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The White House’s top crypto critic departed. What does that mean for a stablecoin bill?

Olivier Douliery—Getty Images

Proof of State is the Wednesday edition of Fortune Crypto where Leo Schwartz delivers insider insights on policy and regulation.

Led by the newly shorn Sam Bankman-Fried, the crypto circus has rolled into the Southern District of New York, occupying every crypto reporter on this side of the Mississippi, who will find themselves trapped in the electronics-free courthouse for hours every day.

While I will soon become part of that unplugged cohort, it’s crucial to remember that there are other stories in the world of digital assets. That includes everyone’s favorite gridlock in Washington, D.C., where crypto legislation remains a frustrating carrot just out of reach.

Everyone is rightly transfixed by the chaos in the House of Representatives, where crypto advocate and Financial Services Committee chair Patrick McHenry (R-N.C.) temporarily took over after Freedom Caucus members and Democrats teamed up to oust Kevin McCarthy. While McHenry likely won’t hold on to the cursed Speaker position, one name being bandied about is another blockchain booster—fellow Financial Services Committee member and Majority Whip Tom Emmer (R-Minn.).

The rising profile of McHenry and Emmer is likely bullish for crypto bills, as both work to persuade Democrats on their committee—and their counterparts over in the Senate—to horse-trade over stablecoin and market structure legislation. Flying under the radar, however, has been an even more positive signal for the future of digital assets regulation: National Economic Council Deputy Director Bharat Ramamurti left the White House.

Ramamurti is the type of figure who wields massive influence in D.C. but is largely unknown outside the concentric circles of Hill staffers, lobbyists, and advocacy groups who shape U.S. policy. A member of Biden’s transition team and original member of his National Economic Council, Ramamurti came up as a top aide to Sen. Elizabeth Warren (D-Mass.), joining the Biden administration as one of the progressive wing’s emissaries. He assumed a broad portfolio in the administration, leading pushes on core initiatives like student debt relief.

Mirroring his former boss from Massachusetts, Ramamurti also became one of the administration‘s key voices against crypto. The near passage of stablecoin legislation in the House Financial Services Committee in July has become the stuff of legends in crypto circles: McHenry and ranking member Maxine Waters (D-Calif.) reportedly had a deal before the White House intervened to block it.

The prevailing wisdom is that the call came from Lael Brainard, the new director of the National Economic Council and former member of the Federal Reserve Board of Governors. Ramamurti, apparently, was on vacation, but people familiar with the situation told me that McHenry blamed him for gumming up the process.

Ramamurti left the White House in mid-September, signaling a new chapter for the National Economic Council. While Brainard remains a clear crypto skeptic, she seems more open to discussions than Ramamurti. “I one hundred percent believe that there’s more of a path forward than there was before,” a former House staffer familiar with the negotiations told me. “It opens the door for this to be a more methodical, realistic conversation.”

The world of crypto policy, of course, is celebrating the news. As one policy head at a crypto firm put it to me, “Why did a few mid-level sfaffers get to decide that the White House needed to destroy crypto?” I reached out to Ramamurti but didn’t hear back.

The open question will be who takes over Ramamurti’s position at the NEC, and whether Brainard decides to play ball with the House Financial Services Committee. And despite stablecoins being the ostensible low-hanging fruit in crypto legislation, it may not even be McHenry’s focus, with market structure still a priority for the temporary Speaker as he negotiates with the Senate Banking Committee.

Maybe the crypto circus is still in D.C. after all.

Leo Schwartz

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