Welcome to Proof of State: A Weekly Newsletter Breaking Down Crypto Regulation

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The crypto emerged from the 2008 financial crisis after the Bitcoin white paper prophesied a monetary system independent of governments and instead governed by the unbiased logic of software. Since then, crypto has often failed to achieve this goal, but one thing remains true: the industry lacks meaningful oversight from governments.

Sure, the Securities and Exchange Commission and the Department of Justice have taken enforcement action, smaller markets have dabbled in rulemaking, and some countries have outright banned crypto, but there’s no yet comprehensive regulatory regime adopted to tame the volatile sector. That could change this year.

As a journalist covering crypto, what fascinates me most is the watershed moment we find ourselves in, where many in the industry are calling for government action, an ironic reality, given the Tech’s libertarian roots and lawmakers seem to be in agreement.

In this new weekly edition of Fortune Crypto, titled Proof of State, I will dive into the biggest stories in crypto politics. This will mean interviews with lawmakers, reports on cross-agency jockeys, and insights into key issues of what crypto regulation might look like, both in the US and abroad. To start, here are some stories in Washington to watch:

Elizabeth Warrens Anti-Crypto Crusade: The Massachusetts Democratic senator and champion of financial regulation has also emerged as one of crypto’s fiercest critics. Before winter break, she introduced a bill to tackle the pernicious problem of money laundering. The proposed legislation sent shockwaves through the crypto industry, with many viewing it as an existential threat. Does it have a chance of becoming law?

Senate Agriculture Committee Tries to Overtake SBF: Prior to the FTX collapse, onlookers agreed that the Senate Agriculture Committee (charged with financial watchdog duties thanks to the history of commodity futures cereals) was best placed to pass legislation, through its digital product consumer protection. Law. The problem? The bill was a favorite of Sam Bankman-Fried, who had a close relationship with the committee. John Boozman (R-Ark.) told Fortune he was determined to rework the bill and silence critics.

Patrick McHenry carves out a stronghold: Although the Republicans did not win the victory they wanted in November, they did win a victory in the House of Representatives. Perhaps the biggest winner of all was Patrick McHenry, the pro-crypto congressman from North Carolina who now chairs the powerful House Financial Services Committee and has his eyes set on an ambitious bill to fight back. against stablecoin regulations.

Thank you all for reading. What political questions do you have? Will regulators continue to be too late for the party? Let me know by contacting me via email or DM.

Leo [email protected]@leomschwartz

DECENTRALIZED NEWS

CoinDesk is tapping bankers to explore a possible sale amid financial turmoil for its parent company, Digital Currency Group. (The Wall Street Journal)

Embattled crypto firm Genesis is negotiating a pre-packaged bankruptcy plan with creditors. (The block)

Binance admitted to having further management issues with its stablecoin assets, a week after acknowledging irregularities around its Binance-peg BUSD token. (Fortune)

Democrats have debated membership on the key House Financial Services Committee, considering whether crypto donations for candidates constitute a conflict of interest. (Politics)

Peter Thiel’s venture capital firm sold the majority of its crypto holdings in March 2022, raising $1.8 billion. (Fortune)

EVEN OF THE MOMENT

Crypto Twitter was unimpressed with yesterday’s DOJ action against Bitzlato:

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