Invest1 publisher3 min readPublished
Crypto's campaign money buys less in this Senate than it did in spring 2024
Ahead of Tuesday's cloture vote the White House is answering bank lobbyists with a scenario tool, while Fairshake's $30 million to Democrats is already spent and Republicans including John Cornyn weigh a no.
The Investor · Invest desk
What happened
- Banking groups said Monday that recent changes to the bill still did not go far enough to make them comfortable with its stablecoin provisions.
- Crypto-friendly Democrats are objecting on ethics, with Adam Schiff arguing the revised provisions would not apply in their current form to the first family.
- A person close to Fairshake told Semafor the PAC's plans for this cycle are not finalized or shared, and that it has already spent more than $30 million on Democratic candidates.
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Why it matters
- constraint Sixty votes are needed while Republicans drift toward the banks and crypto-friendly Democrats withhold over ethics, so a concession that holds one flank costs votes on the other.
- contradiction The administration is telling senators the deposit-flight risk is absent from the data and that the bill protects banks if it materializes. A no vote can be justified on either half of that pitch.
- exposure House Democrats in purple districts who voted for the bill earlier this Congress are the ones left exposed if the industry's super PAC network skips their races.
- decision Democrats who want tougher ethics text have to weigh that against Kim's position that no real rules for digital assets exist today, and a failed cloture vote leaves that status quo in place.
Fairshake has already spent more than $30 million on Democratic candidates this cycle, and a person close to the PAC told Semafor that its plans for this cycle have not been finalized or shared [22]. The industry is holding tens of millions more in campaign cash until the vote is done [17]. The unspent balance is in the same range as what has already gone out to Democrats [24]. A Senate Democratic aide told Semafor that "No one who's in-cycle cares" about the money, and that compared to spring 2024 "it's just not that much of a concern anymore" [19]. Semafor attributes the discount to the short time left before the midterms, the small number of Senate Democrats in competitive races, and progressives treating the money as a political liability [18].
Cloture needs at least 60 senators [9]. Multiple Republicans, Cornyn among them, have indicated they could vote no on the banks' side Tuesday afternoon [6]. Cornyn told Semafor Monday night that he was not sure the latest text addresses the issues he is concerned about, which are the issues community bankers are concerned about [7]. On the other flank, Sen. Adam Schiff said the revised ethics provisions would "cover federal employees other than the president, functionally" and "not apply, in the current form, to the first family" [13]. Sen. Mark Warner said "I don't think the ethics provision is near enough" [14]. Senate Majority Leader John Thune gave Semafor his own count this way: "A week ago I would have said that didn't look good, but we'll see if that's changed" [16].
The closing argument is a website. On Tuesday, officials plan to launch a tool that lets users "set the parameters, run the scenarios, and see for themselves" why the Council of Economic Advisers concluded "there is no meaningful relationship between stablecoin growth and community bank deposit flight," CEA Chair Chris Phelan told Semafor [2] [4] [3]. The site will also carry an FAQ on the earlier report plus responses to its critics [10]. Patrick Witt is executive director of the president's Council of Advisers for Digital Assets. He said "the data simply does not support the deposit flight narrative that DC bank lobbyists are pushing on stablecoin rewards" [11]. He also said the Clarity Act "includes real safeguards to protect community banks if the deposit flight scenario ever did materialize" but "banks get none of those protections if the bill fails" [12]. Both arguments are being made at once: the risk is not in the data, and the bill covers the risk if it shows up [11] [12]. What would trigger those safeguards isn't in Semafor's account.
For a community bank, the worth of contingent protection sits in the trigger language. I'd expect that text to move more Republican votes on Tuesday than a scenario tool published the same morning. Cornyn said he was "looking forward to having a conversation and seeing where the votes are" [8]. That is the language of a senator still negotiating. The marginal vote may also not have read the thing yet. Sen. Jon Ossoff, the only incumbent in his caucus in a tough race, was still undecided Monday night. He told Semafor "I haven't read it yet" and "I read things before I vote" [23].
What to watch
- Whether the CEA's FAQ or the bill text defines what triggers the community-bank safeguards Witt described.
- Whether Cornyn's promised conversation ends in a yes, and how many other Republicans stay with the banks.
- Whether Fairshake commits money to the purple-district House Democrats who backed the bill earlier this Congress.