A leading-edge research firm focused on digital transformation.
Subscriber Account active since
Lawmakers are torn about how to regulate cryptocurrency. But that hasn’t stopped some members of Congress and their senior staffers from investing in it.
At least one senator and four US House representatives have bought stock in cryptocurrency-related companies or invested with brokerage firms that work with this emerging market, according to an Insider analysis of federal records detailing the lawmakers’ personal finances for 2020.
Meanwhile, Congress has been introducing legislative proposals aimed at better regulating crypto.
Sen. Cynthia Lummis, a Republican of Wyoming who sits on the Senate Banking, Housing, and Urban Affairs Committee, is an outlier among her colleagues. In her January 2021 report, she reported owning between $50,001 and $100,000 in Bitcoin. She’s among a handful of members of Congress who accept cryptocurrency campaign contributions.
But Lummis was several days late reporting a purchase in August of up to $100,000 in Bitcoin. Lummis’s spokeswoman Abegail Cave told Insider that the Wyoming senator “has gone above and beyond to comply with federal law and Senate Ethics requirements regarding financial disclosures.”
Rep. Jeff Van Drew, a Republican of New Jersey, reported up to $250,000 in “an investment trust” operated by Grayscale, the world’s largest digital-currency asset-management firm. The office of Van Dew did not respond to Insiders comment on what kind of investment trust he has with the firm.
Democratic Rep. Jake Auchincloss, a 33-year-old freshman of Massachusetts, reported up to $15,000 in Flipside Crypto Investor Holdings.
Rep. Barry Moore, a Republican of Alabama, reported investing up to $15,000 with a brokerage firm in Coffee, Alabama. The description of the firm on his financial disclosure said “crypto currency.” His office did not respond to Insider’s request for comment on which brokerage firm he was using. His disclosure said the firm paid $2,501 to $5,000 in dividends in 2020.
Jim Newman, the husband of Rep. Marie Newman, a Democrat of Illinois, has traded stock in the cryptocurrency exchange Coinbase at least 16 times. The most recent trade, a sale valued at $50,001 to $100,000, occurred in November.
Also in November, Newman’s husband purchased up to $50,000 worth of stock in Grayscale Bitcoin Trust.
Congressional ethics officials say that the “most comprehensive approach” for lawmakers to “eliminate conflicts of interests and the appearance of them” is to form what’s known as a qualified blind trust, a financial vehicle the House or Senate ethics committee approves that a trustee manages independently.
Most members of Congress have not established qualified blind trusts, which are often expensive and time-consuming to establish.
Lawmakers are not the only ones getting in on the cryptocurrency action.
Insider identified 21 high-ranking congressional staffers or their spouses who in 2020 and 2021 bought or sold cryptocurrencies, including ethereum and dogecoin, a cryptocurrency originally created as a joke among crypto enthusiasts that’s grown in value over the past year.
The tally is part of the exhaustive Conflicted Congress project, in which Insider reviewed nearly 9,000 financial-disclosure reports for every sitting lawmaker and their top-ranking staffers.
Senior staffers and some other aides on Capitol Hill are bound by federal law to file timely reports about all their stock transactions and other outside earnings if they make more than $132,552 annually. That’s generally the salary minimum for chiefs of staff; the staffers and aides also include chief counsels, legislative directors, and staff members who work on committees and advise lawmakers on policy.
The extent to which other Capitol Hill office employees with lower salaries hold cryptocurrency and crypto-related stocks is unknown because they are not required to disclose it.
Kristin Walker, Lummis’ chief of staff, told Insider that she started investing in bitcoin in the summer of 2020, before Lummis was elected and before she came to work on the Hill.
“Wyoming has been at the forefront of digital assets for the past few years, and I learned about it through Wyoming’s efforts,” Walker said.
Another crypto investor was Scott Sloofman, the staff director for the Senate Republican Communications Center under Senate Minority Leader Mitch McConnell. He purchased between $1,001 to $15,000-worth of Coinbase shares in April. He did not respond to Insider’s inquiry about his investments.
More senior staffers than lawmakers have invested in cryptocurrency does not come as a surprise to Ron Hammond, the director of government affairs for the Blockchain Association.
“There has been a massive uptick in staffers who either have crypto or are really interested in the issue, and I think it’s more of a generational thing,” Hammond, who worked on Capitol Hill as a former congressional staffer for many years.
The average age of members of the House at the beginning of the current 117th Congress was 58.4 years, according to the Library of Congress. The average age for senators was 64.3 years.
The idea of lawmakers and congressional staffers investing in cryptocurrency is exciting, Hammond said.
