Tom Emmer had a message: Embrace cryptocurrency, and the campaign checks would soon follow.
“Do you know how powerful this is for some elected officials to look over and say, ‘What’s Emmer doing, he’s getting what? He’s getting, oh my goodness, campaign contributions? I need to learn more about what’s going on with cryptocurrencies,’” Emmer remarked in a video reviewed by The Washington Post.
At a moment when Washington is becoming keenly aware of the promise and peril of cryptocurrency, Emmer, 61, is about to become one of its most prominent advocates in Congress. In recent years, the Republican from Minnesota has increasingly promoted crypto interests — championing its companies, pushing industry-friendly proposals and chastising critics who in his view stand in the way of innovation.
Along the way, Emmer has reaped big bucks from the industry and its top executives, including those from the since-collapsed company FTX. But his sharp deregulatory bent could carry greater significance next year, when Republicans are set to assume control of the House — just as some lawmakers say they hope to enact crypto regulations. Emmer’s fervent support — and his new, powerful perch as House majority whip — could make him a formidable foe of aggressive restrictions on what he has described as the future of finance.
“Together, we’re going to keep educating these members of Congress,” Emmer told viewers watching online that August.
The congressman declined through his spokesman, Michael McAdams, to be interviewed for this story. Responding to Emmer’s comments about donations, McAdams said in a statement: “It’s important for industries to advocate for their priorities in a variety of ways to avoid policy fiascos that are rooted in Congress’s ignorance on issues.”
The stakes for federal action became apparent in November after the sudden collapse of FTX, the third-largest crypto exchange globally. The firm’s meltdown at the hands of founder Sam Bankman-Fried sent digital token values plummeting, eviscerated billions of dollars in investments and toppled companies tied to the FTX network, including the lender BlockFi, which became the latest to declare bankruptcy last month.
In the nation’s capital, the shock waves forced federal policymakers to confront the limits of their knowledge about crypto — and the consequences of their longtime inaction. Reacting to the FTX fiasco, Treasury Secretary Janet L. Yellen recently described it as a “Lehman moment,” likening the industry’s peril to the 2008 bankruptcy that decimated the U.S. economy and prompted an overhaul of banking laws.
Some Democrats, including Sen. Elizabeth Warren (Mass.), have responded by calling for new rules on crypto companies, which at times may handle deposits and assets as if they were traditional banks or registered brokers — yet often aren’t regulated in the same ways. In the House, where Republicans are set to assume control in January, party leaders are expected to forge ahead with an ongoing probe into FTX.
The chamber’s top financial services panel, soon to be led by Rep. Patrick T. McHenry (R-N.C.), plans to create a special subcommittee devoted to the world of digital tokens, according to two people familiar with the matter who spoke on the condition of anonymity to discuss details not yet made public. And McHenry intends to resume bipartisan talks to regulate stablecoins, a small slice of the crypto ecosystem concerning digital tokens pegged to assets like the U.S. dollar.
“The recent events surrounding the collapse of FTX show us now — more than ever — how important comprehensive market structure legislation that brings clarity to the treatment of digital assets is to the survival of this ecosystem in the U.S.,” McHenry said in a statement.
But the foremost champions of cryptocurrency in the Capitol have stood firmly in support of the technology, promising to stem some of the new legislative threats even in the wake of the FTX meltdown. The mere specter of regulation drew a sharp rebuke from Emmer last month, who went as far as to take the stage at a major crypto industry conference just days after FTX unraveled — and hours after his party elected him to serve as the third-most-powerful House Republican in the next Congress.
Seated in front of crypto executives and lobbyists, Emmer promised to “use the stage that is Congress to promote all of you beyond the walls of the Capitol,” according to reports of his remarks. And in defiance against the flood of calls for new crypto rules, the congressman signaled staunch opposition to any legislative crusade to “rush in and put a huge wet blanket of regulation atop this industry just because something didn’t go right.”
Emmer continued his public defense a week later on Fox Business, stressing the problem was “not about crypto” but rather the result of Bankman-Fried specifically. He also blamed the fallout on Gary Gensler, the chairman of the Securities and Exchange Commission, an agency that Emmer has needled at times for trying to police the broader crypto industry too aggressively.
Some in the cryptocurrency industry later heralded Emmer’s comments, believing he might come to be an important political bulwark against regulation next year. “Congressman Emmer is a steadfast crypto champion, and we appreciate his continued and thoughtful engagement on the merits and potential of cryptocurrency technology,” said Kristin Smith, the executive director of the Blockchain Association, the lobbying group that hosted him onstage in November.
Asked about Emmer’s approach to regulation, his spokesman McAdams repeated the congressman’s belief that FTX was not a failure of crypto. Instead, he said it was caused by a range of factors, including “centralization,” referring to cryptocurrency exchanges run by companies.
“Regulation and legislation is necessary for this space, but it has to make sense for the technology,” McAdams said, noting that “otherwise Congress will regulate it offshore and out of the United States’ safe markets.”
