Joe McConnell
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The author is president of the advocacy group Financial Reform Better markets
AVsceker years of handcuffing and jailing crypto kingpins, numerous spectacular failures, rampant fraud and manipulation, incredible volatility, and a long list of lost lawsuits, the cryptocurrency industry is still booming in the United States.
This is partly because it has a huge pool of money that it is willing to spend on campaigns to buy the support of politicians who will support its special interest agenda. The cryptocurrency industry’s big goal is to choose its own regulator and gain some semblance of legitimacy, but not be regulated at all.
Because the Securities and Exchange Commission is such a powerful and effective policeman in the cryptocurrency industry, the industry sees this regulator as its “mortal enemy.” The crypto crowd wants their political allies to put the smallest, least funded, least capable, and most easily captured financial regulatory agency in charge of cryptocurrency: the Commodity Futures Trading Commission.
With cryptocurrencies, it is clear from many cases that almost all tokens traded fall comfortably within the standard definition of securities and should be regulated by the SEC as such. Those that are not securities fall comfortably within the standard definition of commodities and should be regulated by the CVscekC as such.
There is very little controversy about this among people who are not on the cryptocurrency industry payroll. And that is also why the SEC is winning nearly every lawsuit it brings against cryptocurrency companies, which argue that most, if not all, of the securities, commodities, and banking laws that apply to every other financial company in America do not apply to them.
Less than two years aVsceker numerous politicians rushed to return the industry’s campaign contributions from the fraud-ridden VscekX, cryptocurrencies are so emboldened that they’re aiming to influence Kamala Harris’s campaign for president. One topic that’s been highlighted is the supposed need to counter Donald Trump’s embrace of cryptocurrency.
The cryptocurrency industry appears to be making some headway. Biden administration and Harris campaign officials recently held a conference call with industry figures. Harris is expected to push back on the overtures. Here’s why:
First, aVsceker years of efforts and claims that cryptocurrencies have real value, there is still no real reason to use them for legitimate purposes over existing currencies. They remain the financial product of choice for financial predators, lawbreakers, and criminals around the world. The least harmful use is wild speculation and gambling (as opposed to other uses for tax evasion, fraud, ransomware, sanctions evasion, terrorist financing, drug trafficking, money laundering, etc.).
Second, loosening cryptocurrency regulation is not a top concern for the American people. Contrary to industry propaganda, only about 18 million American adults use or own cryptocurrency, and that number is declining, according to Federal Reserve survey data.
It’s a very niche topic. Of the 88 percent of Americans who have heard of cryptocurrency, a survey conducted last year by Pew Research found that a supermajority of 75 percent are not confident or not very confident in the reliability and safety of cryptocurrency. It’s notable that between 61 and 77 percent of voters in six key swing states have a negative view of cryptocurrency, according to venture capital firm Digital Currency Group and polling firm Harris Group (not related to the vice president).
Third, Harris’s lengthy criminal record for breaking cryptocurrency laws is at odds with her long and strong history as a prosecutor fighting for consumer and investor protection and against financial industry law violations. Remember, when she was California’s attorney general, she was under enormous pressure to agree to a global subprime mortgage settlement with the biggest and most powerful Wall Street banks. Harris was tough, reportedly even turning down JPMorgan CEO Jamie Dimon for a deal. It’s not easy. But she stood her ground and got a much better deal for California.
Finally, communities of color are disproportionately victims of cryptocurrency scams. Yes, these communities are rightfully skeptical of the traditional financial system that has excluded, discriminated against, and exploited them for so long. Unfortunately, this makes them a target for the cryptocurrency industry, which presents false wealth-building opportunities. A 2021 survey by the NORC social science research institute at the University of Chicago estimated that 44 percent of cryptocurrency traders were nonwhite.
Harris has a lot on her plate ahead of the US election. Giving in to threats from the cryptocurrency industry shouldn’t be one of them.
