Organized by: BitpushNews Tracy

The cryptocurrency industry is experiencing a boom in Washington. Lawsuits are dissipating, a group of industry-supported lawmakers have entered Congress, and the White House has welcomed a high-ranking official specifically responsible for digital asset affairs. However, the cryptocurrency industry may have become its own biggest enemy. Due to strategic, commercial, and ideological differences, intense infighting is occurring within the industry.

Nic Carter, a partner at Castle Island Ventures, bluntly describes the crypto community: "They hate each other." But he adds, "However, they hate the outside world even more."

After years of negotiation, hopes for crypto-friendly legislation passing through Congress have increased significantly, with many leading companies pushing for a regulatory framework that better aligns with the characteristics of digital assets. Logically, under this optimistic sentiment, pushing for legislation should be a smooth process.

But now, I begin to doubt which bill can truly be implemented.

Even the least controversial stablecoin bill—regarding the regulatory framework for privately issued digital currencies pegged to the dollar—has now been caught up in internal disputes within the crypto industry.

Paolo Ardoino, leading Tether, the world's largest stablecoin issuer, stated on X that this legislative draft is a means for competitors to "strangle Tether." Former senior diplomat of the Trump administration, Richard Grenell, seems to agree, writing in a post: "Certain crypto companies are manipulating the system again, trying to eliminate competition."

Chris Pavlovski, CEO of the video streaming platform Rumble (which has a partnership with Tether), also posted on X, expressing his suspicion that this "toxic stablecoin legislation" is undermining market confidence in the crypto industry.

"Who is pushing this garbage?" he added.

This was supposed to be the easiest bill to pass.

In fact, despite the growing influence of the crypto industry, it remains a highly fragmented sector, with complex internal interests that are even harder to coordinate than traditional finance. Beyond basic market competition, there are significant disagreements within the crypto industry regarding the future development direction of digital assets and related technological paths.

For Washington, "supporting crypto" is far from as simple as it seems.

But for the crypto industry, this is more about survival. For a long time, the industry has been labeled as a paradise for speculators and money launderers. Now, it has reached a critical moment to redefine itself and shape its political influence—provided that industry leaders are willing to push for more than just higher coin prices.

Currently, the Trump administration seems to be exploring how to engage with the crypto industry. According to insiders, the White House's cryptocurrency advisory committee has not yet been formally established, and the current plan is to first hold a series of summit discussions with the industry.

The first summit is scheduled for this Friday.

When I mentioned the internal divisions within the crypto industry to Coinbase's Chief Legal Officer Paul Grewal, he admitted, "This is an all-encompassing field."

"There are many different people in the industry, and we don't always completely agree." he said.

In fact, the term "cryptocurrency" itself implies a contradiction.

Digital assets like Bitcoin were initially conceived as currency, and their application in the payment sector remains a core argument supporting their long-term value. However, especially in the United States, the mainstream perception of cryptocurrencies leans more towards investment tools, with the core market goal often being to drive up prices.

But if the value of a currency fluctuates wildly, it becomes difficult to use it widely for actual payments. In other words, cryptocurrencies want to be a serious monetary system while also being a gold mine for speculative markets, which are hard to reconcile. Currently, the vast majority of crypto payments are made through stablecoins, which are essentially a complement to government fiat currencies rather than true competitors.

Another layer of contradiction is that Bitcoin's core selling point is decentralization, which eliminates reliance on traditional financial institutions like banks for transactions. However, the development of the crypto industry relies on centralized platforms, such as exchanges like Coinbase and Binance, which serve as the core infrastructure for market trading. This creates a natural divide between the ideal of decentralization and the reality of centralization.

Moreover, the legitimacy and recognition of different crypto assets are also focal points of internal disputes within the industry. Particularly this week, Trump's post supporting the establishment of a "strategic crypto reserve," hoping to stockpile certain specific tokens, has sparked a new round of discussions.

The crypto industry has long walked the line between innovation and fraud, and regulators need to clarify what kind of industry they want to support.

Washington's long-term focus on the crypto industry mainly centers on consumer protection and preventing illegal financial activities. At the same time, policymakers also hope to promote the development of underlying technologies to further enhance financial efficiency and foster new innovations.

However, it cannot be ignored that government policy choices will directly impact the future development of the crypto industry. Therefore, decision-makers need to act cautiously when formulating regulatory frameworks to avoid unintended consequences.

This also brings the focus to stablecoins, as any related legislation will simultaneously affect the crypto market and the global status of the dollar.

Currently, the bills proposed in both houses of the U.S. Congress aim to strengthen regulation of stablecoin issuers, requiring these tokens to be backed by high-security assets to ensure they can be redeemed for dollars at face value at any time. The core goal of this measure is to prevent digital assets that should be pegged to the dollar from facing credit risks.

"The growth in the use of stablecoins is partly because other countries want to store dollar assets through them," said Nellie Liang, former Deputy Assistant Secretary for Domestic Finance at the Biden administration. "Therefore, we need to establish a regulatory framework that can give these stablecoins credibility."

The current legislative direction may benefit U.S.-based stablecoin issuers like Circle, but it may also restrict Tether's operations in the U.S. market—this is one of the core controversies behind the bill.

Tether has a close relationship with Cantor Fitzgerald, where U.S. Commerce Secretary Howard Lutnick once worked, but has long faced scrutiny in the U.S., with regulators expressing doubts about the transparency and compliance of its reserve assets. In response, Tether has recently begun to enhance transparency and announced on Monday that it is advancing a comprehensive financial audit to address market concerns about its reserves and stability.

However, Tether may still struggle to fit into the upcoming legislative framework. Its reserve assets include not only ultra-safe cash and U.S. Treasury bonds but also a broader range of asset classes. Additionally, if Tether is to accept U.S. regulation, it must establish a physical presence in the U.S., which could be a significant obstacle for a company headquartered in El Salvador.

According to a report by TRM Labs, Tether was involved in $19.3 billion of illegal financial transactions in 2023, far exceeding its competitors.

Dante Disparte, Circle's head of public policy, did not directly comment on Tether in an interview but hinted at the internal tensions within the industry, describing Circle as "a fully reserved, highly transparent stablecoin operator." This seems to sharply contrast with Tether.

He also stated, "The 'space race' for digital currencies will be won by those digital dollars that comply with U.S. law, and currently, not all stablecoins meet this requirement."

George Selgin, an economist at the libertarian think tank Cato Institute, compared stablecoins lacking clear regulation to underground distilling during Prohibition—unknown ingredients, unpredictable risks, and full of uncertainty.

But for the entire crypto industry, the real question is: what kind of stablecoin can be considered a "quality product"? Clearly, there is still no consensus within the industry.

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