Earlier this month, Paradigm went back into the field for a new national poll on Americans’ ownership of crypto, their views on how the government is approaching crypto, and other key political topics.
Today, we’re sharing those findings with the community.
Chair Gensler just testified that he taught multiple courses on crypto but has never owned or used it. How can you teach a course about something you've never owned or used?
@MIT
This Manchin deal is probably the best kept secret I’ve ever seen in politics. Even pretty senior Hill and Admin staffers didn’t have an inkling of this deal being live and no one knows details.
It's Friday night, the kids are in bed, the biggest piece of crypto legislation for this year has dropped—the McHenry-Thompson bill on market structure— so let's get this party started.
Here’s a deep dive into the bill’s contents. Thread
For all our bluster, nobody in politics, D or R, actually knows why Biden is unpopular. The likeliest theory is it’s related to inflation in some way, but the degree of public anger at it has been surprising.
That’s why everybody is fighting - there’s no clear agreed-upon cause.
Biden is reportedly frustrated with his low poll number (like this), and I don't blame him.
Serious question: What could he do to turn this around? Everyone's answers always strike me as ideologically self-serving. I really don't know!
Ages of the six Democrats that voted for the bill:
35, 41, 47, 48, 50, 57 (average: 46)
Average age of the rest of the HFSC Democrats: 61
More than anything else, age dictates Democratic Members’ views on crypto and whether legislation on crypto is needed.
This is a historic day for crypto policy.
@FinancialCmte
just advanced the FIT for the 21st Century Act by a vote of 35 to 15, including significant support from Democratic members.
This sends a strong bipartisan message in favor of reasonable regulation for digital assets.
I do think the core point here - that Sen. Warren lost the official primary but won the staffing and ideas primary - continues to be under appreciated.
@jtstj_
Elizabeth Warren didn't catch populist fire, but she got all her ideas implemented by the Biden administration, because unlike Bernie, she did not surround herself with the worst people in left-of-center U.S. politics.
This is the number one feature of US politics this decade. In five months, Dems won’t be able to approve any nominees for Senate confirmed posts without GOP votes for another 10+ years, and maybe for 15-20.
Much of the political world is underestimating the disaster that lies ahead for Democrats in the Senate over the medium-term—even if they win national majorities—due to education polarization, rural over-representation and a hardening electoral realignment.
Good primer here >>
In all seriousness, the thing that should terrify every one of us on the left & center-left is that the inflation of the last few years has been so psychologically shocking that long-time committed socialists are expressing dissatisfaction with the current full employment economy
Funny to listen to all the screams from Democrats when you mention inflation or the high cost of living. No wonder you look to litigation to beat Trump, because you've got nothing else except snobbish dismissal.
CFTC Chair Behnam tripling down on Ether being a commodity and stablecoins also being commodities, contra SEC Chair Gensler's interview in NY Mag. Rare to see this level of interagency disagreement in public.
Much of Chair Gensler's pitch to other policymakers is that he understands crypto because he taught a course on it. But how was he competent to teach a course about something he's never actually touched?
Another big crypto bill has dropped, the Lummis Gillibrand Responsible Financial Innovation Act.
It’s the biggest Senate crypto bill this year, but it’s going to be especially important for how it influences the House’s McHenry Thompson bill.
Thread
Now for something surprising: crypto voters leaned to Biden in 2020 but now lean Trump.
Among crypto owners, 43% recall voting for Biden in 2020 and 39% recall voting for Trump. Now crypto owners support Trump 48-39.
In a close election, this swing could be decisive.
Clarifying point: using crypto is not limited to trade it - if you’re writing code, spinning up a node, that’s using crypto too. You don’t need to be a trading degen to be crypto native even.
The trade Biden made was giving progressives a lot of power of domestic staffing and regulation (especially at the independent agencies and inside the White House) in exchange for a free hand on foreign policy staffing and decisions.
Both sides got what they wanted until now.
Biden put a lot of emphasis on trying to avoid factional fighting after winning the primary, treating the progressive wing he beat with a level of indulgence that I know has frustrated a lot of his actual 2020 supporters.
That bargain’s now fraying.
You know it’s bad when people in the Admin are privately saying “Coinbase is making really good points here.”
Ultimately, Biden Admin is divided on all things crypto: has been, is, and probably will be for the rest of this term. So to the courts we all go.
