News : Crypto tug-of-war

Wednesday, June 7, 2023

Crypto tug-of-war

Jun 07, 2023

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Message received, Gary. You run the Washington crypto show.

It’s not Congress. House Republicans wanted the spotlight this week to roll out their proposal for overhauling digital asset regulations — one that would rein in the SEC and empower the smaller CFTC. They had a big hearing planned for Tuesday.

But who won the morning and stomped all over those plans?

It was Gary Gensler, President Joe Biden’s SEC chair and top crypto antagonist. He revealed a long-awaited lawsuit against Coinbase, the largest U.S. digital asset exchange, a day after the agency also sued Binance, the largest crypto trading platform in the world. The SEC claims that the companies are operating illegally.

“It is an interesting coincidence,” Rep. French Hill, one of the authors of the new House crypto plan, told me on Monday (in what might be the understatement of the year.)

Gensler’s big moves — carrying just as much political weight as they do policy significance — confirm there’s little that his opponents on Capitol Hill and in industry can do to stop him from trying to clean up what he’s dubbed the “Wild West” of finance. He’s controlling the debate.

It’s probably going to take Congress years to agree to anything big on digital assets, and the SEC’s moves in the near term may rally Democrats around the agency. So, for now, U.S. crypto policy really hinges on how courts handle Gensler’s attempts to curtail what he sees as an egregious flouting of securities laws and consumer protections.

CFTC Chair Rostin Behnam, who is generally supportive of the new House Republican approach with a few critiques, told lawmakers this when asked about the SEC cases Tuesday: “This is the reason why we’re here. There is confusion.”

Gensler put it in existential terms.

“We don’t need more digital currency,” he said on CNBC Tuesday morning. “We already have digital currency. It’s called the U.S. dollar.”

It’s Wednesday — And crypto is once again the biggest financial policy story in Washington. What’s next? Send tips: Zach Warmbrodt, Sam Sutton.

A message from the American Bankers Association:

Farmers and ranchers play a critical role in the U.S. economy. With the headwinds of inflation and higher interest rates, Congress can help sustain these producers and revitalize our rural communities by supporting the bipartisan Access to Credit for our Rural Economy, or ACRE, Act (H.R. 3139). ACRE will provide farmers and ranchers with greater access to low-cost credit they can use to purchase farmland and support the ag economy. Learn more about ACRE.

Driving the day

U.K. Prime Minister Rishi Sunak will meet with House Speaker Kevin McCarthy in Washington, before meeting with Biden on Thursday … House Financial Services holds a hearing on the U.S. dollar’s status as the world’s reserve currency at 10 a.m.

It’s not easy for JPMorgan comms — Days after the bank tried to tamp down presidential campaign talk, Jamie Dimon on Tuesday told Bloomberg TV’s Kailey Leinz on Capitol Hill: “I never say never to anything.”

Debt deal blowback — McCarthy faced an unexpected conservative rebellion in the House Tuesday, when a group of Republicans frustrated with the outcome of the debt-limit fight derailed a vote on a bill to protect gas stoves from government bans.

Some GOP lawmakers fear it might be just the beginning of a push on the right to undercut McCarthy’s leadership team.

Golf: The next merger battle? — Reuters has a look at potential U.S. antitrust and CFIUS scrutiny of the surprise deal that would combine the PGA Tour and the Saudi-backed LIV Golf. One dynamic in the merger’s favor: U.S. officials are more concerned about industries like AI, biotech, computing and agriculture.

"I don't think golf has reached that level of necessity yet,” said Nevena Simidjiyska, a lawyer at Fox Rothschild.

GET READY FOR GLOBAL TECH DAY: Join POLITICO Live as we launch our first Global Tech Day alongside London Tech Week on Thursday, June 15. Register now for continuing updates and to be a part of this momentous and program-packed day! From the blockchain, to AI, and autonomous vehicles, technology is changing how power is exercised around the world, so who will write the rules? REGISTER HERE.

Crypto

SEC targets Binance assets — Our Declan Harty reports that the SEC is making an emergency push to freeze assets at Binance.US as it prepares to take on the exchange in court. The SEC said in a statement that the move was “to ensure that Binance.US customers’ assets are protected.” Binance.US responded to the request in a tweet, calling it “unwarranted” and saying that user assets are “safe and secure.”

Gensler’s political challenge: House Dems open to the GOP crypto bill — Our Eleanor Mueller reports that Democrats on the House Agriculture Committee Tuesday laid out changes they would like to see to Republicans’ new crypto market structure revamp — indicating a potential willingness to hash out a compromise bill. The proposal would give new crypto powers to the CFTC, which is overseen by the Agriculture panel.

As Eleanor also points out, House Financial Services Democrats led by Rep. Maxine Waters will likely be a much harder sell. (The crypto plan is a joint effort by the Agriculture and Financial Services Committees).

CFTC chair wants bigger budget — CFTC Chair Rostin Behnam on Tuesday said he is supportive of the House GOP bill that would hand his agency greater jurisdiction over crypto, but he would like to see some tweaks, including more funding. He suggested a “self-funding mechanism” separate from the congressional appropriations process.

A message from the American Bankers Association:

World view

Rishi Sunak in Washington — The FT has a preview of the U.K. prime minister’s two-day visit to Washington this week, which will include meetings with McCarthy today and Biden on Thursday. Sunak will pledge to build an economic alliance with the U.S. to counter global threats. He will also try to get concessions from Biden to soften what U.K. officials see as protectionist policies on green tech.

Sequoia break-up illustrates U.S.-China tensions — Venture investing giant Sequoia Capital said it will split into three independent businesses in the U.S., China and India. The WSJ reports that Sequoia made the move as its China arm faces growing scrutiny from U.S. officials.

“It has become increasingly complex to run a decentralized global investment business,” the firm said in a note to investors.

A message from the American Bankers Association:

Farmers and ranchers are the backbone of America. In today’s economy, they need greater access to sound credit. Congress can help sustain and grow rural communities by passing the Access to Credit for our Rural Economy, or ACRE, Act (H.R. 3139). The bipartisan legislation would lower the cost of making a loan backed by farmland, enhance competition between lenders for agricultural and rural housing loans, and expand access to low-cost credit in rural America. Learn more about the legislation.

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