How Crypto Money Is Poised to Influence the Election

By David Yaffe-Bellany, Erin Griffith and Theodore Schleifer. (New York Times). June 17, 2024.

Ryan Selkis, a cryptocurrency executive, was eating dinner at Mar-a-Lago last month when he got an unexpected invitation: Former President Donald J. Trump wanted him to come to the stage and say a few words.

Mr. Selkis, who runs the crypto data firm Messari, was one of a couple hundred attendees at an event celebrating Mr. Trump’s series of nonfungible tokens, the digital collectibles known as NFTs. When he reached the lectern, Mr. Selkis turned to face the former president.

“There’s 50 million crypto holders in the U.S.,” the executive declared. “That’s a lot of voters.”

That message has become a political talking point in the crypto world, as the industry tries to shake off a wave of scandals and establish itself as a powerful force in the 2024 election cycle. Three large crypto firms have banded together to finance a group of affiliated super PACs, investing about $150 million to elect pro-crypto candidates in congressional races.

Read the full piece here: The New York Times.

It’s time to end the SEC’s war on crypto

By Anthony Scaramucci. (Blockworks). June 6, 2024.

The American government is badly damaged — we need public servants who care more about right or wrong, especially when it comes to the crypto industry.

I’m not denying that there are reasonable questions about how crypto firms should be regulated. Many policy questions still require legislation to resolve. But, our current system is broken.

The Securities and Exchange Commission traditionally does not expose itself and its credibility to an appellate beatdown. But this SEC is different. This SEC and Chair Gary Gensler have an extra-regulatory anti-crypto agenda. And they are using their power to obstruct and delay the industry — imposing their own preferences where they can. 

Gensler may not like bitcoin. But whether you decide to invest in bitcoin is up to you, not the SEC. 

Read the full article here: Blockworks

2024 Is Crypto’s Moment

By Jerry Rogers. (RealClear Policy). May 31, 2024.

The 2024 elections are once again hinging on narrow margins nationwide with hot issues like immigration, the economy, abortion, and foreign policy getting most attention. But many of the contests, including the presidency, may ultimately be decided on other issues motivating different constituencies that can hold the balance.

One that is starting to gain more credible momentum is an unexpected entrant – the increasingly enthusiastic crypto constituency in the United States.

It isn’t a fringe industry anymore and it’s not new to politics. But crypto is getting more robust and organized in this cycle than ever before and notching serious legal and policy victories on the way. 

Leadership at crypto firms tired of endless SEC lawsuits and lack of a regulatory framework are deciding to fight back. A turning point was the legal victory of California-based Ripple Labs against the SEC in one such lawsuit.

Notching that win had Garlinghouse emerge as a spiritual leader for many in crypto’s foray into hardball politics. His defiance paved the way for other companies to fight back and win.

Read the full piece from Jerry Rogers here: RealClear Policy.

Why The Securities And Exchange Commission Lost Its War On Crypto

By Dan Ikenson. (Forbes). May 28, 2024

From banning “non-compete” clauses to re-requiring “net-neutrality” to hyperinflating the costs of taxpayer-funded infrastructure with extravagant union giveaways, the Biden administration has overseen a massive expansion of the regulatory state. But amid this regulatory incontinence, which sows uncertainty, suppresses innovation, and retards investment and growth, there are encouraging signs that Congress, the courts, and US entrepreneurs are fed up with rule by executive fiat.

Take, for example, the escapades of the Securities and Exchange Commission. Since assuming power, Biden’s approach to cryptocurrencies and related technologies has been to delegate and defer to an activist SEC and its crusading chairman, Gary Gensler. Chairman Gensler portrays the crypto industries as “rife with hucksters, fraudsters, [and] scam artists,” which, he seems to believe, excuses him from proposing and promulgating concrete rules, in compliance with statute, for the industry to follow. Instead, Gensler sees crypto companies as undeserving of such regulatory clarity, choosing to keep them off balance through a “regulation by enforcement” approach – aggressively suing crypto companies for non-compliance with securities laws without ever articulating what “compliance” requires.

In the absence of clear, legal pathways, companies in the digital asset space have taken their innovations and expertise to friendlier shores. Governments in places such as the United Kingdom, the European Union, Singapore, and the United Arab Emirates have already established regulatory frameworks and their economies are certain to reap the benefits of the resulting financial and related technological innovations.

Read the full article here: Forbes

America Needs to Get Moving on Blockchain

By Peter Roff. (Cagle Cartoons). May 24, 2024

From the sublime to the ridiculous, America invents. From the airplane to Jell-O, and in between, we somehow understand intuitively what people want and figure out how to get it to them. That’s put us in a position to lead the transformation of the marketplace many times, most recently by our rapid adoption of e-commerce.

It’s time we did it again by applying that same innovative spirit to blockchain. Instead, we’re hesitating. This may be out of fear of the unknown, but that’s easy to fix. Blockchain isn’t complicated and shouldn’t be scary. At its core, it is a peer-to-peer communication technology that could revolutionize global financial transactions, especially those crossing international borders.

The quicker we adopt it, the faster we get to a more streamlined and efficient future. That’s in everybody’s interest. The value of money continually fluctuates. Digital networks must operate quickly for estimates of value at the time of purchase to be accurately preserved. The faster they move, the more precise, secure, and transparent those valuations can be.

Read the full article here: Cagle Cartoon

Bringing clarity to cryptocurrency

By Rep. French Hill and Rep. Dusty Johnson. (Washington Times). May 21, 2024.

As the FTX collapse demonstrated in 2022, issuing and trading digital assets—including cryptocurrencies—need clear rules of the road.

