“The crypto community was almost libertarian and apolitical for a while,” my source tied into the donor space tells me. But as the business grew under the Biden administration, more regulation by enforcement occurred—the Securities and Exchange Commission, or SEC, brought at least 83 crypto-related enforcement actions, initiating lawsuits against companies like Coinbase and Kraken, according to Reuters, arguing that their products should be regulated like securities—and donors felt “an animosity” from the White House that pushed them into Trump’s coffers, they explained. (Months into the second Trump administration, those lawsuits were dismissed.)
However, sources in both Trumpworld and on the blockchain side of the equation tell me crypto donors have become impatient with the return on their investment from the campaign, which came in at just under $250 million raised by crypto-aligned and related PACs and super PACs when all was said and done. Getting their favorite parts of both the GENIUS Act and the CLARITY Act over the line—including what they viewed as more favorable regulation under the Commodity Futures Trading Commission, rather than the SEC—was an opportunity to cash in.
This is where Coinbase and a16z got involved. Both firms have key connections in Trump’s orbit—most notably, respectively, Chris LaCivita, the former 2024 Trump co-campaign manager, works on the global advisory council for Coinbase, while a16z is cofounded by Marc Andreessen, the Silicon Valley billionaire and cocreator of the modern web browser, who wields influence primarily through Vice President JD Vance. These power players wanted to effectively merge the stablecoin bill with the more ambitious and wide-reaching CLARITY Act, according to two sources familiar with the proceedings.
Coinbase specifically ruffled feathers in the House GOP conference, another Republican operative in Trumpworld tells me. “It was one of those things with, if you’re gonna throw your weight around … at the end of the day they wasted two weeks of the legislative calendar by slowing everything down.”
Another sticking point, the senior administration official and GOP operative tells me, is around Coinbase appearing too chummy with Democrats after bringing on David Plouffe, the former Obama and Harris strategist, to join the organization’s global advisory council in addition to LaCivita and others.
Even though plenty of industries depend on maintaining relationships with lawmakers in both parties, Trumpworld has grown increasingly wary of any perception of camaraderie between the crypto crowd and Democrats, with Plouffe being the most prominent example.
“If [Democrats] take power again, you’re not getting shit,” says the senior administration source, “and all of your bets are wasted.”
The message from Trumpworld to the crypto community heading into the next phase of legislation is simple: Play by our rules, or good luck getting anything from a possible future Democratic-controlled Congress and White House.
“These guys just need to understand that if they stick with us they have a good chance of success—rowing against us will almost guarantee failure,” the administration source tells me.
“And they shouldn’t play both sides beyond getting the bare minimum of Democrat votes on legislation … They should wake up.”
Underneath all the wrangling is the substance of the legislation—even if the legislative gambit had been successful, it may have ultimately backfired. “It’s a case of be careful what you wish for,” says James Angel, a finance professor at Georgetown University. “The problem with the CLARITY Act is this tremendous lack of clarity that it really gives us.” It’s still unclear where the CFTC authority ends and the SEC’s begins under the proposed law, according to Angel.
And either way, he says, the evangelists shouldn’t be surprised if the CFTC ultimately cracks down on crypto as well.
As for the rough-and-tumble of getting legislation through Congress, the senior administration source says this is a welcome-to-the-club moment for the crypto community.
“Welcome to Congress,” the official says. “You’re just one of many who’s been chewed up and spit out.”
This is an edition of Jake Lahut’s Inner Loop newsletter. Read previous newsletters here.