Today's Daily Spotlight: A clash of radically different cultures has implications for the future of the economy and technology in America 📝 Molly Ball (mollyesque)
o the untrained ear, Hester Peirce’s comment sounded anodyne, but everyone in the audience knew what she was doing: selling out her boss. “It’s fairly clear,” the U.S. Securities and Exchange commissioner said from the Washington conference stage, “that we’ve been taking an enforcement-first approach in an area where we should be taking a regulatory-first approach. I think we’ve got the balance wrong right now.
Now D.C. has moved into crypto’s territory, with regulatory crackdowns, tax proposals, and demands for compliance. And crypto has pushed into D.C.’s terrain, standing up multiple trade associations, think tanks, and political action committees and hiring hundreds of lobbyists. “The industry has gone from 0 to 100 in record time,” says one D.C. consultant who advises crypto and other tech firms and has seen business skyrocket in the past year. “Even small companies have some footprint now.
Gary Gensler, chairman of the Securities and Exchange Commission, has drawn the ire of the cryptocurrency industry for his tough stanceThe inter-agency pissing match is the subject of endless speculation and argument among crypto people, but it’s important less in its particulars than what it signifies: would-be crypto innovators who are not trying to scam anybody have no way to be confident they’re following the law.
In August 2021, a bipartisan group of senators was negotiating infrastructure legislation to fund roads, bridges, and broadband across America. To pay for all this, the senators consulted a “menu” of revenue options staff had prepared. Among them was a tax on cryptocurrency brokers that would raise an estimated $5 billion. The lead Republican negotiator, Rob Portman of Ohio, picked it off the list, sources familiar with the process confirmed.
Perianne Boring, founder and CEO of the Chamber of Digital Commerce, testifies before a congressional committeeIndustry bigwigs, such as FTX CEO Sam Bankman-Fried and the venture capitalist Marc Andreesen, made major contributions to a handful of new political-action committees—$500,000 to $1 million was the baseline expectation.
Without explicit rules, companies say they’re forced to parse Gensler’s public statements for clues. Even crypto skeptics who want scammers kept in line can see the benefit of knowing what, exactly, the government considers a scam, versus a legitimate enterprise. “Gary is out there stating over and over again, ‘I have jurisdiction over all of this, everyone needs to come in and register [with the SEC],’” says a lobbyist for a top crypto platform.
The situation reminds many observers of the 1990s, when the internet was new and barely regulated and Silicon Valley went gangbusters—until it crashed in the early 2000s, leaving major sports teams with stadiums named for defunct companies. A few titans emerged from the wreckage to become today’s tech behemoths: Amazon, Google, Facebook. In what might be a cautionary tale for Web 3.0, lawmakers are still struggling to rein them in, and public sentiment has turned sharply negative.
The Trump Administration’s stance toward crypto largely reflected the former President’s disdain. But on Capitol Hill, crypto’s loudest skeptics have been on the left, particularly Senator Elizabeth Warren, who famously derided the industry as a “shadowy, faceless group of supercoders.” The congressional blockchain caucus, which was started in 2016 by then-Reps. Mick Mulvaney and Jared Polis and now boasts nearly 40 members from both parties, is about two-thirds Republican.
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