It is hard to throw the rulebook at an entire economic sector when there is no rulebook and the people responsible for the rulebook can't even agree themselves what the rulebook should say – even as we have asked for a rulebook. 13/15
The judge in this case, Judge Failla, was appointed by President Obama with the recommendation of Senators Schumer and Gillibrand in 2013. She’s a former prosecutor, so her issuing this is notable.
She’s also the judge presiding over the SEC’s suit against Coinbase.
Another huge victory for the crypto world & software devs. SDNY court tossed out a class action against us, deciding that the “self-driving” Uniswap protocol has primarily *lawful* use & protocol devs aren’t liable when others misuse it. The trend in courts is obvious.
@AstorAaron
@roddreher
With the number of troops they have (and in a VERY hostile countryside), this map suggests about 1 Russian soldier per square kilometer can “hold” the territory they’ve passed through.
Ok, having gone through the Ripple decision, here’s my takeaway:
Big loss for the SEC’s approach to crypto via focusing solely on enforcement, and this measurably increases the odds of crypto legislation passing this year.
Thread
It takes real skill to so mismanage a situation that you have serious institutionalists like Professors Macey and Hamermesh filing amici briefs AGAINST the SEC in an enforcement case.
SEC v. Coinbase, Big Update:
Six Securities Law Scholars File Devastating Amicus Brief in Support of
@Coinbase
.
Law Professors from Yale, Univ. of Chicago, UCLA, Fordham, Boston University and Widener filed an amicus brief last night that Absolutely Shreds the SEC's…
So, California is about to pass a law analogized to New York's controversial BitLicense law
Curious about what the law does and its implications for crypto in the Golden State, especially if you're a small biz? We've got you covered: long thread.
Good piece. But on the “why is this assault happening” questions, I’d say there are two underlying reasons.
1) Techlash has progressed to where you couldn’t pass the Telecommunications Act of 1996 today
2) Idea of a decentralized internet isn’t that appealing to many in DC.
When President Biden issued a balanced, forward-looking executive order on digital assets last year, it looked like the U.S. could take leadership of the crypto industry. That chance is now lost.
Opinion by CoinDesk Chief Content Officer
@mikejcasey
This case was a 3-0 decision, where two judges appointed by Presidents Obama and Carter were so turned off by the SEC’s arguments that they not only ruled against the SEC, they agreed to join Trump-appointed conservative judge Rao’s opinion.
The great thing about the American political system is that it’s designed to curtail administrative overreach
In the face of an intransigent
@SECGov
, the courts will ensure crypto has a future in the US
It’s a joy and a privilege to announce that I’m joining the fantastic team at
@paradigm
to assist them with policy. I’m incredibly grateful to
@alanapalmedo
,
@matthuang
, and
@FEhrsam
for the opportunity. Thread.
It may be seen that moderate inflation (3-4% annually) even outpaced by wage gains is more politically toxic than many of us on the center-left expected in 2011-2020.
If that’s the lesson from all this, it would be very bad for large scale progressive policymaking going forward.
Hard to overstate how much damage short-sighted progressives are doing to the larger progressive project by insisting that any inflation is too much, REGARDLESS of whether incomes keep pace. It’s a brainless retreat to crankdom and despair and it empowers your enemies.
Over the weekend,
@sheila_warren
and I published an op-ed on how many of my fellow progressives are making an analytical mistake when it comes to crypto.
This is probably the most personal work I've done in a long time.
I think a lot of people are struggling with how inflation is different than other economic metrics.
When unemployment goes down, things are getting objectively better.
When inflation goes down, prices are still rising albeit less quickly. So things are getting worse, slower.
Sorry but everyone saying the polling on the economy is grounded in material reality cannot explain the *decline* in polling as the single biggest issue (inflation) has gotten better.
There was a belief in 2021 that these added benefits for even a year would be incredibly popular, so popular that it would be impossible for them to not be renewed.
The theory didn’t work, in part because unlike with the ACA, opponents didn’t need to do anything to undo them.
It's been genuinely remarkable to watch as the covid safety net expansions get taken apart bit by bit by bit by bit
Unemployment insurance, rental aid/moratorium, then the student debt freeze ... now soon 2 be $ for 6M poor mothers on WIC, per
@TonyRomm
SEC Chair Gensler just testified that "both" of his official email addresses are on the SEC's website. Anyone able to find them? Asking for 300 million Americans.
