Senators Own Cryptocurrency Assets as They Shape Rules for Industry

There is nothing illegal about lawmakers who own assets, including cryptocurrencies, even if they are working on laws that are directly related to those assets. Commission Ranking Republicans Lummis and Toomey say their experience with cryptocurrencies gives them expertise on subjects that they have barely studied at Capitol Hill.

“Tell us what part of the economy you are not involved in,” Toomey said in an interview when asked about potential conflicts of interest. “If you follow that logic, I don’t think anyone in the Senate can invest in anything. That would be ridiculous.”

Others are concerned that the personal investment of lawmakers could affect potential regulation.

“These two senators are the most vocal on favorable cryptocurrency regulations,” said Lee Reiners, managing director of the Global Financial Markets Center at Duke University and a former employee of the Federal Reserve Bank of New York. increase.

“I’m not saying they are motivated by personal financial interests,” Liners said. Given their holdings, there is a problem. “

Alexandria Ocasio-Cortez (D., NY), a member of the House Financial Services Committee, recently stated in her Instagram account that the House of Representatives must not hold or trade individual stocks or crypto assets. Confidential information and future policies. “

Legislators are not prohibited from drafting or voting on bills that could lead to personal financial gain, but they must disclose their assets each year and report their transactions within 45 days.

Reportable assets include real estate, equities, and cryptocurrencies from 2018 onwards.

A journal review of financial disclosure and regular transaction reports found that in addition to Mr. Lumis and Mr. Toomy, nine house members and at least five White House employees reported crypto assets. ..

In most cases, holdings occupy a small share of their total assets.

Rep. Michael Waltz, a Republican in Florida, who bought $ 30,000 to $ 100,000 in Bitcoin in June, said he bought it in light of soaring prices for many commodities. Authorities report the value of the asset to the extent specified.

“Bitcoin is evolving as an inflation hedge, just like gold,” Waltz said in an interview.

Mr. Lumis said he bought his first Bitcoin in 2013 after learning about Bitcoin from his daughter and son-in-law. She said she currently owns five Bitcoins worth about $ 240,000 on Thursday and has no plans to sell them. Her Bitcoin is part of a broad portfolio that includes her family’s ranch.

“Someone said,’She should sell Bitcoin.’ That’s OK, it’s like a commodity. Should I sell cows too?” Lumis said in an interview. “Should I sell a trust? Should I sell my retirement fund just because I might be invested in something great and worthwhile?”

Lummis plans to introduce a law early next year that will allow the cryptocurrency industry to govern itself through a new self-regulatory body overseen by the Commodity Futures and Securities and Exchange Commission. This is an idea endorsed by some industry lobbyists and advocates.

In mid-June, Toomey bought $ 2,000 to $ 30,000 in stock.

Grayscale Bitcoin Trust

When

Grayscale Ethereum Trust,

An investment vehicle that seeks to track the price of a coin. He said holdings are part of a diverse portfolio.

Like Mr. Lumis, Mr. Toomy said the first rule to regulate cryptocurrencies should be “harmless”. He urged the Banking Commission-supervised SEC to avoid restraining innovation.

Cryptocurrency officials also own cryptocurrencies, but unlike Congress, you have to reject yourself if you are making certain investments.

Tim Wu, senior presidential adviser on technology policy, reported holding $ 1 to $ 5 million in Bitcoin this spring, among senior White House officials who need to publicly disclose their assets. Became the largest Bitcoin holder. He also reported that he owns $ 100,000 to $ 250,000 on Filecoin, a blockchain-based file storage network.

The White House said Mr. Wu has been denied handling cryptocurrency issues.

Other holders are not directly involved in setting the policy. Ryan Montoya, director of Scheduling and Advances at the White House, owns $ 467,000 to $ 1,080,000 in cryptocurrencies, one of his most valuable holdings behind real estate. He was previously the Chief Technology Officer of the Sacramento Kings basketball team, which developed blockchain-based tokens for fans in 2019.

Some non-government guard dogs believe that there should be more stringent restrictions on the types of investment parliamentarians can have.

Investing in cryptocurrencies is of particular concern as market rules are still being developed.

Some cryptocurrencies are under the jurisdiction of the SEC, but authorities are still developing their regulations. What is known as stablecoin may be subject to the rules being considered by banking regulators. The largest digital tokens, Bitcoin and Ether, currently do not have a full-time federal oversight body.

Uncertainty means that Washington’s decision can have a significant impact on the value of Bitcoin and other digital assets.

“It’s an early stage industry and it’s important to separate it because it has rules,” said Timi Iwaemi, a researcher at the Center for Economic Policy Research, a liberal think tank.

Other lawmakers who reported that their holdings of crypto assets or investments in companies focused on crypto currencies that focused on recent disclosures, including investments owned by spouses and dependents, Jake Ochincross They were Congressman (Democratic Party, Massachusetts) and Mark Green (Republican, Tennessee). ), Alan Lowenthal (Democratic, California), Michael McCaul (Republican, Texas), Barry Moore (Republican, Alabama), Marie Newman (Democratic, Illinois), Ed Pearlmatter (Democratic,) Colorado) and Jeff Vandrew (Republican, NJ).

Auchincloss, Green, and Newman said through a spokesperson that they are following House’s Code of Ethics. Other offices did not respond to requests for comment.

Cryptocurrency advocates are working to strengthen their foothold in Washington by contributing to new trade associations, strong lobbyists and campaigns.

The Center for Economic Policy Research recently identified 43 former financial regulators, including five former CFTC commissioners working for cryptocurrency companies.

Prior to last year’s election, the Digital Commerce Chamber of Commerce, a leading industry association in the digital assets and blockchain industry, gave all members of the House and Senate $ 50 Bitcoin to put cryptocurrencies on the radar. Provided. The only pitfall was that their campaign had to set up a way to receive digital currencies.

Records show that Bitcoin was returned in all but eight campaigns.

Write to Chadday Chad.Day@wsj.com, Julie Bukovich julie.bykowicz@wsj.com And Paul Kiernan paul.kiernan@wsj.com