Trump’s $1.4 Billion Haul Comes Back to Haunt Crypto Industry

(Bloomberg) -- The crypto industry watched with a grim foreboding as its landmark bill detonated on the Senate floor Tuesday. Blame first fell on Democrats, none of whom voted to advance it. But some of the industry's own supporters pointed elsewhere: at President Donald Trump and the roughly $1.4 billion in income he generated from crypto ventures last year.

Now the industry is confronting the other side of its embrace of Trump: The alliance brought major wins in Washington, only for the president's own crypto dealings to become an obstacle to locking some of those gains into law.

Crypto spent hundreds of millions of dollars trying to reshape Washington, betting that a friendlier White House and Congress would finally give the industry the legal footing it had sought for a decade. In many ways, the bet worked. The Trump administration dismantled much of the enforcement regime crypto companies had fought under President Joe Biden, regulators began writing friendlier rules and Trump signed landmark stablecoin legislation.

The Clarity Act was supposed to be the bigger prize. At its core, the bill was meant to settle a question that has hung over crypto for years: who regulates what. It would have divided responsibility between the Securities and Exchange Commission and Commodity Futures Trading Commission and set rules for exchanges, brokers and other firms operating in the market. For digital-asset companies, that meant a clearer legal path for doing business in the US, rather than working it out case by case with regulators.

Then Trump's business dealings became part of the perceived problem. Several people in the industry now say his financial ties to crypto helped turn an already difficult bill into an even harder sell.

"The failure of Clarity begins and ends with Donald Trump," said Justin Slaughter, senior adviser at crypto and financial technology investment firm Paradigm. The memecoin that launched days before his inauguration "was the first brick in the road to this failing," he said.

Since the collapse of FTX, crypto has spent years trying to move Washington's attention beyond the industry's controversies and toward the technology and the rules governing it. But after its most powerful political ally launched a lucrative memecoin and became one of crypto's biggest beneficiaries while championing the laws and regulations governing the industry, his opponents in Washington seized on those ties.