Crypto winter storms could further chill relations in gridlocked Washington

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(Kitco News) – There are signs that the crypto winter could turn more bitter as US lawmakers look set to give the industry the cold shoulder when Congress reconvenes after the midterms. The Democrats may hold the Senate, and the Republicans look set to take the House, but neither party appears to be inviting crypto in from the cold.

Beleaguered FTX CEO Sam Bankman-Fried appears to have lost his billionaire status and Capitol Hill appeal on the same day, as reports emerge that SBF’s other company, Alameda Research, may have traded FTX clients’ deposits.

Now the relative disaster of a Binance bailout for pennies on the dollar is becoming the absolute disaster of a Binance withdrawal with nothing in its place. It looks like Congress’ former crypto darling won’t be invited back unless it has to testify under oath… more sober sartorial styleno doubt.

Speaking of Binance (and who isn’t today), while their position in the market has never been stronger, their position in Washington is weaker than ever before.

Recent revelations that the platform continued to process billions in Iranian transactions for years while claiming they were not, and issuing repeated assurances that they were voluntarily complying with US sanctions, have led to increased scrutiny from regulators.

The fact that the company often sent mixed signals and continues to use opaque business practices that make it unclear who owns the company and under which jurisdiction it operates has attracted the attention of the Treasury Department, which now has the company under its watch.

And evidence is now emerging that lawmakers’ relationship with the crypto industry has been cooling for some time, as demonstrated by a decline in spending by the crypto lobby last quarter, according to The Block.

The one percent drop in spending from last quarter doesn’t look dramatic until you consider that lobbying dollars increased between 20% and 40% since Q3 2021, even though crypto winter was in full swing. Money talks in Washington, and crypto chose an odd time to climb.

The crypto winter has been long and hard, and both investors and the industry would like to see signs of support from the US government. But when the biggest crypto news out of Washington is the seizure of $3.36 billion in stolen bitcoin, the smart money isn’t on warming relations anytime soon.