Crypto Industry Coalitions: Who Is Allied With Whom in the Washington Policy Wars

When observers refer to “the crypto industry lobby,” they are describing a coalition of interests that agrees on some things — crypto should not be banned, regulatory clarity would be beneficial, the SEC’s enforcement-first approach was harmful — while disagreeing on questions that are just as consequential. Understanding what those disagreements are, which organisations represent which positions, and how coalition negotiations produce specific legislative compromises is essential for reading the bills, regulations, and enforcement actions that result from the Washington policy process.

The Major Industry Organisations

The Blockchain Association is the most aggressive and most crypto-native of the major industry groups. Its membership is dominated by crypto exchanges (Coinbase, Kraken), DeFi protocols (Uniswap Foundation, Protocol Labs), and venture funds with crypto portfolios. Its policy positions reflect the interests of these members: maximum regulatory permissiveness for crypto-native activities, CFTC jurisdiction over crypto commodities rather than SEC jurisdiction over securities, and opposition to rules that would require DeFi protocols to register as broker-dealers or exchanges.

The Chamber of Digital Commerce occupies different terrain: its membership includes traditional financial institutions alongside crypto-native firms, and its positioning is more institutionally conservative. The Chamber is more comfortable with regulatory frameworks that mirror banking regulation, more willing to accept reserve requirements for stablecoins, and more focused on legitimising digital assets within established financial regulatory structures rather than challenging those structures.

Coin Center is the principled outlier: a nonprofit policy research organisation that is not a lobbying group and does not represent commercial interests. Its positions on financial privacy and First Amendment issues sometimes align with industry interests and sometimes conflict with them. On issues like government surveillance of cryptocurrency transactions and the constitutional limits of financial regulation, Coin Center may advocate positions that industry organisations find inconvenient.

Stand With Crypto is the electoral vehicle: focused on voter mobilisation and candidate support rather than lobbying or policy research. Its connection to Coinbase is close but legally distinct, and its engagement with specific policy questions is secondary to its core electoral function.

Fault Line One: Centralised Exchanges vs. DeFi Protocols

The most significant policy fault line within the crypto coalition is between centralised exchanges (CEXs) — businesses that operate like traditional brokerages, holding customer funds, executing trades, and maintaining compliance programmes — and decentralised finance protocols, which are software systems that execute financial functions automatically without a central operator.

Centralised exchanges have an interest in regulatory frameworks that provide clear licensing pathways, require compliance programmes, and establish a level playing field among licensed operators. They are comfortable with Know Your Customer requirements, AML programmes, and regular reporting to regulatory agencies — these are compliance costs they can absorb, and they simultaneously raise barriers for competitors who lack the resources to implement them.

DeFi protocols have entirely different interests. Many DeFi protocols have no identifiable legal operator — they are software running on public blockchains, maintained through on-chain governance by anonymous token holders. Regulatory requirements that assume a licensable entity — an exchange, a broker-dealer, a clearing house — are structurally inapplicable to protocols that have no such entity. The DeFi sector’s regulatory preference is either for an explicit exemption from existing financial regulations or for a new regulatory framework that acknowledges the decentralised structure.

This fault line produced the most contested provisions in the CLARITY Act drafting: how should DeFi protocols be treated? The Blockchain Association’s position — speaking for both CEX members and DeFi protocol members — had to accommodate both interests, which produced deliberately vague language on DeFi that different members could interpret in their preferred direction.

Fault Line Two: Bitcoin Maximalists vs. the Broader Ecosystem

Bitcoin mining companies and Bitcoin-focused funds have different regulatory interests than the broader crypto ecosystem. Bitcoin miners care primarily about energy regulation, environmental disclosure requirements for proof-of-work mining, and the political legitimacy of Bitcoin as a commodity. Their coalition includes Bitcoin-specific organisations and individual Bitcoin advocates who are skeptical of — and sometimes hostile to — the broader altcoin and DeFi ecosystem.

