Senators own cryptocurrency assets as they shape industry rules

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WASHINGTON — Sens. Pat Toomey (R., Pa.) And Cynthia Lummis (R., Wyo.) Sit on the powerful Senate Banking Committee and have argued for mild government pressure on the growing and largely uncontrolled cryptocurrency market.

They also own cryptocurrency assets. Ms. Lummis’ roughly $ 250,000 worth of bitcoins makes her the most heavily invested U.S. lawmaker in digital assets. Mr. Toomey has smaller stakes in crypto-related investment vehicles. Together, they are the only two senators to have such investments, according to a Wall Street Journal study of public financial information.

There is nothing illegal about lawmakers owning assets, including cryptocurrencies, even though they are working on legislation directly related to those assets. Ms. Lummis and Mr. Toomey, the ranking Republicans on the committee, say their experience with cryptocurrency gives them expertise on a topic few on Capitol Hill have studied.

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“Tell me what part of the economy are we not getting involved in?” Mr. Toomey said in an interview when asked about potential conflicts of interest. “By following that logic, then I guess no one in the Senate can invest in anything. It would be ridiculous. “

Others fear that the personal investments of lawmakers could influence potential regulation.

“These two senators are the most vocal when it comes to favorable cryptocurrency regulation,” said Lee Reiners, executive director of the Global Financial Markets Center at Duke University and former head of the Federal Reserve Bank. from New York.

“That’s not to say they’re motivated by personal financial interests,” Mr. Reiners said, “but it’s fair to question their advocacy. This is problematic given their holdings.

Representative Alexandria Ocasio-Cortez (D., NY), who is part of the House Financial Services Committee, recently said on her Instagram account that members of Congress should not own or trade individual stocks or cryptocurrency assets. , “because we have access to sensitive information and upcoming policy.

Investments in cryptocurrencies are of particular concern to some oversight bodies outside of government, as market rules are still being worked out. Photo: Mario Tama / Getty Images

While lawmakers are not prohibited from writing or voting on bills that could result in personal financial gain, they are required to disclose their assets annually and report transactions within 45 days.

Reportable assets include real estate, stocks and, as of 2018, cryptocurrency.

The Journal’s review of financial information and periodic transaction reports found that in addition to Ms Lummis and Mr Toomey, nine members of the House and at least five White House officials reported crypto assets. -cash.

In most cases, farms represent a small part of their total wealth.

Representative Michael Waltz (R., Fla.), Who bought between $ 30,000 and $ 100,000 worth of bitcoin in June, said he did so in light of soaring prices for many products. Officials report the value of their assets within specified ranges.

“Bitcoin evolves as a hedge against inflation much like gold has been,” Mr. Waltz said in an interview.

Representative Michael Waltz (R., FL) purchased between $ 30,000 and $ 100,000 worth of bitcoin in June. Photo: Tom Williams / Zuma Press

Ms Lummis said she bought her first bitcoin in 2013 after learning about it from her daughter and son-in-law. She said she now owns five bitcoins, worth around $ 240,000 on Thursday, and has no plans to sell them. His bitcoin is part of a large portfolio that includes his family’s cattle ranches.

“Someone said, ‘She should sell her bitcoin.’ It’s like, well, okay, it’s a commodity. Do I also have to sell my cows? Ms Lummis said in an interview. “Should I sell my mutual funds?” Should I sell my retirement fund just because it could be invested in something that is a great store of value? “

Ms Lummis plans to introduce legislation early next year that would allow the cryptocurrency industry to govern itself through a new self-regulatory organization overseen by the Commodity Futures Trading Commission and the Securities and Exchange Commission, a idea that some lobbyists and industry advocates have championed.

In mid-June, Mr. Toomey bought $ 2,000 to $ 30,000 of shares in Grayscale Bitcoin Trust and Grayscale Ethereum Trust, investment vehicles that seek to track coin prices. He said the holdings were part of a diverse portfolio.

Like Ms Lummis, Mr Toomey said the first rule of cryptocurrency regulation should be ‘do no harm’. He urged the SEC, overseen by the banking committee, to avoid stifling innovation.

The recent rise in the value of Shiba Inu Coin and the ensuing drop in value is part of a growing trend for coins even rivaling some of the largest digital tokens in the world. WSJ retail investment reporter Caitlin McCabe explains why investors are investing money in this memes-based cryptocurrency. Photo: Amber Bragdon / Getty Images

Some branch officials also own cryptocurrency, but they have to recuse themselves if they hold certain investments, unlike Congress.

Tim Wu, the president’s senior adviser on technology policy, said this spring held between $ 1 million and $ 5 million in bitcoin, making him the largest holder of bitcoin among senior White House officials who are required to disclose publicly their assets. He also said he owns between $ 100,000 and $ 250,000 in Filecoin, a blockchain-based file storage network.

The White House said Mr. Wu was barred from dealing with any cryptocurrency issue.

“” Bitcoin evolves as a hedge against inflation much like gold has been “”

– Representative Michael Waltz (R., Florida)

The other holders are not directly involved in setting the policy. Ryan Montoya, the White House’s director of planning and advance, has between $ 467,000 and $ 1,080,000 in cryptocurrency, one of his most valuable holdings behind real estate. He was previously CTO for the Sacramento Kings basketball team, which developed a blockchain-based token for fans in 2019.

Some oversight bodies outside of government believe there should be tighter limits on the types of investments members of Congress can make.

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Of particular concern is cryptocurrency investments as the rules of the market are still being worked out.

Some cryptocurrencies fall under the jurisdiction of the SEC, but the agency is still developing regulations for them. So-called stable coins could be subject to rules being considered by banking regulators. The biggest digital tokens, bitcoin and ether, currently have no full-time federal watchdogs.

The uncertainty means Washington’s decisions can dramatically affect the value of bitcoin and other digital assets.

“This is an industry in its infancy, and it’s important to be detached while the rules are being written,” said Timi Iwayemi, a researcher at the Center for Economic and Policy Research, a liberal think tank.

Other lawmakers who have said they own cryptocurrency assets or investments in cryptocurrency-focused companies on recent disclosures – which include investments held by spouses and dependent children – were Reps Jake Auchincloss ( D., Mass.), Mark Green (R., Tenn.), Alan Lowenthal (D., California), Michael McCaul (R., Texas), Barry Moore (R., Ala.), Marie Newman (D. , Ill.), Ed Perlmutter (D., Colorado) and Jeff Van Drew (R., NJ).

Learn more about crypto regulations

MM. Auchincloss and Green and Ms Newman said through spokespersons that they were following House ethics rules. Other offices did not respond to requests for comment.

Cryptocurrency advocates are working to strengthen their presence in Washington, through new trade groups, powerful lobbyists, and campaign contributions.

The Center for Economic and Policy Research recently identified 43 former financial regulators, including five former CFTC commissioners, who now work for cryptocurrency companies.

Ahead of last year’s election, the Digital Chamber of Commerce, a trade group representing the digital asset and blockchain industry, donated $ 50 in bitcoin to all members of the House and Senate in an effort to ‘get cryptocurrency on their radar. The only problem was that their campaigns had to set up a way to receive digital currency.

All but eight campaigns returned bitcoin, records show.

Write to Chad Day at [email protected], Julie Bykowicz at [email protected] and Paul Kiernan at [email protected]

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