Personally, I was pretty sympathetic to the SEC’s position five years ago (the questions posed by crypto are hard! Learning about a new space takes time), but have gotten less sympathetic since there’s been no progress on regulations over that time.
I agree with Paul.
If there was a denial of the ETH spot ETFs, there would again be a lawsuit at the DC Circuit. Not only would the facts be similar to the Grayscale case, but the plaintiffs will be able to cite the Grayscale case as precedent.
But it’ll take some time.
One thing that’s been consistently true of the Biden White House: they always seem surprised when, after making concessions in negotiations, the other party just asks for more.
Wait, you have had a material undisclosed short position, which was underwater, and have been telling people to get out of the crypto space?
Why haven’t you declared this before? Was the position live when you testified?
One of the worst kept secrets in DC is a lot of the SEC attorneys working on crypto enforcement don’t actually want to be doing a total war ballistic attack against the biggest crypto firms, when they instead could be doing more targeted enforcement. So this isn’t surprising.
SCOOP:
@SECGov
bracing for major exodus among senior enforcement lawyers in its crypto assets and cyber unit, according to officials at major law firms who have seen several of the resumes.
@FoxBusiness
is withholding names to protect privacy; the moves suggest that the bleed of…
Pretty clear SEC Chair Gensler wants a public fight with crypto at this point. Rare to see a regulator basically publicly call a whole industry he says he wants to regulate a bunch of lawbreakers. Makes it tough for courts to accept claims the regulator is acting impartially.
As Chair of
@SECGov
, I have one goal with regard to the crypto markets: to ensure that investors and the markets receive all the protections that they would in any other securities market. How?
Read my op-ed in
@thehill
:
So, I respectfully disagree with Noelle on this one. I think BlackRock is doing this on the merits (seeking to get a bitcoin ETF approved) rather than trying to send a political message.
Bear with me, because this is complicated in terms of Democratic politics.
My take on the BlackRock BTC ETF filing:
- **BIG** news - BlackRock is the world's largest asset manager
- It’s not going to happen
- BlackRock knows this
- Rather, it is sending a political message
- Larry Fink is a prominent Democrat
Couple of points:
1) Senators deal with hundreds of issues and a fraction of their staffs deal with any one; this doesn't mean Sen. Warren has changed her mind on crypto
2) DC is Veep, & accidents like this are legion
3) Some intern or staff assistant is about to have a bad day.
BREAKING: Elizabeth Warren signs a certificate to honor
#Bitcoin
creator Satoshi Nakamoto with a ceremonial flag flying. "Americans are forever grateful." 🇺🇸
This is also going to be a huge issue for us competing with any other developed or developing nation as a manufacturing exporter: our median wage is just vastly higher than every other G-7 economy, let alone the rest of the world.
In my opinion, this is an absolutely major theme in the coming years.
A massive wage arbitrage has opened between the US and its competitors. The overwhelming majority of people in the US have no idea just how much more money they make than the Japanese, French, British, etc.
Aside from
@joshchafetz
, David Super is probably the smartest person on the planet regarding Hill process and rules. If he says doing a second standalone reconciliation for the debt ceiling works, it works.
@paulwaldman1
Georgetown law professor David Super offers a fascinating idea here:
He says Dems can use a separate, stand-alone reconciliation vote to effectively defang the debt limit once and for all.
Check it out:
Chair Gensler aside, the key lesson of the Hinman emails is that the SEC staff has been and is utterly lost on how to approach crypto. There’s never been a consensus in the building.
That’s a big part of why their approaches to the industry have vacillated wildly over the years.
whatever you think of Hinman emails and Ripple's chances of wining/losing, I think we can all agree SEC policy, tactics, everything on crypto has been an absolute mess--even before Gensler--inviting arbitrary application of law through nebulous 'morphing' non-guidance
So, another day, another piece of draft legislation on crypto. This one is from NY Attorney General Letitia James and represents an effort to create a regulatory framework for crypto in NY state.
Let’s dive into what the bill actually does. Thread.
@NathanTankus
@MIT
I think there’s a different between teaching about abstract thought/policy without doing and teaching about a technology without actually touching it.
