Warren wants regulators to answer for crypto ‘revolving door’
Sen. Elizabeth Warren, D-MA, and four other Democratic lawmakers asked seven federal agencies on Monday what safeguards are in place to prevent employees from jumping to crypto lobbying positions.
“We are concerned that the crypto revolving door risks corrupting policymaking and undermining public trust in our financial regulators,” Warren wrote in a letter also signed by Sen. Sheldon Whitehouse, D-RI; and reps. Rashida Tlaib, D-MI; Alexandria Ocasio-Cortez, D-NY; and Jesús “Chuy” Garcia, D-IL.
More than 200 government officials have moved between regulatory positions and crypto firms, the lawmakers wrote, citing figures from the Tech Transparency Project. It includes 31 from the Ministry of Finance; 28 of the Securities and Exchange Commission (SEC); 15 of the Commodity Futures Trading Commission (CFTC); six from the Federal Reserve; five from the Office of the Comptroller of the Currency (OCC); three from the Consumer Financial Protection Bureau (CFPB); and two from the Federal Deposit Insurance Corp. (FDIC), the lawmakers said.
“Just as powerful Wall Street interests have long exerted their influence over financial regulation by hiring former officials with knowledge of the inner workings of government, crypto firms appear to be pursuing the same strategy,” the lawmakers wrote.
In two of the most famous examples, former Acting Comptroller of the Currency Brian Brooks became CEO of crypto exchange Binance.US months after leaving the OCC. He resigned after three months at the company, but moved to another crypto firm, Bitfury, where he remains CEO.
Kathy Kraninger, the CFPB’s former acting director, became vice president of regulatory affairs at crypto startup Solidus Labs. Among her tasks: Building up the company’s regulatory team.
In their letter, the lawmakers claim that crypto firms more than quadrupled their lobbying efforts over the past three years.
“Americans should be confident that regulators are working on behalf of the public, rather than auditioning for a high-paying lobbying job when they leave public service,” the lawmakers wrote.
Warren and the others on Monday asked officials at the SEC, CFTC, OCC, CFPB, FDIC, Fed and the Treasury Department what policies the agencies have in place to prevent former employees-turned-lobbyists from exercising influence. They also asked how long individuals must wait after leaving government work before taking roles in a room they oversaw.
The CFPB, FDIC and Fed acknowledged receiving the letter, according to Law360. The SEC declined to comment. The CFTC and OCC did not respond to requests for comment.
“Treasury employees seeking external employment are subject to feedback obligations that limit the types of work they can perform in their current role and must disqualify themselves from participating in a particular matter in which a potential employer has a financial interest,” spokeswoman Kristin Lynch told the publication . “This requirement applies even to the early stages of a case, such as making a recommendation or participating in an investigation.”
The lawmakers are also asking the agencies what rules they have in place to ensure transparency and avoid the appearance of conflicts of interest. Warren and the others said they want answers by Nov. 7. The Fed and FDIC, in their acknowledgments to Law360, promised to respond to the letter.
