Tensions rise as Senate Democrats, crypto executives meet on sweeping digital assets bill

Talks between Senate Democrats and cryptocurrency industry leaders over a bill to regulate digital assets at large got intense on Wednesday. 

Crypto executives met with a group of Senate Democrats in Washington D.C. to discuss a bill that aims to regulate crypto market structure. Senate Republicans are holding their own meeting to discuss the topic in the afternoon. 

Meetings on Wednesday come after a proposal from Senate Democrats was leaked earlier this month. The six-page proposal focused on decentralized finance and would designate the Treasury Department and other financial regulators to define when an entity or person "exercises control or sufficient influence." This draft drew heavy criticism from many in the crypto industry who said it would essentially ban DeFi. 

During the Democrat meeting on Wednesday, a source familiar said the meeting began with 30 minutes of introductions from industry leaders, who they say didn't offer insight beyond top-level insights from what they wanted to see in the bill. 

“I’m really f*cking pissed about what happened last week," one Democratic senator said, according to the source. "Don’t be an arm of the Republican Party. They used you all and your megaphones to fuck us.” 

The source familiar also said trust had been broken, but said that Democrats want to get a bill done. They emphasized that lawmakers were not slow walking the legislative process but noted Republicans themselves have current issues with how the bill stands. Democrats also seemingly warned that if crypto advocates tried to derail negotiations as they did a few weeks ago, it would set the bill's progress back, according to the source.

“If something happens similar to what happened last week, it’s gonna set us back again," one Democratic senator allegedly said.

The Senate is working on its own legislation to regulate crypto market structure after the House passed its version this summer. The Senate Banking Committee, led by Republicans, has a draft that looks to allocate jurisdiction between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission, as well as create a new term for "ancillary assets" to clarify which cryptocurrencies are not securities. Republicans need Democratic support to pass a bill. 

Notably, Sen. Elizabeth Warren, who is the top Democrat of the Senate Banking Committee, was not at the meeting, according to a source familiar. Senate Minority Leader Chuck Schumer attended the meeting. 

Several crypto executives were at the Democratic meeting, including Solana Policy Institute President Kristin Smith, Galaxy CEO Mike Novogratz, Coinbase CEO Brian Armstrong, Jito Labs Chief Legal Officer Rebecca Rettig, a16z Head of Policy Miles Jennings, Circle Chief Strategy Officer Dante Disparte, among others. 

Smith called the Democrat-led meeting the "necessary step at this time" and said that Democrats want to get a bill done.

"My takeaway was that there's a group of Democratic senators who really do want to get this done and they've been really held up on maybe process to date," Smith said in an interview with The Block. "The good news is that there is a lot of interest there in going deeper and working to get this right."

Democrats came to the meeting with concerns about illicit finance as well as the Trump family's involvement in crypto, she said. 

"Overall, there was a little bit of frustration from some of the members about the way the process has played out in the past, but I think everyone left with a forward-looking mindset that they want to continue to exchange ideas, exchange information and get the process of crafting legislation moving again," Smith said.

The GOP meeting

The Republican-led meeting began at 2 p.m. ET.

A spokesperson for the Senate Banking Committee said the meeting was productive. The panel's Chair Tim Scott urged his Democratic colleagues to give their feedback on the bill, a spokesperson said in a statement. 

"Banking Committee Democrats must commit to a markup date so the digital asset industry can finally have the regulatory clarity it needs to compete, thrive, and innovate here in America – not just for the digital asset community, but for the American people who deserve greater access, opportunity, and democratization in our financial system," the spokesperson said. 

Smith said the Scott-led meeting was more casual. 

"It was more of a relaxed conversation," Smith said. "Similar to the Democrats, I think the Republicans are really eager to do this."

Lawmakers looking to pass a crypto market structure bill may bump up timing-wise with midterms in November 2026, as lawmakers often turn to focusing on campaigning. When asked about the midterm season, Smith said there were many differences that need to be overcome. 

"If this does end up slipping, it's not the end of the world," Smith said. "We've got an SEC right now that is doing a lot of work with Project Crypto and is going to answer some of these questions." 

Updated at 8:25 p.m. UTC on Oct. 22 to include details throughout