Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. Beat-down crypto advocates have a new spot to gather and vent about Washington regulators: The House Financial Services Committee. Committee Republicans opened their doors Thursday at a hearing that had a clear bent, based on the title alone: “Coincidence or Coordinated? The Administration’s Attack on the Digital Asset Ecosystem.” What emerged was an initial step by Republicans — backed up by testimony from crypto executives and a former Trump administration bank regulator — to make the case that Congress needs to intervene with a new rulebook for the industry as it faces a U.S. crackdown under decades-old regulations. That’s great news for crypto firms that are fed up with the SEC and federal banking agencies. The gathering was an attempt to move beyond the fallout of the FTX collapse, which scrambled the Washington crypto debate by revealing indisputable mismanagement across the industry. The debacle has emboldened crypto skeptics on Capitol Hill and made industry-friendly bills a harder sell. House Republicans are now leveraging the meltdown as a reason to press ahead with comprehensive digital asset legislation — going beyond smaller-scale bills that have been the committee’s focus until now. Rep. French Hill, who chairs the digital assets subcommittee that held the hearing, has tried to make clear in his new position that he holds a degree of skepticism about crypto’s place in the economy. He said Thursday that he’s a strong proponent of “same risks, same activities same rules.” He wants to create “a functional framework that’s tailored to the specific risks of digital assets.” But his questions indicated the Republican path forward. He teed up crypto industry criticism of how the SEC and the federal banking regulators are approaching the space — casting doubt on the “come in and register” pitch by the SEC and building a record for a potential regulatory regime custom-fit for crypto. “We all recognize that inside or outside a regulatory framework we can still have huge financial challenges and criminal issues as well,” he said, citing the dot-com bust and the mortgage crisis. “In my view, you’re better off with that regulatory framework.” Crypto executives love the open-minded approach as they get pummeled elsewhere in Washington (a top Fed official compared crypto investment to tulip mania on Thursday morning). “We’re confident whatever set of standards [House Financial Services Chair Patrick McHenry] may propose are going to reflect not only market realities but the need to protect consumers and keep investors safe,” Coinbase chief legal officer Paul Grewal, who testified Thursday, told MM. “His thought and care and attention are something I have a lot of confidence in.” Happy Friday — Did we miss anything this week? Send tips to zwarmbrodt@politico.com and ssutton@politico.com.
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