Novogratz: A firestorm in Washington is behind Democrats’ sudden crypto shift

Novogratz: A firestorm in Washington is behind Democrats’ sudden crypto shift
MarketsRegulation
Galaxy Digital Mike Novogratz says Democrats have had enough of Elizabeth Warren's anti-crypto crusade. Credit: Suzanne Cordeiro/Shutterstock
  • The SEC is poised to approve the Ethereum ETFs after all.
  • The change of heart is likely due to a seismic shift in Washington, Galaxy's Novogratz says.
  • Democrats were likely afraid of being seen as anti-crypto ahead of the US elections.

A “widespread shift amongst Democrats” in Washington in the last 24 hours just upended the Ethereum ETF game completely, according to Galaxy Digital CEO Mike Novogratz.

“It feels like someone at the Biden White House made a call and said ‘Guys, we can’t be the party against crypto anymore,’” Novogratz told CNBC.

After months of silence, the Securities and Exchange Commission is frantically communicating with prospective ETF issuers — which include Galaxy — in order to get the products ready before a crucial deadline on May 23, CoinDesk reported.

Ethereum has soared 20% since rumours of the about-face first surfaced through Bloomberg Intelligence’s ETF analysts Eric Balchunas and James Seyffart.

If the SEC’s change of heart was politically motivated, “that’s a seismic shift,” Novogratz said. “If that’s what actually happened, prices are going to be much higher than here.”

Firestorm

Prominent members of the Democratic party — particularly Massachusetts Senator Elizabeth Warren — have long been critical of crypto, while Republicans have generally been more amenable to the industry.

The difference in approach became particularly salient in the last couple of weeks. Former President Donald Trump, historically crypto agnostic, recently said he will support the industry if re-elected.

President Joe Biden, meanwhile, threatened to veto a motion to repeal SAB 121, a controversial crypto accounting rule, despite bi-partisan support for the repeal.

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The contrast between the two politicians — less than six months before they face off in the US presidential election — “set off a firestorm,” Novogratz said.

“It almost became a purity test — Republican good for crypto, Democrat bad for crypto. And the Democratic regime woke up and said ‘This is crazy,’” he said.

With Trump leading Biden in the polls, and crypto super PACs raising over $150 million to push forward pro-industry candidates, sometimes in vulnerable swing states, Democrats’ aversion against crypto made less and less sense, Novogratz said.

“It has been really Elizabeth Warren and a small group of people who’ve held the Democrats hostage on this,” he said, adding that Democratic Senate leader Chuck Schumer, who voted to repeal SAB 121, likely told Warren “enough, this is becoming dumb.”

“There is no reason to make crypto, which is a technology, a political issue,” Novogratz added. “Hopefully that message is starting to resonate.”

Tom Carreras is a markets correspondent for DL News. Got a tip? Reach out at tcarreras@dlnews.com