Reading through the SEC’s disapproval of the Greyscale ETF in the clear light of day, the major takeaway is that the SEC will probably reject any other Bitcoin/crypto ETF absent new legislation. Short thread.
This is a core divide on crypto within DC - is this industry something we want in the US?
A significant number of people are saying “no, let it leave”.
If I ever do write the saga of how multiple Admins failed to deal with crypto in a common sense way, Sen. Warren’s tweet from her campaign account about building an “anti crypto army” will be a major hinge point.
It was the signal this was not just about policy but politics too.
People aren’t reading to the bottom. Yes, NYAG claims Ether is a security. They then ALSO claim it’s a commodity.
They’re not taking sides in SEC vs CFTC, they’re just covering their bases.
New York's attorney general files a lawsuit against the crypto exchange KuCoin, alleging that it sold securities without registering as a securities broker or dealer.
Diverging from the CFTC, the lawsuit describes tether and ether as securities:
Don't like a U.S. government agency's position on crypto on a given day?
Just wait a day, and another agency will take a completely different position.
YELLEN: SUPPORTS U.S. REGULATORY OVERSIGHT OVER CRYPTO TO PROTECT CONSUMERS, INVESTORS -CNBC
YELLEN: ADDITIONAL CRYPTO REGULATION WOULD BE APPROPRIATE, WILL WORK WITH CONGRESS TO SEE ADDITIONAL LEGISLATION PASSED
Lots of political news from Australasia this weekend. Australia’s referendum but also New Zealand’s election where voters have just ended 6 years of Labour rule and returned the most conservative government for many years. Big, big losses for NZ Labour.
There’s going to be a lot of talk about ETF approvals/what they mean for crypto, but the real information in the ETF approval is this: the SEC did an analysis and found that Bitcoin futures market correlated 98.4% to spot hourly.
So the SEC agrees now that it’s all one market.
If we’re discussing the SEC’s enforcement actions against key crypto companies, we’re not discussing the McHenry-Thompson bill.
But we’re also not discussing the SEC’s failure to finish most of the rules on its very large agenda, from ESG to market structure.
This is a judge from SDNY who was appointed by a Democratic president.
The SEC’s arguments will get an even tougher hearing from the conservative dominated Supreme Court.
The idea that the courts would cleanly agree with the SEC was a fantasy, and has made legislation harder.
SEC vs Coinbase trial update:
Judge Katherine Polk Failla says to the SEC lawyer:
"These 1933 laws had a great run for 90 years but we have new tools now and new things and we need to readdress." !!!!!!
YES!!!! BULLLLLISH!!!!!!
Yesterday, Paradigm joined the chorus of companies, stakeholders, and other agencies in the Biden Admin asking the SEC to improve its proposed rulemaking on custody.
TLDR: the rule needs a lot of work - as it stands, it’s an illogical mess in key places.
🚨BREAKING re
@Ripple
/
@SECGov
:
ORDER: granting in part and denying in part 621 Motion for Summary Judgment. For the foregoing reasons, the SEC's motion for summary judgment is GRANTED as to the Institutional Sales, and otherwise DENIED. Defendants" motion for summary judgment…
I think a lot of people don’t get the signaling function of Chair Gensler giving this interview to NY Mag.
NY Mag, more than most other publications, speaks to the beating heart of the CENTER of the Democratic Party.
And now that we know it’s a Binance settlement per Bloomberg, SEC absence indicates this is probably a global Binance settlement with US Govt EXCEPT for the SEC civil enforcement case.
Absence of the SEC Chair for a crypto enforcement announcement with this many major Admin officials is curious.
Could suggest that this doesn’t involve SEC, could suggest that this is a settlement announcement that the SEC isn’t participating in.
Many things can be true at once:
- Biden was the only person who could’ve beaten Trump in 2020
- Biden is not the strongest Dem candidate in 2024 even against Trump
- A competitive Dem primary would be brutal
- Biden is very unpopular and nobody really knows why
This is going to scramble a lot of narratives. In DC, it’ll probably be taken as:
1) evidence for most that crypto is staying
2) proof for critics that the industry won’t challenge finance
3) proof for regulators that the “problem” with crypto is it’s run by tech & not finance.
The second point is the key one.
If you are working in crypto as a tech dev or engineer, yes, there are a few people in the White House that think your job is against the national interest and should be abolished.
