This Commission That Regulates Crypto Could Be Just One Guy: An Industry Lawyer

Republicans in the Senate are racing to confirm a lawyer with a long list of crypto industry clients as the next Commodity Futures Trading Commission chair a position that will hold wide sway over the industry CFTC nominee Mike Selig has served dozens of crypto clients ranging from venture capital firms to a bear-themed blockchain company based in the Cayman Islands according to ethics records obtained by The Intercept Those records show the breadth of expected conflicts of interest for Selig who if validated will serve on the CFTC alone due to an exodus of other commissioners With a Bitcoin crash wiping out a trillion dollars of value in the past sparse weeks the industry is counting on friendly regulators in Washington to give it a boost Related Trump Is Rewriting History to Justify His Sketchy Pardon of a Crypto King Senate Agriculture Committee members voted - on party lines in favor of Selig on November setting up a vote in the full Senate The committee vote came a day after a hearing in which Selig dodged straightforward questions about whether CFTC staffing should be expanded as it takes on a role overseeing digital assets and whether Donald Trump was right to pardon Binance founder Changpeng Zhao One thing Selig was committal on however was the danger of over-enforcement leading the consumer group Better Markets to criticize him as the wrong choice to lead the CFTC The CFTC is facing unprecedented strain as crypto and prediction sphere oversight has been layered into its traditional derivatives sphere oversight responsibilities mentioned Benjamin Schiffrin the nonprofit group s director of securities protocol During his hearing Mr Selig exhibited little interest in regulation on either count and was unable to answer the simplest of questions Friendly to Crypto Selig has drawn widespread backing from crypto industry groups in the wake of his October nomination which came after an earlier Trump nominee was derailed by the Winklevoss twins who sued Mark Zuckerberg over the creation of Facebook before launching a lucrative career in crypto Selig s resume shows why the industry is so assured with him Early in his career he was a law clerk for J Christopher Giancarlo the CFTC chair during Trump s first term who calls himself CryptoDad After the CFTC Selig joined Giancarlo at the white-shoe law firm Willkie Farr Gallagher His client list there extended from major crypto investors to smaller startups numerous of them with several presence in the derivatives or commodities worlds according to a form he filed with the Office of Cabinet Ethics after his nomination Selig s clients included Amir Haleem the CEO of a crypto company that was the target of a yearslong Securities and Exchange Commission probe Architect Financial Technologies which last year stated a CFTC-regulated digital derivatives brokerage Berachain the Caymans-based blockchain company whose pseudonymous co-founders include Smokey the Bera and Papa Bear CoinList a crypto exchange that allows traders to access newly listed digital tokens Deribit a crypto options exchange Diamond Standard which offers commodities products that combine diamonds and the blockchain Input Output Global one of the developers of the decentralized blockchain Cardano and the U S branch of eToro an Israeli crypto trading platform Yes I think the crypto society is excited about Mike At least one of Selig s former clients Alluvial Finance met with staffers of the crypto task force where Selig has served as chief counsel since the start of the second Trump administration according to SEC records Selig s clients have also included exchange groups including the Proof of Stake Alliance which advocates for friendly tax policies for a type of blockchain and the Blockchain Association which represents dozens of capital firms and large crypto companies in Washington Pushing back against the idea that Selig was a one-trick pony in a latest podcast interview Giancarlo mentioned that Selig s interests extended to other industries overseen by the CFTC such as agriculture Yes I think the crypto region is excited about Mike But so is the whole CFTC society Giancarlo declared It s not Crypto bro goes to CFTC This is somebody who has had a decadelong practice in all aspects of CFTC law and jurisdiction and is accomplished in all those areas Revolving Door It is far from uncommon for Republican presidents to tap industry-friendly lawyers to serve as financial regulators Selig though is poised to assume a uniquely powerful position thanks to a more distinctive circumstance an exodus of CFTC commissioners this year The commission s other members fled for the doors since Trump s second term began with only a single crypto-friendly Republican left to serve as acting chair She has stated that she will step down once her replacement is ratified Trump so far has yet to nominate any Democratic commissioners on the body that is typically split - along party lines with the majority going to the party that controls the White House That appears to have been the sticking point for the Democratic senators who unanimously voted against Selig at the committee vote Selig may not have to recuse himself from matters involving his former clients as CFTC chair it appears In his leadership ethics filing Selig pledged not to involve himself in matters involving his former clients for the standard period of a year after he represented them However Selig has been in regime utility for the majority of meaning that there are only a scant weeks remaining of that blackout period A White House spokesperson did not answer questions about possible conflicts of interest if Selig is established Mike Selig is a highly qualified crypto and industry leader who will do an excellent job in leading the Commodity Futures Trading Commission under President Trump White House spokesperson Davis Ingle declared in a announcement We look forward to his swift confirmation Backwater to Bleeding Edge If established Selig will lead an agency that was once considered a relative backwater until it was put in charge of regulating derivates after the financial crash More in recent days Congress advanced decree that would put the CFTC on the bleeding edge of overseeing digital assets Nonetheless even relatively crypto-friendly Democrats such as Sen Cory Booker of New Jersey noted at the hearing last week that the agency has nowhere near the staff needed to take on a major new role in the financial markets The CFTC has only employees dedicated to enforcement actions compared to about at the SEC Booker reported There is a real issue right now with threshold in the agency that you are up to lead Booker informed Selig Despite the dearth of both commissioners and staff Selig was unwilling to commit to growing the agency if he is verified Pressed by Democrats whether he would ask Trump for a bigger staff Selig repeatedly explained that he needed to inquiry the issue Selig also avoided giving direct answer to questions from Democrats as to whether the CFTC should crack down on the emerging world of prediction markets offering sports gambling outside the auspices of state regulation and whether crypto exchanges should be allowed to vertically integrate by investing in the same tokens they allow customers to commerce Selig did signal a general openness toward cryptocurrencies and skepticism of regulation in his announcement to the committee I have seen firsthand how regulators unaware of the real-world impact of their efforts and zeal for regulation-by-enforcement can drive businesses offshore and smother entrepreneurs with red tape Selig disclosed Everyday Americans pay the price for these regulatory failures If endorsed I am committed to instituting common sense principles-based regulations that facilitate well-functioning markets and keep pace with the rapid speed of innovation The post This Commission That Regulates Crypto Could Be Just One Guy An Industry Lawyer appeared first on The Intercept