Hi friends,
Hope you had a pleasant Thanksgiving. Can’t we all just make a truce to take off the month of December? Feels like we need a break.
Alas, yesterday, the House Financial Services Committee held a hearing featuring CEOs from some of the world’s biggest crypto companies. You may have seen this. It was, to be honest, relatively boring (?) and four and a half hours long. But, boring can be good. And in this case, unlike most of crypto, it was not an insane dumpster fire of chaos and craziness. Normalcy was nice. No fireworks. I enjoyed it.
You should read the Politico piece by Zach Warmbrodt, which runs down more of the hearing happenings. The gist is: the industry wants to be regulated on their own terms, Democrats are still relatively lukewarm to cold on crypto, SEC bad and CFTC good.
While there weren’t any big crackle and pop moments, there were still some important takeaways, albeit less spicy than some may have expected. So here’s my interpretation of the general consensus, coupled with my own takes. The Venn diagram of these things has relatively large overlap, so here we go.
- Boring is good: This goes for both Congressional members and the industry. There weren’t any “series of tubes”moments or “We run ads” moments. Maybe the closest thing was crypto champion (ha ha ha) Rep. Brad Sherman and mongoose coin. Relatively, no one seemed to embarrass themselves. Good job! (A side note worth mentioning: Rep. Ocasio-Cortez, who is a member of the Committee, earlier in the week garnered a lot of attention when she talked crypto on Instagram and why she doesn’t own any.)
- Cutting through the noise: I think Kristin Smith from the Blockchain Association describedthe sentiment of a majority of the industry to a tee on Twitter: They're Making progress! It would appear the message of crypto being important for a host of reasons is getting through. Perhaps to everyone’s credit, there seems to be an increasing understanding - and willingness to begin understanding - on the part of Congressional members and their staff. This is good!
- “Where have all the [members] gone?”: Perhaps one caveat, or at least one fact to take into account with the above assessment. A good friend of mine, who is also a close observer of the crypto policy space, pointed out to me that there was an important LIBOR bill discussion happening on the House floor at the same time. Thus, you did see less members on the dais (definition to follow) because that’s a bill under the Committee’s jurisdiction and it’s been in process for years. (Dais is the word we call the elevated platform where Congressional members sit. It is pronounced: die-is. You are now officially prepared to be a Congressional staffer. Congratulations.) There were, maybe, no more than 8-12 at any one time. Remember, the House Financial Services Committee has 54 members. So, perhaps the lack of fireworks came from the fact that you didn’t have 50 people crammed in together all vying for their 30 seconds of fame on MSNBC, Fox News, or your Twitter feed. The fun, desperate, suffocating energy that creates hunger and violence. This was missing.
- Brooks went hard in the paint: Brian Brooks stole the show. He's known to be aggressive and his time at the OCC certainly demonstrated his willingness to go to the mat on a number of issues important to the fintech industry. He is smart, articulate, and says and does crazy ass stuff sometimes where you’re like, “How did he get away with that? How did that happen?” I did not get to work with him when he was at Coinbase, as I was there when you didn’t have to necessarily be smart to get hired, but his move from there to the OCC to Binance US to Bitfury has been fascinating to watch. In not so short, he is a good performer and pretty elegantly addressed a lot of important issues facing the crypto industry. Overarching consensus was that “he was good”. One more thing worth noting about Brooks' testimony, and this was raised by my good friend Neeraj Agrawal. He made a good point on Twitter that while Brooks is now the CEO of a crypto mining company, many of the mining questions were directed at the other witnesses. Weird.
- Sam was the sleeper: Sam Bankman-Fried is well regarded as both a genius (he has a degree in physics from some diploma mill in Massachusetts called MIT) and very, very, very rich. He was also one of the largest donors to President Biden during the last election. And he seems like… a very nice person? Also, very few people know what the hell FTX is, at least in the swamp. I feel like I have a pretty good pulse on what’s happening with normies and I don’t think people know what they do, at least in DC. They certainly don’t have the brand recognition of a Coinbase, Gemini, Circle, etc. Maybe having a “sports arena” named after them will change that?! As far as I can recall, this is the first time we really saw Sam (I’m taking liberties here using his first name. I don’t know him. I’d like to? Pls DM me?) in a setting of this sort and he did very well. I’m not sure what it is, perhaps it’s the famed “X factor”, but people really like the guy and are fascinated by him. It will be interesting to see what he and the FTX squad do in the policy space, spare the inevitable acquisition of the Washington Monument Brought to you by FTX.
Ok. That’s it. Take care and see you Christmas week? Maybe I’ll do a dumb winter holiday themed post? I successfully pitched (but did not do because I had an intense cornbread stuffing to make from scratch) a Thanksgiving article where I was going to do federal financial regulators as sides. BuzzFeed level dumb, but Julie was like, “Yes.” Sadly you’ll have to live in suspense as to whether or not Yellen was going to be turkey or gravy. But maybe I’ll do something equally dumb for the next holiday - we will see! Buh bye.
John Collins is a Founding Partner at FS Vector, a fintech regulatory advisory firm based out of Washington, DC, where he leads the firm’s public affairs and regulatory strategy group. Prior to that he was a senior staffer in the U.S. Senate and helped lead the American Bankers' Assocation international fintech policy work. He was early employee of Coinbase, where he served as Head of Policy, explaining the company (and bitcoin) to policymakers around the world.
