Former Solicitor General Donald B. Verrilli, who currently serves as Grayscale Investments’ senior legal strategist, has accused US regulators of intentionally stifling the crypto industry through debanking practices. In a joint amicus brief filed on July 3 with Paul Clement, the former Solicitor General under President George W. Bush, Verrilli highlighted growing bipartisan concerns about the regulatory environment for digital assets. This move sheds light on the challenges faced by crypto firms in the current regulatory landscape, with implications for the industry’s growth and innovation.
The amicus brief was filed on behalf of Custodia Bank, which is appealing a Wyoming district court’s decision to grant the Federal Reserve discretion to deny it a Master Account. Verrilli suggested that informal guidance issued by the Office of the Comptroller of the Currency (OCC) has effectively limited banks’ ability to engage with crypto firms. These guidelines, although not official, impose stringent requirements that are challenging for banks to meet. Consequently, this impacts their ability to support the growing crypto industry, creating barriers to entry and hindering competition and innovation.
Verrilli criticized the court’s decision in favor of the Fed, viewing it as a significant obstacle for the crypto sector. Alongside Paul Clement, he expressed concerns about the deliberate effort to debank the industry, stifling its growth potential. The implications of such regulatory practices could have lasting effects on the competitiveness of the United States in the global crypto market. Without more adaptive regulations, the US risks losing its edge and lagging behind other countries that embrace digital assets more warmly.
The alignment of political figures with the crypto sector has signaled a shifting political landscape surrounding digital assets. With the upcoming 2024 US elections approaching, the crypto industry’s influence on political discourse and voter behavior is becoming increasingly apparent. Advocates within the industry and voters interested in digital assets are pushing for more favorable regulations, leading to heightened political engagement. Former President Donald Trump and Democratic figure Robert F. Kennedy Jr. have both shown support for cryptocurrencies, with their campaigns accepting crypto donations and advocating for the protection of Americans’ rights to use and hold digital assets.
The growing political alignment with the crypto sector is seen as crucial for mobilizing younger voters, who are key participants in the industry. Millennials and Generation Z constitute a significant portion of the crypto user base, making their support instrumental in close elections. A poll by the Crypto Council for Innovation (CCI) revealed that a candidate’s stance on digital assets is important to many voters, with a preference for clear crypto regulations. This underscores the significance of regulatory clarity and political support in shaping the future of the crypto industry.
Crypto entities are gearing up to spend over $80 million on the upcoming elections, aiming to boost allies and promote legislation favorable to the industry. This significant investment highlights the industry’s commitment to shaping regulatory policies and strengthening its position within the political landscape. As the debate around crypto regulation continues to evolve, the involvement of industry stakeholders in funding political initiatives underscores the importance of advocacy and lobbying efforts in driving favorable outcomes for the crypto sector.
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