“For those who want to get involved in crypto legislation, it’s important to maybe have some foot in it,” he said. “It does help increase your knowledge about how everything is supposed to work or you know what some flaws may be.”
Crypto chatter has ratcheted up on Capitol Hill in recent months as supporters and opponents of digital assets sketch out their respective visions about what the future might hold.
In early June, Democratic Sen. Mark Warner of Virginia and Republican Sen. Roy Blunt of Missouri proposed tightening cryptocurrency rules to better trace electronic payments to ransomware attackers.
A few weeks later, Rep. Maxine Waters, a Democrat of California who also chairs the House Committee on Financial Services, told attendees at a subcommittee hearing that she and her colleagues are “committed to providing not only more transparency in this minimally-regulated industry, but to ensuring that appropriate safeguards are in place.”
“So we have begun a thorough examination of this marketplace,” the 16-term lawmaker announced during a two-hour discussion weighing whether cryptocurrencies would lead to financial independence or fiscal ruin.
Along the way, House lawmakers quietly passed a bipartisan bill instructing the Federal Trade Commission to provide Congress with recommendations “to further protect consumers from unfair or deceptive acts or practices in the digital token marketplace.”
Come late July, Rep. Elissa Slotkin, a Democrat of Michigan who also chairs the House Homeland Security subcommittee on intelligence and counterterrorism, urged administration officials to lay out their wish list now for stronger cryptocurrency curbs. “If you need changes to legislation, if you need resources, we want to hear more from you, not less,” Slotkin said during a 90-minute discussion tagged “terrorism and digital financing.”
Earlier this month, Sen. Elizabeth Warren, a crypto skeptic who’s characterized it as “unreliable tech” with “unpredictable fees,” said the industry harmed the planet by necessitating huge, energy-sucking mines, computer facilities designed to solve complex math problems to obtain the digital coins.
“Cryptomining has huge environmental costs & is raising energy prices for consumers. Bitcoin alone consumes as much energy as Washington state,” the Massachusetts Democrat tweeted.
A few days later, House lawmakers quizzed the CEOs of a half-dozen crypto-focused companies about their business practices.
The six witnesses, who handle everything from the logistics of mining bitcoin to branching out into other blockchain-based investments, spent four hours answering questions about the pros and cons of cryptocurrencies and their place in the modern economy.
Daniel Gallagher, the chief legal officer for the financial-services company Robinhood, tried to manage expectations ahead of the hearing, telling CNBC that “it’s a stretch to believe that there will be legislation coming out on crypto anytime soon.”
The flurry of talks surrounding regulation has prompted more cryptocurrency associations to strengthen their lobbying efforts on Capitol Hill.
By August, cryptocurrency interests had collectively spent $2.4 million lobbying the federal government, including Congress, according to OpenSecrets, a nonpartisan research organization that tracks money in politics.
The interests lobbied against portions of the bipartisan infrastructure bill that would impose new tax-reporting requirements on crypto brokers that could pave the way for stronger regulations.
The lobbying efforts were unsuccessful. President Joe Biden signed the infrastructure bill into law in November. The crypto-broker policy is expected to raise $28 billion over 10 years to help fund infrastructure projects, according to the Joint Committee on Taxation.
Five years ago, the House created the bipartisan Congressional Blockchain Caucus to consider policymaking. One of the leaders of the group was Mick Mulvaney, a Republican congressman from South Carolina who later became President Donald Trump’s chief of staff.
The current chairmen of the caucus are GOP Reps. Tom Emmer of Minnesota and David Schweikert of Arizona and Democratic Reps. Bill Foster of Illinois and Darren Soto of Florida. None reported holding any cryptocurrencies in their 2020 financial disclosures.
Emmer told MinnPost in October that he started reading about crypto after one of his staffers left the book “The Age of Cryptocurrency” on his desk back in 2015 or 2016. He has introduced several crypto-related bills, including the Securities Clarity Act, which would allow regulators to categorize cryptocurrencies as either a commodity, a security, or a currency.
But overall, lawmakers have been slow to embrace cryptocurrency because it hasn’t been around for a long time, Najah Roberts, the founder of Crypto Blockchain Plug, a brick-and-mortar cryptocurrency exchange and education center, told Insider.
“They are afraid of that technology,” she said.
Roberts said she hoped more lawmakers would invest in the market.
“It will be great if they do because then that will give them a better understanding on how to acquire the asset, how they feel about securing the asset,” she said.
Check out: Personal Finance Insider’s picks for best cryptocurrency exchanges