Bitcoin’s commodity status has been relatively uncontested since the CFTC asserted jurisdiction and the SEC’s leadership during multiple administrations acknowledged it. This relatively settled status means Bitcoin maximalists’ primary regulatory concerns are different from those of Ethereum ecosystem participants and DeFi protocol developers who face active securities law questions.

This produces subtle coalition dynamics: on some questions, Bitcoin maximalists’ interests align with Ethereum and DeFi participants (both benefit from clear CFTC jurisdiction and reduced SEC enforcement risk). On other questions, Bitcoin maximalists prefer regulatory approaches that treat Bitcoin as categorically different from other cryptocurrencies — a preference that aligns with their substantive beliefs but also serves their commercial interests.

Fault Line Three: US-Based vs. Offshore Firms

Binance, the world’s largest crypto exchange by trading volume, operates primarily offshore and had minimal US operations through the period of most intense Washington engagement. Its regulatory interests — or its evasion of US regulatory requirements — are different from those of Coinbase, Kraken, and other US-based exchanges that have invested in compliance and operate within US regulatory frameworks.

The US-based exchanges have an interest in regulatory frameworks that require compliance standards their offshore competitors lack. When Coinbase lobbies for clear regulatory frameworks for US-licensed crypto exchanges, part of the strategic logic is that those frameworks create regulatory moats — compliance costs that US-based firms can absorb but that constrain offshore competitors’ ability to serve US customers.

The CFTC and DOJ actions against Binance in 2023 — resulting in Binance’s guilty plea and substantial penalties — partially addressed this competitive asymmetry by imposing compliance requirements on Binance’s US operations. The Blockchain Association and Chamber of Digital Commerce both quietly supported enforcement that distinguished between compliant US-based firms and non-compliant offshore operators.

The TradFi Entry and Coalition Realignment

The most significant recent change in the crypto coalition map is the entry of major traditional financial institutions — BlackRock, JPMorgan, Goldman Sachs, Fidelity — as major participants in digital asset markets, primarily through tokenization and crypto asset management products.

BlackRock’s BUIDL tokenized money market fund, launched in 2024, represents a TradFi institution bringing institutional assets onto blockchain infrastructure. JPMorgan’s tokenized collateral network, Goldman’s digital asset platform, and Fidelity’s crypto custody and investment products represent the same dynamic: established financial institutions building blockchain-based financial products.

These institutions’ regulatory interests in tokenization and digital assets are different from those of crypto-native firms. They want regulatory frameworks that legitimate their products, that advantage licensed institutions over crypto-native competitors, and that create the investor protection structures that their institutional clients require. They are comfortable with bank-like regulation because they are banks and bank-adjacent institutions.

This TradFi entry is creating new alliance structures: on institutional tokenization questions, BlackRock and JPMorgan often align with crypto-native institutional players like Coinbase Institutional and Galaxy Digital, creating a coalition of licensed, compliant institutions pushing for regulatory frameworks that legitimate institutional digital assets. On questions where TradFi’s interests compete with crypto-native firms’ interests — stablecoin issuance, crypto exchange regulation — the alliances break down and competing lobbying ensues.

How Coalition Negotiations Shape Legislation

The GENIUS Act’s final provisions reflect coalition negotiations among all of these interests. The stablecoin reserve requirements reflect both bank lobbying for bank-like standards and crypto industry lobbying against requirements so stringent they would exclude non-bank issuers entirely. The bank charter pathway reflects bank lobbying for preferential treatment and crypto-native stablecoin issuers’ acceptance of regulated pathways in exchange for legitimacy.

The CLARITY Act’s digital asset market structure provisions reflect negotiations among CEX operators who want clear licensing frameworks, DeFi protocol developers who want flexible definitions that accommodate automated protocols, Bitcoin miners who want clear commodity treatment, and venture funds who want portfolio companies’ tokens to be classified as commodities rather than securities.

In each case, the legislative text that emerges is not the preferred outcome of any single lobbying organisation — it is the equilibrium produced by competing coalition pressures operating through the legislative process. Understanding the coalition map is understanding why specific provisions read the way they do.