In Emmer’s telling, his advocacy for cryptocurrency began soon after he was elected to Congress in 2014. Representing a slice of communities northwest of St. Paul, the congressman repeatedly has attributed his intrigue to a 2015 book, “The Age of Cryptocurrency,” gifted him by one of his staffers.
Written by two former Wall Street Journal reporters, the book portrayed crypto as a beneficial challenge to the power of governments and large financial institutions globally. The message appeared to resonate with the conservative-leaning pol, who has likened token technology to “freedom” in a slew of television interviews, tweets and appearances on crypto-friendly podcasts.
“Rep. Emmer has been a strong believer in the power of crypto’s technology from the start of his time in Congress and long before it was mainstream,” McAdams said in a statement.
In Washington, Emmer has been quick to tout the industry’s benefits as a member of the House Financial Services Committee, a panel chiefly tasked to oversee banking and securities, including federal regulations. When his peers on the dais or at the witnesses table have aired a note of skepticism about cryptocurrency, Emmer often has been quick to counter with statements of support.
At a little-noticed January 2020 hearing on mobile payments, which drifted into the topic of crypto regulations, the congressman quickly pounced on critics. Taking over questioning, he pressed a witness in attendance if they had ever actually studied the “opportunities” that crypto provides “to empower individuals to control the value of their own assets separate from government control.”
“Have you done any of that?” he asked.
A year earlier, it was Facebook chief executive Mark Zuckerberg submitting to a congressional grilling, this time for his company’s since-abandoned plan to launch a cryptocurrency project known as Libra. Beginning his five minutes of questioning, Emmer said he had “serious concerns” about the social media giant and its endeavor — but added what he was “most concerned about is Congress and American regulators.”
“Unfortunately, my colleagues have offered several proposals in conjunction with this hearing that could have a tremendously harmful impact on innovation in the United States,” Emmer lamented.
To match his rhetoric, Emmer has worked to ward off some of the new regulations targeting the industry. When lawmakers last year looked to require more crypto reporting to the Internal Revenue Service — hoping to pursue tax cheats and raise revenue in the largely unregulated digital space — Emmer stood sharply opposed. He said the proposal, crafted to help finance a bipartisan, roughly $1 trillion infrastructure law, threatened to “limit how the industry grows and how Americans are able to pursue their dreams.”
The congressman later voted against the full bill, citing other concerns, including its approach to climate policy. The measure, which aimed to improve the nation’s roads, bridges, pipes, ports and internet connections, included a revised policy on crypto reporting to the IRS.
Meanwhile, Emmer has introduced a torrent of his own proposals, some of which seek to ease or streamline crypto regulations. During this Congress, he helped put forward a measure that could ease the tax burdens on the owners of some crypto assets. And he co-sponsored bipartisan legislation that would define some digital tokens under law, potentially in ways that could shield many crypto businesses from oversight by the SEC, which is considered an aggressive law enforcement agency.
None of the measures saw a vote, but each of them received support from a wide array of crypto-funded organizations, including the Chamber of Digital Commerce, a lobbying group that includes major financial players like Binance, Circle and Ripple alongside smaller entities. Announcing the enforcement bill, Emmer’s office included an endorsement from the chamber’s president, Perianne Boring, who heralded the congressman and his co-sponsors for trying to create a “predictable legal environment.” The group did not respond to a request for comment.
McAdams, in a statement, said Emmer “seeks input from subject matter experts on legislation that will impact any industry,” describing it as “imperative to generating well-informed and pragmatic policy solutions.”
The congressman has even used his post to pressure agencies, especially the SEC, against policing the nascent industry. This March, Emmer led a bipartisan bloc of lawmakers in what’s known as the Congressional Blockchain Caucus — an advocacy group on the Hill for crypto issues — to urge the agency against imposing “extra-jurisdictional and burdensome reporting requirements” on crypto-related firms. Emmer sent the letter after the SEC wrote FTX and other crypto companies asking questions about their business practices.
The congressman said on Twitter that he had received “numerous tips” from unnamed cryptocurrency interests. His office declined to specify who had contacted him, though McAdams maintained that “Coinbase, Ripple, and FTX had nothing to do with the drafting or development” of the letter.
A nonprofit known as the Coin Center, which is funded by crypto companies and investors, claimed to help lawmakers form the blockchain caucus in 2016. It previously described its input in chartering the group as “instrumental.” Emmer became its co-chair two years later, promising then to help Congress “embrace and support” cryptocurrency for “the next generation and beyond.” A spokesman for the Coin Center declined to comment.
“Within the blockchain caucus, there are people who have holdings in cryptocurrency, or it’s people who seem to have ties to the companies or have taken money from them,” said Jordan Libowitz, the communications director for the Citizens for Responsible Ethics in Washington. Those ties, he said, could position lawmakers to “fight major regulations coming through Congress.”
