Senator Ruben Gallego, once a vocal critic of cryptocurrency, has emerged as a significant figure in the digital asset landscape. His recent involvement in stablecoin legislation and substantial campaign support from crypto-aligned groups signal a notable shift in his stance, reflecting the evolving political dynamics surrounding the industry.
Gallego’s Evolving Stance on Crypto
Senator Ruben Gallego, a Democrat from Arizona, has undergone a remarkable transformation in his views on cryptocurrency. In November 2022, as a House Representative, he celebrated a primary win for an Oregon Democrat, Andrea Salinas, by stating she had "slayed the Crypto beast." This comment alluded to the significant spending by Sam Bankman-Fried’s PAC to support Salinas’ opponent. However, as a freshman senator and a potential 2028 presidential contender, Gallego has adopted a more open approach to the industry.
- Key Takeaways:
- Gallego, now the top-ranking Democrat on a Senate subcommittee overseeing digital currency, is actively involved in drafting the first major stablecoin regulation bill.
- His campaign received $10 million in support from crypto-aligned groups last year, and billionaire venture capitalist Marc Andreessen, a prominent crypto advocate, headlined a fundraiser for Gallego’s affiliated campaign funds.
- This shift aligns with a broader trend among some Democrats and even former President Donald Trump, who have become more receptive to the crypto industry after initial skepticism.
Stablecoin Legislation and Political Fallout
Gallego has played a pivotal role in the stablecoin bill, known as the GENIUS Act. He recently helped block a vote on the bill, advocating for stronger safeguards against money laundering and national security risks. This position has drawn criticism from both sides of the crypto debate:
- Criticism from Crypto Supporters: Ryan Selkis, founder of crypto data firm Messari, called Gallego a "traitor" for delaying the bill, highlighting the millions in backing Democrats like Gallego received.
- Concerns from Consumer Advocates: Corey Frayer, director of investor protection for the Consumer Federation of America, argued that the bill could destabilize financial markets and harm the Democratic party by empowering an industry that will spend heavily against them.
Worries of Another Financial Crisis
Critics of the stablecoin bill, such as Hilary Allen, a law professor at American University specializing in financial stability regulation, express concerns that it does not provide sufficient restrictions to protect investors, unlike those applied to traditional banks. Allen, who worked on identifying causes of the 2008 Wall Street crisis, views the crypto industry’s narrative of financial inclusion as potentially predatory, drawing parallels to the lead-up to the 2008 crisis.
The "Crypto Beast" and Its Influence
The 2022 Oregon primary, where Sam Bankman-Fried’s FTX poured over $10 million into the race, served as an early indicator of crypto’s growing political influence. Gallego’s initial "slayed the Crypto beast" comment came just days before FTX’s collapse, which rattled the crypto markets. This event, along with the subsequent collapse of Silvergate Bank, highlighted the industry’s volatility and its increasing integration with traditional finance.
Shifting Political Landscape
The political landscape surrounding crypto has dramatically shifted. While the Biden administration initially showed wariness, some congressional Democrats, like Rep. Ro Khanna, have sought rapprochement with the industry. Former President Trump, who once called Bitcoin a "scam," has now vowed to make America the "crypto capital of the planet," reflecting a significant U-turn.
Gallego’s Pro-Growth Stance
Gallego’s more crypto-friendly rhetoric has been instrumental in securing support from industry groups. Stand with Crypto, an industry advocacy group, gave Gallego an "A" rating, contrasting sharply with the "F" given to Andrea Salinas. Gallego has stated that while he doesn’t personally trade crypto, he believes blockchain technology will play a "major role" in the future, driving economic growth and creating jobs. He emphasizes the need for regulatory clarity to foster innovation while ensuring safety for investors and consumers.
The "Money Cannon" of 2024
Crypto-aligned super PACs, notably Fairshake, spent a combined $291 million in the 2024 election cycle, demonstrating a bipartisan spending strategy. Protect Progress, a PAC with ties to the crypto industry, spent $10 million supporting Gallego’s Senate campaign, focusing on his biography as a combat veteran rather than crypto issues. This significant financial backing underscores the industry’s growing influence in political campaigns.
