The collapse of cryptocurrency exchange FTX has dragged a host of other companies with it and threatens the stability of the digital coin market, but some Capitol Hill lawmakers are holding on to their crypto investments, even as they call to stricter regulations.
At least nine lawmakers in Washington in both the House and Senate have traded more than a dozen different stocks and crypto assets since last year, according to Capitol Trades, a website that tracks stock market transactions. Capitol Hill lawmakers.
investment related news
Another lawmaker, Republican Senator Tommy Tuberville of Alabama, revealed during a Senate Agriculture Committee hearing on FTX on Thursday that he also holds crypto assets. Tuberville’s most recent disclosure reports from this year reviewed by CNBC show no buying of crypto stocks.
Of the ten offices contacted, only one said it sold off its crypto stocks after the FTX implosion. Rep. Marie Newman, D-Ill., who lost her re-election bid for crypto stocks held until last week, recently sold her digital token stocks as the industry took a hit.
“Congresswoman Newman’s husband sold his coin-based stocks last week due to the volatile nature of the sector,” Marcus Garza, a spokesperson for Newman, told CNBC in an email.
Congressional records show that Garza and her husband previously held positions in several crypto-related stocks and assets, including Coinbase Global, a cryptocurrency trading platform. Newman and her husband recently revealed a joint January purchase of Coinbase stock worth between $1,001 and $15,000. All legislators’ disclosure reports only show a range of the value of their stock purchases.
Coinbase’s stock price on Thursday morning was down more than half a percentage point.
Kedric Payne, ethics attorney at the Campaign Legal Center, said lawmakers who own crypto assets have a conflict of interest trying to write laws to rein in the industry after FTX’s collapse.
“This is another example of how even well-meaning lawmakers cannot escape the perception of corruption when they own individual stocks or cryptos,” Payne said in an email. “Voters are unlikely to trust lawmakers who own crypto to regulate it to their detriment. Reform is inevitable because these conflicts of interest don’t go away.”
He noted that these conflicts can be avoided if Congress passes laws that prohibit members and spouses from trading individual stocks unless there is a blind trust.
Walter Shaub, who was the director of the US Office of Government Ethics under former presidents Barack Obama and, for a short stint, Donald Trump, said lawmakers should not hold crypto assets when considering drafting new laws to strengthen industry oversight in the wake of the FTX scandal.
“It is outrageous that members of Congress are invested in cryptocurrency and related companies at a time when the FTX scandal has required congressional oversight and possible reform,” Shaub said. “This is precisely why Congress must prohibit its members from trading or owning conflicting investments.”
The lack of internal controls and a number of questionable decisions by former CEO Sam Bankman-Fried highlight how little oversight there is in the industry. Some of the lawmakers who hold crypto investments have criticized Congress’ failure to pass laws that would give financial regulators like the Securities and Exchange Commission more power to police the industry.
Sen. Pat Toomey, R-Pa., who is also the top member of the Senate Banking Committee, tweeted last month after the collapse of FTX that “the impact on Americans of today’s bankruptcy filing today by @FTX_Official could have been mitigated had there been a sensible, legally authorized US regulatory framework for digital assets.” Toomey steps down from Congress and is replaced by Democrat John Fetterman.
Despite calls for clearer regulations, Toomey told CNBC that he has no plans to sell his cryptocurrency investments. He and his wife owned between $2,000 and $30,000, combined, between Grayscale Ethereum Trust and Grayscale Bitcoin Trust at the end of last year, according to Toomey’s latest annual financial disclosure reviewed by CNBC.
Grayscale Ethereum Trust represents an investment vehicle intended to hold Ethereum assets, a cryptocurrency. Grayscale Bitcoin Trust is an investment vehicle, for the purpose of holding Bitcoins.
Toomey told CNBC “HODL” when asked if he plans to sell his crypto stock after FTX crashed. HODL is short for “hold on for dear life”, a common phrase used by crypto investors when they have no intention of selling their industrial assets, even if prices are falling. The price of Grayscale Ethereum Trust has fallen by almost 5%. Grayscale Bitcoin Trust’s price fell nearly 2%.
Representatives of nearly every other lawmaker who has bought cryptocurrency stocks did not respond when asked if their bosses plan to sell their digital token assets after FTX’s collapse.
Ryann DuRant, spokesperson for Tuberville, told CNBC in an email that the Alabama lawmaker would continue to disclose “all qualifying transactions,” but did not respond to specific questions about his stock holdings. cryptographic. “Senators are required to file periodic reports for certain securities transactions of $1,000 or more. The senator has and continues to report on all eligible transactions,” DuRant said in response to a list of questions.
Sen. Cynthia Lummis, R-Wyo., has between $100,001 and $250,000 in Bitcoin, according to her latest financial disclosure report. The report, which shows Lummis’ assets over the past year, says a “Qualified Blind Trust (QBT) is currently pending approval by the US Senate Ethics Committee.”
Lummis is a member of the Senate Banking Committee and has co-sponsored legislation with Sen. Kirsten Gillibrand, DN.Y., that would classify digital assets as commodities like wheat or oil and empower the Commodity Futures Trading Commission to curb the emerging industry. Since FTX’s collapse, Lummis said “it’s just time to regulate this space.”
Abegail Cave, a spokesperson for Lummis, told CNBC after this story was published that the Wyoming lawmaker “is a self-proclaimed HODLR and nothing has changed that view.” She also noted that Lummis was “working with the Senate Ethics Committee to place his assets, including his bitcoin holdings, in a blind trust.”
After lobbying to allow cryptocurrencies in retirement plans, Tuberville, who was a college football coach before heading to Washington, compared FTX’s downfall to losing a football game during the Thursday’s hearing with Rostin Behnam, chairman of the Commodity Futures Trading Commission. He also said there needed to be more rules regarding crypto.
“It kind of reminds me of sitting in a chair after I got beat up in the football game and knowing the other team broke the rules,” Tuberville said. “We messed it up. You have to have rules.”
