According to Eli Cohen, Chief Legal Officer at Centrifuge, the crypto industry should pay close attention to the recent New York City mayoral election, where Democratic Socialist Zohran Mamdani came out on top.
His message is simple: the crypto industry needs Democrats too.
A Political Wake-Up Call for Crypto
Cohen says the latest elections show one thing very clearly — crypto can’t survive on one side of the political aisle.
Recent results in states like New York, New Jersey, and Virginia suggest that Democrats are gaining ground, and progressives are feeling more confident than ever. For an industry that has leaned Republican for years, that’s a reality check.
“Historically, crypto companies and lobbyists have worked mostly with Republicans,” Cohen said. “But if we want long-term stability — if we want laws that last beyond one administration — we need both sides on board.”
He warned that if the industry doesn’t build relationships with Democrats, a future Democratic administration could undo everything that’s been built so far.
Government Shutdown? Not a Big Deal for Crypto
When asked whether the ongoing government shutdown had affected crypto regulation, Cohen said not really.
“The shutdown hasn’t slowed much down,” he explained. “The Senate is still moving, and that’s where the real action is.”
The House already passed its version of the market structure bill — officially called the Financial Innovation and Technology for the 21st Century Act, also known as the Clarity Act. The Senate now has the bill, and all eyes are on them.
The challenge? Crypto needs 60 votes in the Senate, and that means bipartisan compromise. Without Democratic support, nothing gets passed.
“The math is what it is,” Cohen said. “Without working together, the industry gets stuck. The only way forward is through cooperation.”
Democratic Draft Sparks Controversy
Cohen also talked about a Democratic draft proposal that leaked recently — something that stirred a lot of anger in the industry.
The draft reportedly included insider trading rules for crypto markets that would also cover members of the executive and legislative branches. Democrats argued this was needed after reports that members of the Trump family made money from crypto.
The problem? Republicans say that if those rules stay in the bill, Trump won’t sign it.
“It’s not that people oppose insider trading rules,” Cohen said. “It’s about political reality. Including those provisions could make the bill impossible to pass.”
What the Elections Really Mean
When asked about the rise of progressives like Zohran Mamdani, Cohen didn’t see it as a national shift to the left.
“Yes, Mamdani’s win in New York got attention,” he said, “but we’re seeing moderate Democrats like those in New Jersey and Virginia winning big too. The overall signal is that the Democratic Party is holding steady in the center.”
Building a Bipartisan Path
So what would a bipartisan approach to crypto regulation actually look like?
Cohen says there’s definitely room for alignment. Democrats like Senator Elizabeth Warren focus on fraud prevention and investor protection — and those are fair goals. Republicans want innovation and freedom from overregulation.
“The real disagreement is about who should regulate crypto,” Cohen explained. “Democrats like agencies such as the Consumer Financial Protection Bureau (CFPB), while Republicans prefer the SEC or CFTC. But with real negotiation, that gap can be bridged.”
Retail Investors: Freedom Until There’s a Rug Pull
Cohen pointed out one of crypto’s biggest contradictions.
“Most retail investors want freedom — no KYC, no oversight, no friction,” he said. “But when something goes wrong — when there’s a rug pull or a scam — the first question is, ‘Where were the regulators?’”
He believes that investor protection and freedom can coexist, but finding that balance is tough.
The Gensler Era: A Lesson Learned
Cohen didn’t hold back on his criticism of former SEC Chair Gary Gensler.
“The Gensler approach was a disaster,” he said. “Instead of offering guidance, the SEC tried to crush the industry. You can’t ban crypto — that’s not how this works.”
Cohen said Gensler’s tactics destroyed trust between regulators and the industry. But he’s hopeful that Washington has learned its lesson.
“The bipartisan talks we’re seeing now — like in the Clarity Act — are a big improvement,” he said. “It’s not Gensler’s approach, and that’s a good thing.”
What’s Still Missing?
Cohen said two big gaps remain in U.S. crypto regulation: stablecoin rules and market structure clarity.
The so-called Genius Act — aimed at stablecoins — technically passed, but it’s still not usable. There’s no real licensing framework for stablecoin issuers yet.
“People are still debating whether stablecoins should be allowed to earn yield,” Cohen explained. “Banks are lobbying hard to stop it. If they win, regulated stablecoins will fail. We’ll end up like Europe — where regulated coins barely get used, and everyone sticks with USDT or DAI.”
As for the market structure bill, Cohen says it’s even more important.
“One line in that bill could change everything,” he said. “It would define which tokens are not securities. That would finally give the industry legal clarity — and stop future administrations from rolling things back.”
Investor Protection Without Securities Rules
Some Democrats, especially Elizabeth Warren, still want disclosure requirements for major tokens — even if they’re not classified as securities.
But Cohen says that’s easier said than done.
“In DeFi, who’s supposed to make those disclosures?” he asked. “The Ethereum Foundation? They don’t control everything on the network. In Bitcoin’s case, there’s literally no central entity to hold accountable.”
That, he said, is the core challenge of decentralization — no one is in charge, which makes traditional rules hard to apply.
Transparency vs. Risk
Cohen admits that blockchain offers a level of transparency, but it doesn’t solve everything.
“On-chain data is open, yes,” he said, “but there’s still off-chain info, insider trading, and manipulation. If you want a permissionless market, you have to accept that risk.”
He believes people should have freedom of choice — trade in a fully open market if they want, or use regulated platforms for safety. “But we shouldn’t try to force traditional systems onto decentralized ones,” he said.
The Legal Red Lines
When it comes to legal risks, Cohen is very clear: sanctions compliance is non-negotiable.
“At Centrifuge, everything we do is permissioned and follows securities laws,” he said. “But the biggest red line for any lawyer in this space is sanctions. If you move stablecoins in or out without checking for sanctions compliance — that’s a hard no. That’s real trouble.”
The Bottom Line
Eli Cohen’s message to the crypto industry is simple but urgent:
If crypto wants to survive and thrive in the U.S., it can’t be a one-party game.
Bipartisanship isn’t just smart politics — it’s the only path to regulatory stability, market clarity, and long-term growth.
