In the cryptocurrency world, letters from Congress have become an important tool for policy change. Over the past few years, the impact of these letters has varied; some led to significant policy changes, while others simply caused a ripple in the news cycle.
This week, cryptocurrency expert Ron Hammond examines the effectiveness of these letters, the factors that contributed to their success, and the policy actions they initiated.
What makes a letter from Congress effective? According to Hammond, several factors come into play. The governing political party, the seniority of the member (especially if he is the Committee Chair), and strong bipartisan support play crucial roles. The way the letter is presented in the media is also important, both in terms of the message and the potential policy change.
One example of a powerful letter came from Senator Warren, a leading progressive voice with a large media presence. His letter to the US Environmental Protection Agency last year led the US Energy Information Administration (EIA) to report on crypto mining's energy use.
On the other hand, Senator Ted Budd, while in the House of Representatives, sent a letter to the then-Republican SEC Chairman regarding the application of federal securities law to digital assets. The response from the SEC officially approved Bitcoin as a commodity and marked a positive step for the crypto industry.
Sometimes letters are used to provide political cover for institutions to take policy action, Hammond said. For example, Rep. Darren Soto and GOP Majority Rep's letter regarding the Bitcoin ETF could have dramatically changed the crypto landscape if Gensler followed bipartisan leadership.
Surveillance letters, which typically come from minorities, generally do not have any impact and are more for the purpose of sending a message. However, when there is bipartisan consideration, it sends a strong message.
According to Hammond, letters don't always get a response, especially when they're sent by a minority. However, this does not mean that the minority is unimportant. In the Senate, these members confirm agency heads, so ignoring them could be dangerous, especially given the possibility that the Senate could flip to Republicans next year.
This week in Congress and crypto:
1) Over the past few years, there's been a lot of letters from Congress on crypto. Some have had a major impact on policy, others just a quick news hit. In the absence of legislation moving, letters have been one way Congress has moved the needle— Ron Hammond (@RonwHammond) February 12, 2024
*This is not investment advice.
