GM, Joanna here.

Don’t look now, but Congress is softening on crypto. 

Even Democratic Party lawmakers are rethinking their longstanding antipathy to the industry. 

At least, that’s the narrative in press coverage and op eds as crypto emerges as a surprise election issue.

But I’m not sure there’s evidence to show a sea change is truly in the works.

Good signs? Yes, but the new, favourable policies crypto has long desired remain a big unknown.

Crypto pundits have pointed to Congress’ bipartisan vote to scrap a policy called “SAB 121” as proof of increasing support for the crypto industry.

That’s particularly exciting when it comes to the Senate, where crypto’s hold is considered tenuous. 

I’ve written about SAB 121 in depth here, but essentially, it’s regulatory guidance that is blocking big banks like JPMorgan Chase, BNY Mellon, and State Street from muscling into the crypto custody business.

But it’s one thing to support SAB 121, and quite another to support crypto.

Firstly, the bill to repeal SAB 121 is not really a crypto bill.

If SAB 121 were scrapped, the big winners would be Wall Street giants.

The banking lobby has made it clear it wants SAB 121 gone, especially since the approval of spot Bitcoin exchange-traded funds in January. 

Congress is happy to give Wall Street what it wants, especially when it’s asking for something that will benefit consumers.

Which brings me to my second point: pretty much everyone from pro-crypto lobbyists to hardcore sceptics thinks that SAB 121 is misguided.

Sure, President Joe Biden vetoed the repeal. 

But outside of a small Democratic coterie, you won’t find many arguments against allowing heavily-regulated, experienced banks to safeguard crypto assets. 

So to sum up — even broadly anti-crypto Senators may see an upside in handing the industry over to their friends in the powerful big banking lobby.

A quick look at the votes on the SAB 121 bill backs up my opinion. 

Democratic Senators Gary Peters, Mark Kelly, and Jon Tester all voted to get rid of SAB 121.

Peters and Kelly signed on to crypto arch-sceptic Elizabeth Warren’s anti-crypto bill, while Tester once said of crypto that it was “all bullshit.”

What about the House of Representatives?

Pundits point to the passing of the FIT21 Act in May as evidence of support in the lower chamber of Congress. 

But DC insiders say the support in the House may have been there all along — it’s just that its measure was never taken before, as this was the first time that the House has voted on a standalone crypto bill.

It’s natural that the crypto industry wants softer treatment after almost four years of a sceptical administration. 

But Congress isn’t fully on board yet. 

Reach out to [email protected].

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