By Hannah Lang
Sept 9 (Reuters) - A fight over major cryptocurrency legislation has spilled into the congressional summer recess, with the crypto industry and the banking sector mounting a final lobbying blitz in senators' home states ahead of a vote on the bill next week.
The industry has spent hundreds of millions of dollars campaigning to advance the Clarity Act, which it says will put crypto companies on a solid legal footing. The Senate will take a procedural vote on September 15 that could determine
the fate of the bill, but with Democrats and some Republicans warning the bill has insufficient safeguards and could destabilize the banking system, its chances look slim, according to analysts.
During the recess, which began on August 8, the crypto industry and banking groups have taken their fight to senators' home states, deploying op-ed pieces, letter-writing drives and in-person events to rally grassroots support and sway lawmakers, according to executives and public materials.
"Our strategy during recess is ... about demonstrating the presence and enthusiasm of our community, in every state and every congressional district," said Mason Lynaugh, executive director of Stand With Crypto, an advocacy group backed by crypto company Coinbase.
Some of its 3 million advocates — everyday crypto supporters and tech entrepreneurs — have placed op-eds in local newspapers in Oklahoma, Kentucky and Kansas, among other states, urging Congress to pass the bill. The group has also hosted events in Iowa, Michigan and elsewhere to advocate for digital assets. During August, its supporters have called or emailed their members of Congress nearly 50,000 times, and the group is facilitating in-person meetings with lawmakers, Lynaugh said.
Republican U.S. President Donald Trump courted crypto cash on the campaign trail by pledging to promote policies friendly to the $2 trillion cryptocurrency market, and the White House has strongly backed the Clarity Act. The bill would address what the crypto industry says is legal ambiguity by defining which tokens qualify as securities versus commodities, and which regulators oversee them.
Crypto companies are anxious to pass the bill this year because polls favor Democrats to retake the House of Representatives in the November midterm elections, likely extinguishing what many see as a once-in-a-generation legislative opportunity. But the industry's recess campaign is also an opportunity to showcase its growing political clout heading into those elections, on which it has already spent at least $190 million.
"We are showing that the crypto community is everywhere and that crypto voters are paying attention," Lynaugh said.
The Blockchain Association, a Washington group representing crypto companies, in late July launched the website clarityforamerica.com to help individuals and firms write to their senators to urge them to vote for the bill. Users can select from a list of issues that matter most to them, like "consumer protection" and "clear rules & certainty," as well as their preferred tone, such as "urgent but professional" or "passionate and heartfelt."
"We've got to just keep that pressure up," said Summer Mersinger, the Blockchain Association's CEO.
BANKING INDUSTRY PUSHBACK
Crypto companies argue that the Clarity Act, by providing legal certainty, is essential for the industry's future in the U.S., and will keep jobs in the country and preserve American dominance.
"Legal chaos ... drives capital, talent and technological innovation offshore," Jason Dodson, the Kentucky chapter president of the Stand With Crypto alliance, wrote in an August 24 opinion piece that called on U.S. Senator Rand Paul, a Kentucky Republican, to back the bill.
Democrats, whose support is needed to clear the Senate's 60-vote threshold, say the bill lacks robust money-laundering and ethics safeguards. Some Republicans, including senators James Lankford of Oklahoma and Mike Rounds of South Dakota, have also expressed concerns that the bill would allow certain digital tokens to compete with bank deposits, potentially hurting lending.
The Independent Community Bankers of America, which has been fighting the stablecoin-related provision in Washington, has likewise been mobilizing its members across the country to meet with senators in their home offices to raise their concerns.
They are focused on senators beyond the 24-member Senate Banking Committee, which led the bill and voted to advance it in May, said Paul Merski, ICBA's executive vice president of congressional relations.
"During the August recess, the focus has really been on continuing to have the senators hear from the grassroots, and particularly back in their home states with local bankers," he added.
The group has been airing a TV commercial in Washington, D.C., and target states warning that "polls consistently rank crypto at the very bottom of issues important to American voters." It also aired an ad during the U.S. Open tennis tournament advocating to fix the bill and protect Main Street lending.
Spokespeople for senators Paul, Rounds and Lankford did not respond to requests for comment. A spokesperson for Dodson referred Reuters to Stand With Crypto.
GROUP TARGETS WARNOCK IN GEORGIA
Tia Williams, president of the Stand With Crypto Georgia chapter and founder of blockchain-based software platform DocuHero, said she met with staff in the field office of U.S. Senator Raphael Warnock, a Georgia Democrat, during recess to discuss the bill.
Warnock voted against advancing the Clarity Act out of the Senate Banking Committee. His office did not respond to a request for comment.
"One of the takeaways that I've learned from him and his staff is they're very knowledgeable of this space ... but they also want to make sure that the everyday American is protected," Williams said.
The Georgia chapter is arranging for local college students enthusiastic about crypto and blockchain technology to visit Warnock's office too. The group has also held advocacy events in Athens and Augusta, Williams said.
"I think the work that we're doing here in Georgia is pivotal," she added.
(Reporting by Hannah Lang in New York; Editing by Michelle Price and Matthew Lewis)
