Harris crypto pitch keeps divided Democrats at bay

Kamala Harris is scrambling Democrats’ long-running family feud over cryptocurrency as she rallies the party behind a “pragmatic” vision of the economy.

The vice president is signaling that her administration would be more supportive of the crypto industry than President Joe Biden’s, whose regulators have taken a hard line with digital asset firms for pushing the limits of traditional financial safeguards. In Congress, key Democrats including Senate Majority Leader Chuck Schumer and Sen. Elizabeth Warren have been taking conflicting positions on whether the nascent industry is a valuable innovation or a magnet for scams.

Harris, for now, is walking a fine line that has yet to trigger a public outcry from her party’s crypto lovers or haters. She’s vowing to “encourage” technologies like digital assets while protecting consumers and investors, and her campaign is conducting outreach to the industry. Harris appears to be keeping a backlash from either side at bay as she seeks to build a broad base of support, and as a $160 million crypto industry super PAC network looms over races that will be critical to determining who controls Washington. Inside the crypto world, the maneuvering by Harris has forced advocates to rethink how they grade whether a policymaker is truly an ally or not.

“There’s nothing controversial in there,” Rep. Sean Casten (D-Ill.), a leading crypto skeptic, said of Harris’s new position on the industry.

Harris’s approach to crypto illustrates the balancing act her campaign is attempting to pull off on some economic issues. She has leaned on platitudes in certain areas, allowing her to avoid specific positions that could alienate various factions within her party. But the differing interpretations of her vision exemplify the policy clashes that await her on the other side of the election, when she may be forced to stake out more concrete directives.

"This is a political season. The crypto people are flashing huge amounts of money," said Rep. Brad Sherman , a California Democrat who is one of Capitol Hill's top crypto critics. "We know they're playing big. If that means they get a meeting, they get a meeting. They get three meetings, they get three meetings. But ultimately I think that Harris will stand firm."

Democrats have been sharply divided over crypto issues, making it a thorny policy area for Harris to wade into. An emerging coalition that includes party leaders like Schumer has embraced the crypto industry and championed its policy goals alongside Republicans, but some progressives remain staunch skeptics who warn of risks to consumers.

Crypto supporters have lauded her comments as a break from Biden. Rep. Wiley Nickel of North Carolina, a leading pro-crypto Democrat, said they represent “the crypto reset that we’ve been suggesting.”

“As soon as she became our nominee, we worked with her team right away to encourage her to take a look at this issue as a place to differentiate her campaign from the current administration,” he said.

Harris’s campaign has been meeting with figures in the crypto industry, according to Nickel and others involved in the discussions. Former Treasury official Brian Nelson is “one of the people spearheading this issue” for the campaign, Nickel said.

When asked about her crypto stance this week, billionaire investor Mark Cuban, a high-profile Harris surrogate and crypto advocate, told reporters that people in her campaign are “very clear” in conversations with him “that they are not fans of regulation through litigation,” echoing a crypto industry complaint about federal regulators.

Industry leaders have had mixed reactions to Harris’s comments, as former President Donald Trump pledges a sweeping series of crypto-friendly policies .

The advocacy group Stand With Crypto, which was launched by the digital asset exchange Coinbase and gives politicians letter grades for their crypto stances, rated Harris with a “B” this week before reversing course and downgrading her to “N/A." The move was illustrative of the industry's struggle to interpret her position and respond.

Rep. Ro Khanna , a pro-crypto California Democrat who has helped facilitate meetings between the White House and industry leaders, said it is “encouraging that she’s going to have a place for digital assets and understands their value.”

Embracing crypto could help unlock financial support from executives in Silicon Valley and the digital asset world who have put more than $160 million into a super PAC network aimed at electing crypto allies to Congress. A spokesperson for Crypto4Harris — a pro-Harris crypto group that launched after she became the nominee — said it is pitching Harris’s campaign on an in-person fundraiser for crypto executives following her recent encouraging comments.

A crypto-friendly stance may be a way to help Harris win over young men . Polls show that crypto ownership is higher among young men and Black and Hispanic voters, though it is unclear whether they are likely to vote based on digital asset issues.

If Harris wins the Oval Office, supporting the digital asset industry could set up a major policy clash with the left. So far, the rift hasn't opened in public.

Asked about Harris’ comments this week, Warren said in an interview she doesn’t “have any problem with people who want to buy and sell crypto.”

“My concern is law enforcement,” Warren said. “Kamala Harris’s background is a law enforcement officer. I haven’t heard the defense for why crypto should be a welcoming home for terrorists and drug dealers.”

Sherman, who like Warren has criticized the industry for inviting financial crime, said he expects Harris to keep Securities and Exchange Commission Chair Gary Gensler, who is the crypto world's top foe in Washington because of the enforcement crackdown he has pursued.

“We want well-regulated industries. That’s fine," Casten said. "There’s nothing problematic about saying that.”

Eleanor Mueller contributed to this report.