Currently, the White House views tech jobs/dev talent and energy as scarce national resources and therefore zero sum—particularly w/r/t crypto.
-mining bitcoin? Robbing families of power
-working in crypto? Your dev talent is being taken away from “real” applications
I think people (especially those within crypto) are overlooking a key fact regarding the BTC Spot ETF approvals: Chair Gensler took HEAVY fire from his progressive allies for approving the ETFs, as the consensus view was that the Grayscale case didn’t require approval.
If
@FortuneMagazine
’s reporting is correct and the
@SECGov
is indeed on a campaign to classify $ETH as a security, besides scrutinizing its proof-of-stake model, the regulator may also be looking into the ICO, which the
@SECGov
itself “put aside” when it said $ETH was not a…
Some policymakers feel they need to be unfairly tough on crypto just because they went too easy on the banks that caused the Great Recession.
Crypto is the good kid who hosts a party a week after the frats threw a rager.
This is your periodic reminder that information security practices inside non-national security agencies aren't great, hacks are very common, and we really should have a whole of government effort at improving government information security.
The deep dive into the bill is finished (see the QT for the thread). Here are a few overall thoughts on the bill and its prospects for passage.
Short thread.
It's Friday night, the kids are in bed, the biggest piece of crypto legislation for this year has dropped—the McHenry-Thompson bill on market structure— so let's get this party started.
Here’s a deep dive into the bill’s contents. Thread
Watching the HFSC markup, Rep. Lynch just said he’s confident “the Ripple case will be overturned on appeal.”
Maybe it will in the appeals court (though I have my doubts), but the SEC’s odds at this Supreme Court aren’t great. Strikes me as a reckless approach.
It’s an article of faith in policymaking circles in DC at this point that the federal government’s approach over last 30 years to the internet, social media, gig economy, crypto, and all other nascent tech has been anywhere from a failure to an unmitigated disaster.
CNBC reporter, summarizing AI regulator thoughts:
"They want to avoid the same mistakes that were made with the internet and social media" ... "Guardrails weren't in place"
🤦
Nouriel Roubini, who criticized crypto/blockchain in testimony before the Senate in 2018 is now working on a crypto project.
He also notes the numerous uses for crypto, from speed and transparency to financial inclusion.
@SenateBanking
- you should invite him to testify again!
My new
@FT
oped ‘Flatcoins’ are the way forward. The tokens merge the benefits of blockchain and fintech to provide a hedge against inflation while doing social good
NOURIEL ROUBINI
Strategically, the SEC really needs to keep House Dems away from the negotiating table on McHenry-Thompson.
Once Dems starts suggesting there are specific changes to the legislation they’d need to support it, the bill’s odds of passage go up.
If we’re discussing the SEC’s enforcement actions against key crypto companies, we’re not discussing the McHenry-Thompson bill.
But we’re also not discussing the SEC’s failure to finish most of the rules on its very large agenda, from ESG to market structure.
This is 100% true, and it was received wisdom among party actors and DC elites that Biden wouldn’t, couldn’t, (and in some quarters) shouldn’t be the nom from spring 2019 until the South Carolina primary.
@mehdirhasan
I think the important thing here is that if it was up to journalists/Democratic staffers/donors then Biden would not have been the nominee, and that the only reason we have a trifecta at all is that the working class wing of the party didn't listen to them
I actually think this is correct. The SEC’s vaunted “140-0”* win loss record is now broken and policymakers are whispering the SEC has definitely lost control of the situation.
Chair Gensler isn’t going to just throw up and his hands and say “well, we tried!”
New Treasury Report on DeFi and illicit finance just dropped and it’s got concerns about DeFi but also 1) optimistic that the industry can help address illicit finance and 2) understands DeFi isn’t going away and seeks realistic solutions.
Any debt ceiling deal (even short term extension) will need 60 hours of cloture in the Senate & 72 hours of post-intro review in the House.
That likely means a bill has to be introduced 132 hrs before deadlines: May aka noon Thursday the 25th.
So, anon, the fact that these two members decided to work together on this bill is very significant. It shows they want to get this passed, are aligned on the goal and the substance, and everyone should take this legislation seriously. 8
This is like Libertarians complaining about too little government during the Reagan Admin. It’s core members of the movement defecting publicly from a major policy effort. Even under aggressive shaming from social media!
