Hi all, Julie here.

First off, please take this three minute survey for me and get entered to win a Fintech Today hat or 1-month free of FTT+.

Second, I’m pinch hitting for John who’s got a busy week. I’ll try to bring as much humor and sass to this newsletter as he does. I actually have a bit of a scoop for you, and when I mentioned it to John, he told me it was a big deal. So, I figured I’d write about it and stay on the topic of DC.

Alexis Goldstein, Director of Financial Policy at Open Markets Institute, is (almost certainly) heading to CFPB to advise on crypto and other fintech issues. Rohit Chopra, who assumed the role of CFPB Director in October, is bringing her on board. For those that don’t know much about Goldstein, the TLDR is that she’s been a vocal crypto skeptic in the past and indicates a Rhit-run CFPB is going to take a hard look at crypto industry practices. Here are some quotes from her in the recent past:

“Regulators must not tie their own hands while we wait for a crisis. Such an approach risks enshrining a shadow marketplace for these crypto assets, which have grown from $30B to $126B in just the last year.”
“Crypto firms purport to be on the cutting edge of technology, however a lack of regulatory oversight and legal accountability often leads to worse cybersecurity and data privacy outcomes for users of trading platforms. There is an attitude in crypto markets that some refer to as “do your own research” (often referred to by an acronym, “DYOR”) where users who are duped are often treated as if they should have known better. This deflects responsibility from the platforms who may have failed to adhere to regulatory protections.”

Now, this isn’t 100% official yet, but there are very strong indications that this is imminent.

Coupled with the recent news that the SEC brought on Corey Frayer, there’s reason for crypto folks to be concerned about how policy will shake out in 2022. While in the Senate, for instance, Frayer worked as an aide to Senate Banking Committee Chairman Sherrod Brown, who was a notable crypto skeptic. Here’s Senator Brown in July of last year:

“A cottage industry of decentralized financial schemes has also cropped up alongside these alternative financial products, in the hopes of creating a parallel financial system with no rules, no oversight, and no limits….They claim to enable ‘transparency.’ Their backers talk about the ‘democratization of banking,’ but there’s nothing ‘democratic’ or ‘transparent’ about a shady, diffuse network of online funny money.”

Everything from stablecoins to brokerages to crypto ETFs could see some big policy moves this year, and these recent appointments paint more of a glass half empty approach rather than a glass half full. Now, perhaps crypto bulls are in for a pleasant surprise, but either way, we’re in for a big year when it comes to regulation in this space.

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