U.S. lawmakers have raised concerns about the revolving door between financial regulators and the crypto industry. “Over 200 government officials have moved between public service and crypto firms,” the lawmakers said, adding that they include 31 Treasury Department officials and 28 Securities and Exchange Commission (SEC) officials.
Revolving Door Between Financial Regulators, Like SEC, and Crypto Industry
Five U.S. lawmakers have sent a letter to seven financial regulators inquiring about measures they are taking to prevent the revolving door between their agencies and the crypto industry. The letters, dated Oct. 24, were signed by Sen. Elizabeth Warren (D-MA), Sen. Sheldon Whitehouse (D-RI), Rep. Rashida Tlaib (D-MI), Rep. Alexandria Ocasio-Cortez (D-NY), and Rep. Jesús G. “Chuy” García (D-IL).
The letters were sent to Securities Exchange Commission (SEC) Chair Gary Gensler, Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam, Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, Federal Deposit Insurance Corporation (FDIC) Acting Chair Martin Gruenberg, Office of the Comptroller of the Currency (OCC)’s Acting Comptroller of the Currency Michael J. Hsu, and Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra.
“We write seeking information about the steps your agency is taking to stop the revolving door between our financial regulatory agencies and the cryptocurrency (crypto) industry,” the lawmakers wrote. “The crypto sector has rapidly escalated its lobbying efforts in recent months, spending millions in an attempt to secure favorable regulatory outcomes as Congress and federal agencies work to craft and enforce rules to regulate this multi-trillion dollar industry.”
As part of this influence campaign, crypto firms have hired hundreds of ex-government officials … and we are concerned that the crypto revolving door risks corrupting the policymaking process and undermining the public’s trust in our financial regulators.
“According to the Tech Transparency Project, over 200 government officials have moved between public service and crypto firms, serving as advisers, board members, investors, lobbyists, legal counsel, or in-house executives,” the letter details.
The lawmakers added that they include at least 31 Treasury Department officials, 28 SEC officials, 15 CFTC officials, six Federal Reserve officials, five OCC officials, three CFPB officials, and two FDIC officials.
The letter continues:
These officials join at least eight former members of Congress, 79 former congressional staffers, and 32 former White House officials who are currently advising or lobbying for crypto interests.
“Americans should be confident that regulators are working on behalf of the public, rather than auditioning for a high-paid lobbying job upon leaving government service. The rapidly spinning revolving door out of government and into the crypto sector, however, undermines both imperatives,” the lawmakers stressed.
Their letters conclude with a list of questions concerning each agency’s guidelines to prevent a revolving door with the crypto industry. For example, one question asks about what ethics and transparency rules are in place to ensure the integrity of agency officials. Another question concerns how each agency protects its policies from being unduly influenced by current or former employees’ potential conflicts of interest. The regulators were asked to provide answers by Nov. 7.