Good thread.
It’s clear from the public comments, the in-room dynamics, and everything else that the Chair and Ranking Member want and are close to a deal.
It’s select mid-level staffer opposition in the Biden WH and Fed that is the blocker here.
The House Financial Services Committee is marking up the stablecoin bill and there is DRAMA.
Lots of news is being made, but seemingly no one is paying attention. You can learn a ton by watching rare moments like this.
Let's pull out some highlights in this thread:
@aquaimperium8
Europe does seem to really resent that we can do a carrots only industrial policy while they can’t because the reserve currency. But that’s a benefit of being the reserve currency (which comes with other costs, especially on ability to be a manufacturing export powerhouse).
The SEC has backed into a view that decentralization in crypto is basically impossible.
Regulators assuming technology can’t work or improve usually come to regret it.
decentralization & user governance are a joke to this SEC
due diligence or attempted legal compliance are claimed by this SEC as proof of willful legal violations
a perversion of justice
sad for this US lawyer who once advocated for SEC coverage of crypto to see
The major implications of Judge Torres refusing to allow an interlocutory appeal on Ripple are:
1) no chance of Judge Torres’ ruling being overturned before the end of 2024 (as SEC hoped)
2) no chance this case can get to the Supreme Court before 2026.
This is very odd - despite the fact that lower income Americans are getting the bulk of faster than inflation wage gains, they’re the ones most down on Biden’s leadership.
BREAKING: Four in 10 Americans say they've gotten worse off financially since Joe Biden became president, the most in
@ABC
News/
@WashingtonPost
polls dating back 37 years.
The SEC leadership had a choice over last few years:
1) embrace legislation/clear regulation of crypto, & be accused by a few folks of legitimizing it
2) gamble on an aggressive legal strategy crafted by non-lawyers
They choose poorly, and now their overall power is weakened.
@matt_levine
Some thoughts on your piece.
1. "People" don't buy meta stock on the open market. Almost all trading is quantitative. Then funds. Individuals make up a small pct of exchange traded stocks (maybe meme stocks now skew it )
On the flip side almost all programmatic trading…
The .
@CFTC
took a novel action yesterday by filing charges against a DAO (decentralized autonomous organization) and its managers. This approach was a mistake. Short thread.
Speaking as a lawyer, the only people that really like this system are lawyers. Most in government find this interminable process of policy infuriating, as only lawyers obsess over process for process’ sake.
First, word of warning: this bill is MASSIVE. It clocks in at 162 pages, meaning it’s almost 20% of the size of the entire Dodd-Frank Act.
And understandably! This bill is an effort to provide clarity across a host of issues (jurisdiction, registration, even on stablecoins). 2
@JoePostingg
@SpecialPuppy1
Flip side - we ran him in the one cycle where 60 was possible, we hit it by the slimmest of margins, and got ACA for it.
I’d argue the timing was optimal.
It’s about to be a very intense and exciting 96 hours in Washington, maybe the most consequential few days in crypto policy history.
If there’s no movement towards bipartisan legislation now, there probably won’t be before the 2024 election.
Buckle up.
End
The SEC just lost a case in DC Circuit Court re SPIKES futures, court saying the SEC order was "arbitrary and capricious" which is the same legal language Grayscale used in their suit. That said, this has no connection to bitcoin, but it does show the SEC can lose.
One of many reasons the "regulation by enforcement" approach was a poor strategy by the SEC is there have to be a few hundred cases at minimum over the next decade for it to work.
And the SEC has to basically bat 1.000 in them, while the industry has to win just once or twice.
Grayscale v SEC just wrapped up.
It went favorably for Grayscale. Thread below summarizes why.
Doesn't mean of course Grayscale will win, but they're in better position than this morning.
Keep an eye on GBTC price—if discount closes, market agrees
@Pinboard
Every major cause seems like it has an answer:
- he’s old (Trump is almost as old)
- inflation (wages are up/people are happy with their own circumstances)
- it’s the left (they say they got more this Admin than in previous)
- it’s never Trump going home (they still hate Trump)
Instead, it looks like crypto will be vouched for as a "real" industry to Democrats by other parts of finance rather than by financial reformers. That comes with different benefits and costs politically, but it does seem to be the path we are on.