How 1 Top Democrat Lost Faith in Crypto

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Representative Don Beyer, the Virginia Democrat who chairs the House-Senate Joint Economic Committee, began 2022 as many Americans have with an open mind and curiosity about the promise of cryptocurrency.

He was by no means a crypto evangelist. When he led a hearing in November 2021 on demystifying crypto and introducing legislation to regulate the market a few months earlier, he warned of significant risks.

But he also emphasized the goals of promoting innovation and American jobs while giving the market legal certainty.

He believed that crypto “may well have a role to play in the financial structure of our country and so let’s make sure it is well managed and well regulated, not over-regulated but protecting people appropriately.

Very bad cryptos 2022 changed his mind.

Now I’m much more bearish about it, he told MM this week. We have seen fraud, deception, accidents. There’s also a feeling that it’s not real, that it’s just a mathematical idea. Beyond that, there is no reality.

Why it matters: Beyers’ move is another indicator of how the tide in Washington is turning against the digital asset industry, which entered this year with more lobbying and political clout than ever before.

Now there’s a lot more skepticism on Capitol Hill, said Beyer, whose Northern Virginia district is just outside of Washington.

He sees very little value in crypto given that governments are moving to digitize their own legitimate currencies.

How bad things have gotten: One of Beyer’s latest moves as chairman of the Joint Economic Committee is a new report detailing crypto failings over the past year, including falling markets of $2 trillion since last fall.

One of the risks highlighted in the report is the adoption of cryptos by low-income Americans. This challenges the argument made by industry and even some Democrats that digital currency empowers individuals left behind by the traditional banking system.

I would compare it more to buying lottery tickets, he said. A tax on the poor. Cryptos the same way. You have people who don’t have the sophistication or sometimes even the access to the banking system, but then they become victims.

His encounter with another Bankman-Fried: Beyer said he never met FTX founder Sam Bankman-Fried, but was sought out by his younger brother, Gabe, and met him. Gabe founded the nonprofit Guarding Against Pandemics with financial support from Sam.

There was no request. It was like, why are you coming to see us? It was more in the context of wanting to support Democratic candidates, Beyer said. Like, when you leave the meeting, you think, what was it about?

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Driving the day The omnibus is the main event

A message from Binance:

It has been a tough year for crypto. After unprecedented fraud and mismanagement, industry confidence has been shaken. As the largest crypto exchange in the world, Binance believes greater transparency is essential. At Binance, user assets are collateralized 1:1 and our capital structure is debt-free, and we look forward to working with regulators to help bring order to the markets. Learn more about our commitment to moving forward in Politico this week.

The latest on the omnibus The House is expected to pass the nearly $1.7 trillion funding bill on Friday and send it to President Joe Biden for his signature. The government is about to close at midnight.

SBF is out on bail Sam Bankman-Fried was released on $250 million bail in New York on Thursday pending trial on fraud charges. His bail conditions require him to surrender his passport and stay with his parents in Palo Alto, California.

The economy has behaved better than expected over the last few months A few indicators released on Thursday showed the economy’s strength.

The Commerce Department revised up its estimate for third-quarter economic growth to 3.2% from 2.9%, thanks to higher consumer spending.

New jobless claims rose by 2,000 last week but were in line with pre-pandemic levels, according to the Labor Department.

Biden sets inflation expectations Biden in a Yahoo News op-ed: [I]It will take time to get inflation back to normal levels, and we could see setbacks along the way.

Meet the Republicans vying for key Wall Street committee Our Eleanor Mueller has a look at nearly a dozen House Republicans vying for spots on the Financial Services Committee, which will play a major role in the setting rules for cryptocurrency and investigating Biden’s financial regulators.

A senior House GOP aide told Eleanor there could be about 11 open seats. The list of nominees, a mix of incumbents and incoming members from across the country, includes:

Rep. Young Kim of California’s former aide to former Rep. Ed Royce, who was a senior member of the committee, highlights the shortage of West Coast GOP representative panels. She would also bring gender diversity to the Republican side of the committee, where Rep. Ann Wagner of Missouri is the only woman.

