Senate Hearing Pits SEC Against CFTC; CFTC Commissioners Tapped By White House

Senate hearing – CFTC and SEC

Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam and Securities and Exchange Commission (SEC) Chair Gary Gensler appeared simultaneously at yesterday’s Senate Appropriations Subcommittee on Financial Services and General Government hearing on their respective 2025 budgets. See the hearing page.

Sen. Chris Van Hollen (D, MD) – the Subcommittee Chair – and Sen. Bill Hagerty (R, TN) – the Ranking Member – oversaw the one-and-a-half hour hearing.

Senate hearing – prepared testimony

With 12 mentions of “digital assets” in his prepared testimony, CFTC Chair Behnam made clear he’s still angling for the spot market controls he’s long-desired for his agency over digital assets. He said in part, “The lack of legislation addressing the regulatory gap over the digital commodity asset spot market has not hindered the public’s enthusiasm for digital assets, and I continue to believe Congress must act…” Read Chair Behnam’s prepared testimony.

In his opening statement, SEC Chair Gensler focused less directly on digital assets but repeated his claim that crypto markets were “the Wild West” and represent a dearth of compliance with the law. Read the Chair’s opening remarks  – and read his prepared testimony here.

Senate hearing – Q&A

Thereafter, most of the focus of Senators’ questions were with Chair Gensler with the spiciest conversation coming from Senator Bill Hagerty’s Q&A time.

Sen. Hagerty got Gensler to admit that the final leg of approvals for an Exchange-Traded Fund (ETF) for the Ether crypto token will occur “over the summer.”

Also, the two were, predictably, in disagreement over the need for digital assets legislation with Sen. Hagerty trying to saddle Chair Gensler with the implosion of FTX, which Gensler did not accept. (See video at 1:25:10.)

The Chair also remained adamant that the crypto industry is rife with malfeasance and fraud and impugned the reputations of all crypto CEOs.

Read more coverage from CoinDesk.

Senate hearing – Sen. Durbin

Possibly the most awkward moment of the hearing was when Chair Gensler was asked by Senator Dick Durbin (D, IL) whether or not the CFTC could handle policing crypto markets – the same crypto markets Chair Behnam (seated to Gensler’s left) was angling for. (See video at 1:14:10)

With his typical style, Gensler said in so many words that his agency was more appropriate and emphasized the need for oversight using a “disclosure-based regime that we have at the SEC” and that his agency has “nine times the staff” of the CFTC.

what you should know: Themes of Sen. Durbin’s questioning and grave tones during his Q&A time were no suprise. Durbin was reiterating his previously expressed, “anti-crypto” stance. See: a September 2022 hearing on the Digital Commodity Consumer Protection Act (DCCPA); his speech on the Senate Floor (March, 2023) when he decried the harms of crypto; and, his co-sponsorship of Senator Elizabeth Warren’s (D, MA) “Digital Asset Anti-Money Laundering Act” [S.2669].

you’re hired

It’s official – CFTC Commissioner Christy Goldsmith Romero (D) has been nominated as Chair of the Federal Deposit Insurance Corporation (FDIC) and will replace the current Chair Martin Gruenberg. Next for Goldsmith Romero is a potentially lengthy confirmation process.

The White House made the announcement yesterday – read it.

House Financial Services Chair Patrick McHenry (R, NC) was quick to issue a statement in support of the nomination and emphasizing the need to clean up the culture at the FDIC. He added, “The Senate must move forward with confirmation proceedings expeditiously to curtail Chair Gruenberg’s ability to further damage the agency and endanger financial stability.”

Other open positions were also filled by The White House including two “hires” with digital asset oversight experience.

    • CFTC Commissioner Kristin Johnson (D) was nominated to be Assistant Secretary for Financial Institutions at U.S. Treasury.
    • SEC Commissioner Caroline Crenshaw (D) was nominated for another term as Member of the Securities and Exchange Commission.

what you should know: Goldsmith Romero and Johnson’s departures will leave two seats to fill on the CFTC’s Commission. Who’s it gonna be and when? The process likely awaits the next Congress.

Trump mining support

More details are emerging from former President Donald Trump‘s meeting with Bitcoin mining leaders at his Mar-a-Lago Club on Tuesday.

CNBC’s Kenzie Sigalos reports that according to participants “the former president was collaborative, had well-informed questions and seemed genuinely interested in how bitcoin miners could help solve America’s energy deficit problem.”

BTC Inc. CEO David Bailey tells Ms. Sigalos, “Our industry intends to make bitcoin and crypto a defining issue for the 2024 election… As an industry we are committed to raising over $100 million and turning out more than 5,000,000 voters for the Trump reelection effort.” Read more.

what you should know: There’s one thing Bitcoin miners have a lot of… Bitcoin. And in an election, where a lot of Bitcoin is spent could be very impactful.

Rep. Casten on Trump

With former President Donald Trump showing his support on Truth Social for the digital assets community, HFS Committee member Rep. Sean Casten (D, IL) appears to be taking the lead among House Democrats at tearing down former President Trump’s new position.

In a lengthy thread on Wednesday, Rep. Casten tweeted on X, “… Bitcoin is ultimately just a scrap of computer code produced by energy intensive servers. Saying you want that to be ‘made in the USA’ is… stupid? Producing them doesn’t create jobs or investment. It just consumes energy and computer time.”

Read Rep. Casten’s thread.

Senator Warner’s bill

On Wednesday, Senator Mark Warner (D, VA) told Politico’s Eleanor Mueller that he’s open to ideas from the digital assets community on his insertion of the Terrorist Financing Prevention Act [S.3441] into a must-pass: The “Intelligence Authorization Act for Fiscal Year 2025” [S.4443]. .

Warner tells Ms. Mueller, “They’ve been putting forward concerns on the previous bill, but they’ve never come in and said, ‘Here’s what you need to specifically do.’ (…) Now, I think we’re at that stage.” Read more (subscription).

Rep. Sherman NDAA amendment

Rep. Brad Sherman (D, CA) has filed a new amendment to the National Defense Authorization Act (NDAA) must-pass with the House Rules Committee and it has implications for digital assets according to Fox Business’ Eleanor Terrett on X.

Under the terms of the amendement, the Secretary of the Treasury “would have ‘clear authority to prohibit digital asset trading platforms and transaction facilitators under U.S. jurisdiction from transacting with cryptocurrency addresses that are known to be, or could reasonably be known to be, in Russia,'” according to Terrett.

Read more from Ms. Terrett.

And, see the full amendment here.

what you should know: This amendment will not survive in the Republican-controlled House unless Rep. Sherman can get a Republican to co-sponsor and ignite bipartisan momentum.

still more tips

Biden campaign in talks to accept crypto donations through Coinbase Commerce: sources – The Block

European Central Bank says its digital euro design is private. Is it? – Ledger Insights

“Paradigm has raised our third fund: an $850M venture fund focused on crypto projects at the earliest stage” – Matt Huang, co-founder of crypto venture firm Paradigm on X yesterday

Telegram-based Gaming App Offers Clues to Crypto’s Latest Hopes for a ‘Killer App’ – Bloomberg