Emmer even raised his concerns about the SEC in an exchange with Bankman-Fried, who now is facing international scrutiny. At a December 2021 House hearing, the congressman said lawmakers needed to learn from FTX and others about the “great opportunities” posed by crypto — then appeared to fault the watchdog agency for raising regulatory hurdles. That included its efforts to prevent some exchanges from offering more complicated financial products, including funds tracking crypto spot prices.
In response, Bankman-Fried cited his company’s work to use automated technology to discover potential market trouble. Emmer seemed satisfied: “Sounds like you’re doing a lot to make sure there is no fraud or other manipulation,” he said.
A person familiar with the matter, who requested anonymity to describe the lawmaker’s thinking, said Emmer only had been referring to spot markets and had nothing to do with FTX and the troubles that later would lead to its bankruptcy.
Emmer’s embrace of crypto has grown in tandem with the industry’s own rise in politics. Once a minuscule presence in Washington, crypto companies, executives and interests increasingly have put their wealth toward influencing the regulatory process. Over the past nine months, crypto-related interests have spent nearly $15 million on lobbying, a massive increase from the roughly $80,000 the industry spent in Washington in 2014, according to data compiled by OpenSecrets, a money-in-politics watchdog.
“They realized they can’t expect to keep growing without avoiding regulatory scrutiny,” said Yevgeny Shrago, a policy director for Public Citizen, another watchdog group. With massive crypto windfalls they later channeled into American politics, industry executives took to Washington to argue that “crypto is different, it’s special, it can’t be covered by regular regulatory rules.”
In total, crypto-tied donors also spent at least $73 million on all federal candidates last election cycle, OpenSecrets found. And Emmer personally collected more than $78,000 in donations from the industry executives, employees and political action committees over the 2022 cycle, according to OpenSecrets, which examined the data through the end of October.
The congressman’s donors included Ryan Salame, a top executive at the since-disgraced FTX, who contributed $8,700, as well as Barry Silbert, the founder of the Digital Currency Group, and Bart Stephens, the leader of Blockchain Capital, the firm found. Jeffrey Garzik, the chief executive of the blockchain-focused Bloq Inc., said in a statement he donated $5,800 to Emmer this past election because he saw the congressman as an ally — and had “taken the time and done the homework of understanding this transformative technology — its risks as well as benefits.”
As the leader of the National Republican Congressional Committee, the top fundraising arm for House Republicans, Emmer also worked to make it easier for crypto allies to contribute — in digital tokens — to GOP campaigns. Salame and Bankman-Fried each donated to the organization, according to OpenSecrets. Over that same period, a related yet separate super PAC, the Congressional Leadership Fund, amassed nearly $3 million in additional donations from Salame and the official FTX political action committee, according to OpenSecrets.
Emmer’s aides declined to say whether he or the NRCC would return the money tied to FTX.
In doing so, Emmer has continued to make the case to the crypto industry that a relationship with Washington could prove symbiotic — enticing lawmakers while aiding the industry’s own political fortunes.
“We’re getting self-interested elected persons to look at it and go, ‘Wait a second. Is that person getting ahead of me?’,” Emmer said about the NRCC’s work on an October 2020 podcast hosted by HODLpac. The organization is a crypto-affiliated political action committee, and its acronym stands for “hold on for dear life,” a crypto slogan encouraging investors not to sell even when token prices plummet.
Seeing those donations, Emmer said that lawmakers ultimately might ask themselves: “‘Do I need to do some more work on cryptocurrency to understand what it’s all about? Because maybe they’re going to get ahead of me in fundraising and everything else.’”
The same spirit motivated the congressman’s online town hall that August. The congressman at the time billed the event as one that would “educate policymakers and Americans about the true potential of these incredible innovations.” He hosted it with the aid of the Chamber of Digital Commerce political action committee, the official donation arm representing roughly 200 companies in digital tokens and blockchain technologies.
Emmer began by pitching his vision for a legal landscape that might “position the U.S. as a leader” for the burgeoning sector. Anything less, he warned, would cede the cryptocurrency industry to other countries like China.
That rallying cry delighted Brad Garlinghouse, the chief executive of crypto firm Ripple Labs, which offers a currency known as XRP. He soon pledged he was “absolutely going to be making a contribution to your campaign.” Garlinghouse in a statement this week praised Emmer as a “steady and long-standing champion,” pointing in particular to the fact that the congressman “called for SEC accountability with respect to crypto, pushing back against its ‘regulation by enforcement’ approach to industry.”
The news then delighted Emmer, who soon shared his belief that XRP, the digital asset that Ripple had used to raise funds, should not be treated like a security under law. The SEC ultimately would take a different view, suing Ripple for violating federal law later that year. But Garlinghouse, at that moment, saw reason to rejoice over his new, powerful ally in Congress.
“Thank you for your leadership,” he said. “I think it does have an impact.”