Sen. Elizabeth Warren, D-MA, and four other Democratic lawmakers asked seven federal agencies on Monday what safeguards were in place to prevent staff from moving into crypto lobbying positions.
“We are concerned that the crypto revolving door will corrupt the policy-making process and undermine public confidence in our financial regulators,” Warren wrote in a statement. letter also signed by Senator Sheldon Whitehouse, D-RI; and Representatives Rashida Tlaib, D-MI; Alexandria Ocasio-Cortez, D-NY; and Jesus “Chuy” Garcia, D-IL.
More than 200 government officials have switched between regulatory positions and crypto firms, the lawmakers wrote, citing figures from the Tech Transparency Project. This includes 31 from the Treasury Department; 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), lawmakers said.
“Just as powerful Wall Street interests have long wielded 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 best-known examples, former Acting Comptroller of the Currency Brian Brooks became CEO of Binance.US crypto exchange months after leaving the OCC. He resigned after three months with the company but moved to another crypto company, Bitfuryof which he remains CEO.
Kathy Kraninger, former acting director of the CFPB, became vice president of regulatory affairs at crypto startup Solidus Labs. Among his tasks: Building the company’s regulatory team.
In their letter, the lawmakers claim that crypto firms have more than quadrupled their lobbying spending over the past three years.
“Americans should trust that regulators are working on behalf of the public, rather than auditioning for well-paid lobbying work after leaving public service,” the lawmakers wrote.
Warren and the others on Monday asked officials from the SEC, CFTC, OCC, CFPB, FDIC, Fed and Treasury Department what policies the agencies had in place to prevent former employees who have become lobbyists to exert influence. They also asked how long individuals should wait after leaving government before taking on roles in a space they oversee.
The CFPB, FDIC and Fed have acknowledged receipt of the letter, according to law360. The SEC declined to comment. The CFTC and OCC did not respond to requests for comment.
“Treasury employees seeking outside employment are subject to recusal requirements that limit the types of work they can perform in their current role and must disqualify themselves from participating in any 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.”
Lawmakers are also asking agencies what rules they have in place to ensure transparency and prevent conflicts of interest from arising. Warren and the others said they would like answers by Nov. 7. The Fed and FDIC, in their thanks to Law360, promised to respond to the letter.