittee on the use of crypto assets received $202,358 from the crypto industry as a result of contributions from employees of the company and its affiliates.

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In addition to contributions from Kraken, Coinbase Global Inc., Digital Currency Group, and Ripple Labs, the members also received contributions from other firms.