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Crypto law a mainstream issue in Washington - Coinbase CEO

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Supreme Court's overturn of 'Chevron deference' may help

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Regulatory scene changing as political dynamics shift -

analysts

By Niket Nishant and Manya Saini

Aug 2 (Reuters) - The next U.S. administration will be

"constructive" on crypto regardless of which party wins,

Coinbase CEO Brian Armstrong said late on Thursday,

underscoring the industry's growing political influence ahead of

the November election.

The highly volatile crypto sector is seen as a risky fringe

industry and has drawn intense scrutiny from the U.S. Securities

and Exchange Commission, which has accused it of flouting

securities laws.

But support from Wall Street institutions and corporate

titans like Elon Musk and the approval of U.S. exchange-traded

crypto funds have boosted its mainstream appeal. The Republican

and Democratic parties have also acknowledged the industry's

growing clout in recent weeks.

"(Crypto) advocates are making their voices heard as an

important voting bloc. Politicians on both sides of the aisle

have taken notice, and there is growing momentum to pass

comprehensive crypto legislation," Armstrong told analysts.

The largest U.S. crypto exchange is fighting the SEC in

court after the regulator sued Coinbase last year alleging it

failed to register as an exchange.

Meanwhile, three major pro-crypto super political action

committees - Fairshake, Defend American Jobs and Protect

Progress - that did not exist until this election cycle - have

raised more than $230 million to support friendly candidates.

That campaign is moving the needle for both parties.

Republican presidential candidate Donald Trump vowed to create a

"stockpile" of bitcoin last week. Democratic vice president

Kamala Harris's advisers have also reached out to top crypto

companies to "reset" relations, the Financial Times reported.

"Donald Trump is pro-crypto which theoretically creates a

tailwind for the industry if he wins," Dan Coatsworth,

investment analyst at AJ Bell told Reuters.

"We don't yet know Kamala Harris' position but there are

reports she could take a softer stance... than Joe Biden."

That would be major win for the sector, which for years

warned that the SEC crackdown will push crypto entrepreneurs

overseas.

Mike Colonnese, an analyst at brokerage H.C. Wainwright &

Co, said a regulatory shift "has the potential to bring a new

wave of institutional capital into the space that would've

otherwise been sidelined".

'CHEVRON DEFERENCE'

Coinbase CEO Armstrong lauded a recent Supreme Court

decision that overturned a doctrine called "Chevron deference"

that had called for judges to defer to federal agency

interpretations of laws deemed to be ambiguous.

Widely viewed as a blow to federal agency powers, the ruling

said it is the job of courts, not agencies, to interpret laws.

"We see this case as a sign of Supreme Court skepticism to

agency overreach, which we view as a positive overall for our

industry," said Armstrong, a vocal critic of the SEC.

Coinbase last month added to its board former U.S. Solicitor

General Paul Clement, a lead lawyer on the case which led to the

Chevron ruling.

"Shifts in the U.S. election landscape and the Supreme

Court's overturning of the long-standing Chevron precedent has

changed our view on Coinbase's regulatory risks," analysts at

Citigroup wrote in a note last month.

(Reporting by Niket Nishant and Manya Saini in Bengaluru;

Editing by Michelle Price and Arun Koyyur)