Senate Banking Finalizes Details on Market Structure; Gensler's Texts Vanish
Bipartisan talks loom on market rules as industry fumes over former SEC chair’s lost texts
Welcome to the Friday edition of the Crypto in America newsletter!
What you’ll read: A new market structure draft could drop today, a year’s worth of former SEC chair Gensler’s texts are apparently gone for good, and this week’s top stories.
The Senate Banking Committee, chaired by Tim Scott (R-SC), is putting the finishing touches on its latest draft of a market structure reform bill after staffers spent the summer fielding feedback from industry and lobbyists.
Capitol Hill timing is always a moving target, but multiple sources tell Crypto In America they’re hoping to see the draft hit their inboxes this afternoon and are watching closely to see if the committee delivered on their wishlist.
Sen. Cynthia Lummis (R-WY) told CNBC’s Emily Wilkins Thursday that the plan is still to mark up the text in Banking by the end of the month, with Ag following in October and a full Senate vote penciled in for November or December.
The wildcard: How Democrats respond to the text and whether that slows things down.
Republicans have driven the market structure effort so far, but this draft gives Democrats a chance to digest the new provisions, weigh in before markup, and maybe even bring pro-crypto Dems like Sen. Kirsten Gillibrand (D-NY) on board. A GOP staffer told Crypto In America they’ve been reaching out to Democratic staff to get input and start bipartisan talks.
Sen. Mark Warner (D-VA), a key Democrat on the committee, told Punchbowl News Thursday that rushing to hold a markup by Sept. 30 — as planned by Scott — would “dramatically, dramatically decrease any chance of a bipartisan bill.”
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Gensler’s Missing Texts
Nearly a year of Gary Gensler’s SEC texts are gone.
An internal investigation found that “avoidable errors” and a botched IT wipe of the former SEC chairman’s phone permanently deleted messages from October 2022 through September 2023, during the height of the agency’s crypto crackdown.
According to the SEC Inspector General’s report, some of the lost texts involved enforcement actions against crypto companies, settlement talks with a major bank, and even White House coordination on a commissioner’s appointment. About 38% of the texts covered key discussions central to the SEC’s work.
Since the debacle, the agency has disabled texting on most employee devices and started records training for senior officials. For the crypto industry, though, the timing is ironic and hits close to home: Gensler’s lost texts cover the back half of 2022 — when FTX collapsed and Operation Chokepoint 2.0 began — as well as much of 2023, which saw a record-high wave of crypto enforcement actions.
Industry bigwigs, including Custodia CEO Caitlin Long, who was debanked five times during the mass cutting off of crypto firms under Operation Chokepoint 2.0, are expressing outrage.
It’s unclear whether Congress or the White House will investigate further. For now, key moments in crypto history — and the former chair’s thinking on them — are lost to the ether.
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Weekly Recap
ICYMI. Here are the biggest news stories this week from the intersection of Washington and Web3:
The SEC and CFTC issued a joint statement clarifying that registered exchanges are not prohibited from facilitating the trading of certain spot crypto asset products.
Polymarket received a green light from the CFTC to begin operating in the U.S. three years after its exit.
Bitcoin mining company American Bitcoin, backed by Eric Trump and Donald Trump Jr., went public on the Nasdaq.
Gemini chose the Nasdaq for its public debut next week, seeking a $2.22 billion valuation.
The SEC unveiled its rulemaking agenda aimed at reforming crypto regulations and relaxing Wall Street rules considered overly restrictive.
The Federal Reserve will host a payments innovation conference next month on stablecoins, tokenization, and AI.
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