The regulatory gaps in the digital asset market must be filled by legislation, not by independent agencies ruling by enforcement. If Congress does not take action, Securities and Exchange Commission (SEC) Chairman Gary Gensler will continue to exercise broad authority over all digital assets.

That’s why we collaborated with House Financial Services Committee Chairman Rep. Patrick McHenry (R-NC) and House Agriculture Committee Chairman G.T. Thompson (R-PA) to craft our Financial Innovation and Technology for the 21st Century Act (FIT21), which crafts a “fit for purpose” regulatory framework for digital assets that protects consumers and investors while keeping innovation in the United States.

This type of committee collaboration is unprecedented and may be the most substantial piece of digital asset legislation in Congress’s history. FIT21 directs the SEC and Commodity Futures Trading Commission (CFTC), along with the bank supervisors, on how to classify cryptocurrencies and other digital assets as securities or commodities. 

Since our two committees passed FIT21 last summer, this bill has incorporated our members’ bipartisan priorities. We believe it fully responds to the Financial Stability Oversight Council (FSOC) and the President’s Executive Order on Ensuring Responsible Development of Digital Assets.

Read the whole piece here: Washington Times.

SEC Ethics Probe Points to Bigger Problem With Federal Tort Claims Act Immunity

By Frank Francone. (Real Clear Policy). May 20, 2024

In his thought-provoking book, Skin in the Game, Nassim Taleb argues that when decision-makers bear the consequences of their actions, they tend to make better decisions.  Unfortunately, this doesn’t apply to federal regulators. The Federal Tort Claims Act (FTCA), exempts them from liability for all damages they inflict on Americans by intentional and demonstrably harmful acts.

This exemption – rooted in the hoary doctrine of the “divine right of kings” – gives no recourse to average citizens, feeds a culture of broad deference to federal agencies, and allows wrongdoing by high officials to be largely ignored. For institutions already suffering from plummeting public trust, this should not continue.

Consider, for example, the long series of poor decisions by the Securities and Exchange Commission (SEC) in its attempt to regulate cryptocurrencies. For years, the SEC issued erratic, contradictory, and positively misleading guidance about the legal status of digital assets. Indeed, William Hinman, then the SEC Director of Corporation Finance, appears to have had serious conflicts of interest that may have caused him to mislead investors and fintech companies.

Read the full piece here: Real Clear Policy

America Requires Regulatory Clarity Before Blockchain Bears Its Bounty

By Dan Ikenson. (Forbes). May 2, 2024

Innovation is essential to economic growth and higher living standards. Better tools and techniques that make us more productive are requirements of wealth creation. Still, innovation attracts its fair share of skeptics whose fears about where new technologies may lead are ripe for exploitation.

Helming the regulatory agencies in Washington, today, are many who seem to prey on fears about the nefarious misuse of technology or how innovation will send our jobs and way of life into obsolescence. Yet, with every new wave of technological uptake, the U.S. economy has created more and better paying jobs than existed before, owing to the increasing abundance produced and invested. Such progress would be impossible without entrepreneurs and their innovations.

Consider blockchain – one of the most important innovations to emerge from the financial technology revolution of the past couple decades. Blockchain is most commonly associated with cryptocurrencies—digital currencies that users exchange through decentralized computer networks—and is valued for its ability to reduce the time, cost, and security risks of transactions. But new and evolving applications will amplify the utility of blockchain in a wider variety of industries – that is, unless regulators kill it in the crib.

Read the full piece here: Forbes

The SEC Came to Destroy Crypto, Not to Regulate It

By Roslyn Layton. (DC Journal). April 3, 2024.

Following the Securities and Exchange Commission’s effort to stretch, bend and twist the law to grant itself authority to regulate cryptocurrencies has been like watching an exhausting video game. By the last level, the monster has grown so grotesque and ridiculous that you’re just waiting for the relief of seeing it explode so the comforting words “game over” can finally appear.

Unfortunately, it’s not a game for many innovative U.S. Financial Tech companies. The SEC has mobilized all its resources to carry out a policy against crypto companies that is not designed to protect investors from fraud or even to clarify what legal compliance means. It is practicing what professor J.W. Verret of George Mason University has called “enforcement by destruction,” trying to turn courts into execution chambers for an industry it never intended to regulate but to destroy.

It comes down to a bait-and-switch strategy by two successive SEC chairmen to claim that every digital asset, no matter how it is designed, is itself a “crypto asset security,” and that gives the agency full authority to require they be registered like stocks. Nothing in nearly a century of securities law provides the SEC such all-encompassing authority over an entire asset class. But the SEC’s strategy was never to prove this theory in court so much as to have a pretext to launch enforcement actions never meant to bring anyone into compliance.

Read the full piece here: DC Journal

The SEC Is Engaging In Regulation By Destruction

By J.W. Verret. (Law360). April 1, 2024.

The term “regulation by enforcement” was coined in 1990 by Harvey Pitt in his days as a Yale law professor, about a decade after he served as general counsel of the U.S. Securities and Exchange Commission and before he became chair of the SEC. The warning was eerily similar to President Dwight D. Eisenhower’s farewell address cautioning about the growth of the military-industrial complex.

Regulation by enforcement has become manifest in the SEC’s approach to the emerging technology of cryptocurrencies, using lawsuits instead of rulemaking to claim that all digital assets are unregistered securities and fully under the commission’s authority.

Pitt’s term doesn’t fully capture what the SEC’s strategy on crypto has evolved into: “Enforcement by destruction” is more apt.

Read the full piece here: Law360

J.W. Verret is an associate professor at the George Mason University Antonin Scalia Law School. He is a former member of the SEC’s Investor Advisory Committee.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.