Never Underestimate the Cryptocurrency Lobby

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US SEC

  • In growing signs that crypto money is flowing into K Street, a senior Republican from the House of Representatives has lashed out against U.S. Securities and Exchange Commission Chairman Gary Gensler over his attempts to regulate cryptocurrencies.
  • Confounding issues of jurisdiction, cryptocurrencies sit at the nexus of several agencies, including the U.S. Federal Reserve and the U.S. Commodity and Futures Trading Commission.

As the price of cryptocurrencies has skyrocketed, some of the biggest players in the digital asset space haven’t been spending their newfound wealth on Lambos, but lobbyists.

In growing signs that crypto money is flowing into K Street, a senior Republican from the House of Representatives has lashed out against U.S. Securities and Exchange Commission Chairman Gary Gensler over his attempts to regulate cryptocurrencies.

Tom Emmer, the Republican representative for Minnesota and co-chair of a group of lawmakers interest in blockchain technology, has said he believes Gensler was overstepping his authority with this attempts to expand the SEC’s role in regulating the cryptocurrency space.

And there’s sufficient evidence to back Emmer’s claims.

Recently, Coinbase Global, a Nasdaq-listed cryptocurrency exchange, walked back plans to roll out a cryptocurrency lending product that looked very similar to a fixed deposit or bank account, on threat of litigation from the SEC.

To be fair, Coinbase Global’s proposed cryptocurrency lending product ought to have fallen within the purview of the U.S. Office of the Comptroller of the Currency, should have had jurisdiction in that case.

Yet Gensler very deftly threatened litigation to shut down Coinbase Global’s intention, without having to fire out the first subpoena.

And it’s this regulator zeal and overreach that Emmer believes is amounting to overstep and is part of a broader move by supporters of cryptocurrencies to push back on Democrat-led attempts to increase oversight of the US$2 trillion market.

Testifying before Congress on Tuesday, Gensler said that he wanted cryptocurrency platforms to be registered with the SEC, adding,

“Right now (investors) don’t have the benefit of that basic bargain that we protect people against fraud and manipulation. People are going to get hurt.”

Speaking with the Financial Times, Emmer disagreed,

“I think the vast majority of cryptocurrency offerings or related offerings are actually currencies or commodities. The SEC is not involved.”

“If the SEC were to deem one of these coins a security, the value of that token would plummet. And those retail investors would be seriously hurt – that’s directly the opposite of his (Gensler’s) mission and his authority.”

Confounding issues of jurisdiction, cryptocurrencies sit at the nexus of several agencies, including the U.S. Federal Reserve and the U.S. Commodity and Futures Trading Commission.

Nonetheless, that hasn’t stopped Gensler from going on a landgrab to try and coalesce the regulation of cryptocurrencies under the SEC’s umbrella.

But the cryptocurrency industry is fighting back, with digital asset companies setting up a range of new lobbying organizations to argue their case on Capitol Hill and lobbyists have found a receptive audience in Emmer’s blockchain caucus.