Two Peas In Two Pods: NYDFS Superintendent Harris And SEC Chair Gensler

right on cue

Just before the SEC Enforcement hearing by the House Financial Services (HFS) Capital Markets Subcommittee yesterday, Securities and Exchange Commission (SEC) Chair Gary Gensler appeared on CNBC’s airwaves with Squawk Box host Andrew Ross Sorkin.

See the interview.

Gensler began by openly complaining that Sorkin was asking too many questions about crypto given its diminutive size in comparison to the traditional stock and bond markets.

Sorkin bulled ahead anyway as Gensler largely continued his mantra that digital assets remained a lawless wasteland.

On whether Ethereum was a security or commodity and whether there would be an Ethereum ETF, Gensler demurred (as he did to HFS Chair Patrick McHenry (R, NC) back in April 2023). He said yesterday:

… to me, the fundamental question is, how do we ensure that the American investor is protected and right now they’re not getting the required or needed disclosures and the intermediaries in the center of this rather centralized market generally are conflicted and doing things we would never allow the New York Stock Exchange to do.”

more tips:

    • Gary Gensler Says It’s Our Fault the SEC Appears So Focused on Crypto – Decrypt

floor vote today

Rep. Mike Flood’s (R, NE) office confirmed late yesterday that today is the day for the House floor vote on Joint Resolution 109 rescinding the SEC’s Staff Accounting Bulletin 121.

See it here – the live feed for the House and as early as 10 a.m.

Also yesterday, the House Rules Committee formally presented H.J.R.109 on the House Floor. See video here. The text was repetition of Rep. Flood’s Rules Committee presentation on Monday.

Finally, around the same time as the Rules Committee introduction, House Majority Whip Tom Emmer (R, MN) presented the joint resolution in a press conference with House Speaker Mike Johnson (R, LA) and Majority Leader Steve Scalise (R, LA).

Emmer said in part, “Later this week House Republicans… we’re going to do our job to provide oversight and accountability to the SEC by passing Congressman Mike Flood’s (R, NE) resolution, so that this illegal and harmful rule ceases to be in effect. I hope that our colleagues on the other side of the aisle will join us as we work to ensure the digital asset ecosystem can thrive right here in the United States.” See the video.

what you should know: At least three House Democrats will join if February’s HFS markup was any indication: Rep. Wiley Nickel (NC), who is a co-sponsor of the resolution, and Reps. Josh Gottheimer (NJ) and Ritchie Torres (NY).

seeding crypto in NY State

Speaking at the Milken Institute’s 2024 Global Conference this week, New York Department of Financial Services Superintendent Adrienne Harris, a Democrat, reaffirmed her belief that the crypto space needs to be regulated.

But, Harris said the space also needs room to discover its future and to innovate – a stark difference from her Federal regulator counterpart, SEC Chair Gary Gensler, also a Democrat.

Some of her words even appeared to rebuke regulators such as Chair Gensler. Superintendent Harris said:

Right now, we’re so in the early stages, we don’t even know what some of the most impactful innovations are going to be. But it is clear from a regulatory standpoint, and from a consumer standpoint, that this isn’t going anywhere.”

“And so for regulators to abdicate their responsibility to learn about it, to build teams, to regulate it, to use all their tools, whether its rulemaking, examinations and – when necessary – enforcement, I think is a real shame because we really don’t know yet all the usefulness that this technology will provide.”

And so for us, we spent a lot of time really leaning in, talking with other regulators, talking with industry, really engaging and, I think, having honest conversations about what some of the shortcomings are in the space and socializing companies to what it’s like to be regulated in ways that banks and insurance companies have long been socialized to dealing with the regulators -crypto companies are still work in progress.”

View quote beginning 18:37.

what you should know: Harris also made clear regarding stablecoin legislation that she has been in close consultation with two New York Members of Congress: Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jefferies, both Democrats.

The “New York” element in the stablecoin legislation discussion could be a difference-maker for the passage of impactful stablecoin law.

thought bubble: Imagine Harris as Secretary of the U.S. Treasury someday. She represents an emerging generation -and an emerging United States.

Rep. Casten launches mixer bill

Rep. Sean Casten (D, IL), who briefly announced his crypto mixer bill at yesterday’s HFS Capital Markets Subcommittee hearing, provided more details later in the day.

Titled the “Blockchain Integrity Act,” a press release says the bill seeks to “temporarily prohibit financial institutions from transacting with funds that have gone through digital asset mixers while the Treasury Department, Securities and Exchange Commission (SEC), Commodity Futures Trade Commission (CFTC), and Department of Justice (DOJ) conduct a study on their illicit uses.” And, there’s more – read the release.