Rep. Dan Meuser of Pennsylvania Meuser ran a manufacturing business and served as Secretary of Revenue before joining Congress.

Rep. Byron Donalds of Florida The priority for former financial advisors in the upcoming session, a spokesperson says, is to ensure our financial services institutions work for the people and reduce the heavy bureaucratic hand of government that is stifling growth and opportunities in our financial markets.

Rep. Mike Flood of Nebraska The former state legislator, who drafted legislation allowing banks to hold cryptocurrencies, cited the presence of local financial firms, including Nebraska-based Pacific Life and Mutual of Omaha. .

Representative-elect George Santos of New York City’s new lawmaker is facing accusations that he fabricated his resume, including allegations that he worked at Citigroup and Goldman Sachs.

And the Democrats? Eleanor reports that Democratic Reps. Sean Casten of Illinois and Jake Auchincloss of Massachusetts are seeking new committee assignments. Casten wants Energy and Trade and Auchinclos wants Ways and Means.

Dan Berkovitz Leaves SEC SEC General Counsel Dan Berkovitz will step down at the end of next month, after just over a year at the agency.

Berkovitz’s rental was a big deal last year. Prior to joining the SEC, he served as Commissioner of the CFTC and General Counsel for the CFTC under then-Chairman Gary Gensler (now Chairman of the SEC) during the implementation of Dodd-Frank.

Berkovitz is also an alumnus of Sen. Carl Levins’ former staff of the Senate Standing Subcommittee on Investigations.

Berkovitz said in a statement Thursday that after 34 years of public service, it’s time for me to embrace new and different challenges and opportunities.

SEC Senior Deputy General Counsel Megan Barbero will become the agency’s general counsel upon Berkovitz’s exit.

Maxine Waters urges FTC to investigate Intercontinental Exchange deal House Financial Services Chair Maxine Waters has urged FTC Chair Lina Khan to investigate Intercontinental Exchanges’ planned takeover of the mortgage data firm Black Knight, citing concerns about potential costs to the housing market.

A message from Binance:

JPMorgan says energy crisis is derailing its climate targets The FT: JPMorgan has failed to stay on track to meet its climate change targets, blaming the energy crisis for forcing customers to increase production of fossil fuels.

Reporting on those targets for the first time on Thursday, the bank said its financed emissions intensity related to fuel sold by its oil and gas customers increased by 1% between the end of 2020 and June 2022, while the measuring the intensity of their operational operations emissions have remained stable instead of declining as expected.

Global efficiencies in oil and gas operations have materialized more slowly than expected, the bank argued, in part due to volatility in commodity markets.

Senate investigates automakers’ ties to Chinese forced labor

Florida state-backed insurer’s CEO to step down POLITICO: The CEO of Florida’s real estate insurer of last resort announced on Thursday that he will step down, and the company’s board will find a replacement by March.

A takeaway from Trump’s taxes: The IRS is ill-equipped NYT: [The House] committee reports released this week underscore how exhausted the IRS has become over the past decade as Republicans starve it of funding. They also show how the agency has become increasingly unable to crack down on wealthy taxpayers who push the legal limits to lower their tax bills and have the wherewithal to push back on audits if they get caught.

Brookings Institution Appoints New Economics Editor University of California professor Jn Steinsson is the new co-editor of the Brookings Papers on Economic Activity.

A message from Binance:

It has been a tough year for crypto. Macroeconomic headwinds spawned challenging market conditions, followed by unprecedented fraud and mismanagement. The combination has shaken consumer confidence and created a level of skepticism about the future of crypto. Binance strongly believes that crypto’s best days are yet to come, but to get there, transparency is the only way forward. At Binance, we invest in transparency protocols to demonstrate our strong financial health. Our capital structure is debt-free and all user assets are secured 1:1. Binance does not borrow customer funds or invest them without their consent. More importantly, we look forward to working with policy makers to better protect consumers while promoting innovation. Learn more about our commitment to moving forward in Politico this week.

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