Galaxy Digital Founder and CEO Mike Novogratz: Crypto Bill Stalled Over Presidential Profit Issues
Mike Novogratz, founder and CEO of crypto asset management firm Galaxy Digital, commented in detail on the failure of the CLARITY Act, stating that "the government feels like it has failed". After 18 months of negotiations involving the crypto industry, Democrats, and Republicans, they ultimately fell short at the "five-yard line".
Novogratz pointed out that all contentious points had been compromised through hard negotiations except for one issue; both parties chose to stick to their guns on the "Ethics" clause, believing their positions were more important than the long-term interests of the entire industry and the opportunity for the U.S. to lead in this sector.
He explained that Republicans were concerned about setting real limits on the president's ability to profit from digital assets, while Democrats chose to use this specific industry as a battleground for their "anti-corruption war"—fearing that if they appeared too lenient on this issue, they would be interpreted as being "soft" on the president.
Novogratz mentioned that there had previously been a viable bipartisan proposal, but it was ultimately "hijacked" in political maneuvering. He expressed disappointment that neither side could overcome this divide and acknowledged that with only seven weeks until the midterm elections, this factor dominated both parties' decision-making.
He also made an interesting judgment—he does not believe that cryptocurrency or this bill will be among the top ten issues in this election; he noted that unlike in 2024, this year's election focus will be on war, inflation, cost of living, artificial intelligence, and immigration, as well as which party can provide better answers on these issues.
Regarding the future direction, Novogratz expressed confidence that the SEC and CFTC will continue to push for "rules for the road" and hopes Congress will find a way to codify these rules legislatively, thereby giving the market longer-term confidence in how the U.S. treats digital assets. He also humorously noted that former Senate leader Mitch McConnell returning in a wheelchair after a 90-day absence is a somewhat absurd symbol of how "dysfunctional" Congress is. He concluded by stating that the industry will "go back to work as usual and continue building".
From a market mechanism perspective, Novogratz's statement explicitly points to the crux of the CLARITY Act negotiations' breakdown—the focus on "limits on the president's ability to profit from digital assets"—which directly echoes previous Bloomberg reports that "Trump's personal trading volume has exceeded that of both houses of Congress combined". This indicates that the president's own crypto and asset trading activities have objectively become a specific political variable affecting the entire industry's regulatory legislative process, rather than just an abstract partisan divide. This means that as long as the president's asset trading activities remain under high public and media scrutiny, the disagreement surrounding the "presidential conflict of interest clause" is likely to continue being the most difficult issue to resolve in any future digital asset legislative negotiations. Novogratz's mention of the "SEC and CFTC continuing to push for rule-making" also reaffirms the industry consensus path previously proposed by Coinbase executives Shirzad and Armstrong to "shift towards existing regulatory agency authority". Who benefits: Leading institutions that can adapt to a relatively loose environment of "no congressional legislative endorsement, relying solely on regulatory agency administrative rules" will face limited direct impact from this legislative failure; who is under pressure: Industry participants who truly need clear constraints on the presidential conflict of interest clause to gain broader public and institutional trust will find their demands difficult to meet through legislative means in the foreseeable future.
ABAB AI Insight
Mike Novogratz is a seasoned hedge fund manager from Wall Street, having worked at Goldman Sachs and Fortress Investment Group. He founded Galaxy Digital, a crypto asset management and investment banking firm, in 2018, and is one of the few leading figures in the crypto industry with both traditional Wall Street experience and crypto-native business expertise. He is known for his candid public commentary on industry and policy issues, and his detailed disclosure of the CLARITY Act negotiation's ins and outs continues his trend of openly discussing sensitive political topics in the industry.
From the perspective of political resource competition, Novogratz's statement reveals the specific point of contention that was most concentrated in resource investment during the 18 months of negotiations and ultimately could not be resolved—the conflict between the president's personal interests and the overall regulatory framework for the industry. This means that previous lobbying efforts by the industry have largely reached compromises on other technical and commercial terms, but on politically sensitive clauses involving the president's personal interests, any concessions by either side would carry corresponding political risks, making this issue effectively beyond the scope of simple industry lobbying.
Historical precedents of bipartisan legislation breaking down at the last minute due to individual political figures' conflicts of interest have occurred in other legislative battles in U.S. Congress involving the president or senior officials' personal interests, such as attempts to disclose presidential tax records or review presidential asset conflicts of interest, which often struggle to form genuine bipartisan consensus due to touching on the current president's specific interests. The current stage of digital asset regulatory legislation confirms this pattern—technical and commercial differences can be resolved through professional negotiations, but clauses involving specific political figures' interests are often reignited by election cycles and partisan tensions.
This essentially represents a structural deadlock caused by the intertwining of industry legislation and personalized political conflicts in the "regulatory change" process: when legislation that should focus on the overall framework of the industry is specifically embedded with clauses related to a current political figure's personal interests, the negotiation logic shifts from "compromise on professional technical differences" to "confrontation with political symbolic significance", where any concession by either side would be interpreted as a stance on a specific political figure rather than a simple policy judgment. Mechanically, this also explains why Novogratz believes that the SEC and CFTC's administrative rule path is more likely to be implemented first—administrative agencies' rule-making procedures can be more confined to technical and industry categories, avoiding direct contact with the highly politicized sensitive clauses of the president's personal interests, thus circumventing the structural deadlock that is difficult to resolve at the congressional level.
ABAB News · Cognitive Laws
- Technical differences can be negotiated, but political symbolic significance cannot be resolved.
- One person's interests can block an entire industry.
- Inescapable clauses are ultimately handed over to administrative agencies.