Co-sponsors are all Democrats including Reps. Bill Foster (IL), Brad Sherman (CA) and Emanuel Cleaver (MO).

polling for crypto voters

According to a new DCG poll released yesterday revealed “1 in 5 battleground state voters consider crypto a key issue in 2024 U.S. elections. In a survey conducted with [Harris Poll], swing state voters call for greater discourse on digital assets from political candidates.” Read DCG’s tweet thread.

And, read the full report on Blockchain Association’s website.

what you should know: Speaking of swing states, did you see Bitcoin get booed at Ohio State University’s graduation ceremony? See it here. Senate Banking Chair Sherrod Brown (D, OH) must have smiled somewhere given his highly-contested race for re-election.

Wen meme?

prudential regulator turmoil

Yesterday, House Financial Services Chair Patrick McHenry publicly requested that Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg, a Democrat, resign his post given the outcome of an investigation into workplace improprieties at the prudential regulator.

McHenry said in a statement: “It’s time for Chair Gruenberg to step aside. The independent report released today details his inexcusable behavior and makes clear new leadership is needed at the FDIC. This report confirms the toxic workplace culture at the FDIC-which starts at the top-has led to entrenched and widespread misconduct at the agency…” Read more.

Later, Democratic Congressman Bill Foster (IL), also a member of HFS, came out to demand Gruenberg resign as well. See his tweet thread.

Senate Banking Chair Sherrod Brown didn’t call for his resignation but demanded Gruenberg fix things.

more tips:

    • FDIC Special Review Committee Releases Independent Report on Workplace Misconduct and Culture –

what you should know: Gruenberg has largely aligned himself with the anti-crypto positioning of the Biden Administration. Similar to the U.S. Treasury Secretary Janet Yellen (June 2023), he has also advocated for stablecoin legislation (Oct. 2022).

more floor votes

New filings on Congressional calendars indicate floor votes in the U.S. House of Representatives may be upcoming for:

    • H.R.4763 – FIT 21 or the Financial Innovation and Technology for the 21st Century Act sponsored by House Agriculture Chair Glenn Thompson (R, PA) – (a.k.a. the digital asset market structure bill)
    • H.R.1747 – Blockchain Regulatory Certainty Act from Majority Whip Tom Emmer
    • H.R.2969 – Financial Technology Protection Act of 2023 sponsored by Rep. Zach Nunn (R, IA)

All three of the bills have bipartisan support.

Whip Emmer’s H.R.1747 bill seeks to exempt “from certain financial reporting and licensing requirements blockchain developers and providers of blockchain services that do not take control of consumer fund.” Rep. Darren Soto (D, FL) is the sole co-sponsor.

Rep. Nunn’s H.R.2969 looks to establish an “Independent Financial Technology Working Group to Combat Terrorism and Illicit Financing” and is supported by Rep. Jim Himes (D, CT) among 3 other Republicans.

more tips:

    • House eyes end of May for crypto floor votes (subscription) – Politico

what you should know: Even though its extremely unlikely these bills make it through Congress and into law, the roll call votes – assuming there are roll call votes – could help illustrate the amount of support for digital assets across both parties.

new co-sponsors

Majority Whip Tom Emmer’s CBDC Anti-Surveillance State Act [H.R.5403] added four more sponsors since May 1 including Reps. Celeste Maloy (R, UT), Tom McClintock (R, CA), Chip Roy (R, TX) and Michael McCaul (R, TX).

Total co-sponsors have reached 164 Republicans and no Democrats.

Only 53 non-co-sponsor Republicans remain -Heritage Foundation is no doubt “watching.” See Heritage’s February press release.

Meanwhile, on Monday, Rep. Ritchie Torres officially signed on as the lone co-sponsor of “Clarity for Payment Stablecoins Act” [H.R.4766]… New York is in the House.

what you should know: In the best of all possible worlds, it would have been nice to see HFS Ranking Member Maxine Waters (D, CA) climb aboard the stablecoin bill – especially given her years-long involvement – but, it looks like there’s not enough support from Dem leadership (the White House).

thought bubble: Kinda feels like Chair McHenry was saving the spot for Ranking Member Waters.

still more tips

Robinhood Would Likely Win Crypto Court Case With the SEC: KBW – CoinDesk

Lamborghini Bros No More: Crypto Is Creating a New Wealth Effect – Bloomberg on Yahoo

Here’s how debt markets are being overhauled by blockchain (podcast) – The Block