Former US President and Republican presidential candidate Donald Trump looks on during his campaign rally in Racine, Wisconsin, USA, June 18, 2024.
Brendan Mcdermid | Reuters
On a cool, sunny June evening in San Francisco, venture capitalist David Sacks’ Pacific Heights mansion was the scene of an event rarely seen in one of America’s most progressive cities: a high-dollar Republican political fundraiser.
The guest of honor that evening was former President Donald Trump, who delivered a formal address from a curtained stage to guests who had paid up to $300,000 to attend.
The presumptive Republican presidential nominee promised to ease cryptocurrency regulation if elected in November and “steer clear of innovation,” a person in the room told CNBC. When he finished, Trump asked viewers to speak up.
Stuart Alderoty, chief legal officer of blockchain giant Ripple, said the company has spent over $100 million defending itself in a Securities and Exchange Commission lawsuit.
Alderoty’s comments were intended as an example of how the SEC’s regulatory actions under Chairman Gary Gensler have affected his company and the industry as a whole, according to a guest and a person familiar with the situation who were granted anonymity to describe a private meeting .
As Alderoty spoke, there was a second crypto executive in the audience whose company is also battling the SEC: Paul Grewal, the chief legal officer of Coinbase.
In 2020, before President Joe Biden took office, the SEC accused Ripple and its founders of violating securities laws by acting as unregistered brokers of digital currency tokens, which the SEC regulates as securities. In 2023, the regulator filed a similar complaint against Coinbase, the largest US crypto exchange platform.
The cases are ongoing and both companies have denied violating securities laws. Alderoty’s comments at the Trump fundraiser have not been previously reported, but he has made similar remarks elsewhere.
This frustration with Gensler’s regulatory agenda has taken on a political tenor this year as crypto investors seek to exert more influence in Washington, DC
Trump has seized on this frustration in recent months, transforming himself from a crypto skeptic into a crypto supporter. Early signs suggest that this shift is winning Trump’s support in the small but loud crypto community.
Some in the industry who side with Trump are going further than just complaining about Gensler. Instead, they are trying to shape the agency in a possible future Trump administration – from the top.
Crypto investors in recent weeks have raised several names of potential candidates for SEC commissioner if Trump is elected to a second term, according to three people with knowledge of the talks.
Those names include two former chairs of the Commodity Futures Trading Commission during the Trump administration: J. Christopher Giancarlo and Heath Tarbert.
Christopher Giancarlo, former Chairman of the US Commodity Futures Trading Commission (CFTC), during a House Agriculture Committee hearing in Washington, DC, USA, on Tuesday, June 6, 2023.
Ting Shen | Bloomberg | Getty Images
Another name that came up is Dan Gallagher, who served as SEC commissioner during Barack Obama’s two terms as president and now works as chief legal officer at investment platform Robinhood.
Gallagher said he was honored to be nominated as a possible SEC chairman in a Trump administration.
“I have had the privilege of serving in various roles at the SEC, including as commissioner,” he said in a statement to CNBC.
“I care deeply about the agency and hope that any new SEC chair will promote access to markets and ensure that the U.S. remains at the forefront of financial innovation,” he said.
In this June 14, 2011 photo, Daniel Gallagher, candidate for Securities and Exchange Commission commissioner, listens during a Senate Banking Committee hearing on Capitol Hill in Washington.
Andrew Harrer | Bloomberg | Getty Images
The fourth name that came up among people close to Trump is Paul Atkins, According to three people with knowledge of the talks.
As SEC commissioner under former President George W. Bush, Atkins opposed the agency’s policy of imposing massive fines on companies that violated securities laws. He later played an influential role on Trump’s transition team in 2016, where he helped shape Trump’s laissez-faire approach to financial regulation.
“It’s a mess over there right now,” Atkins said of the SEC in an interview with CNBC. “I think there is still a lot to be done. There has to be a change of course.”
Atkins has not heard from Trump or his team about a possible role at the agency, he said. Asked if he would take a job at the SEC if Trump wins, he replied: “Who knows?”
If Trump is elected, the SEC and crypto policy as a whole could potentially be shaped by more than just the commission’s chairmanship.
According to OpenSecrets, at least 16 former Trump administration officials are currently advocating for the crypto industry.
If there were a new Trump administration, they would likely be top contenders for key positions at the SEC, the Commodity Futures Trading Commission, and the Federal Trade Commission, all of which could have an impact on crypto regulations.
Biden allies are sounding the alarm
While the crypto industry can push Trump and Republicans to prepare for a potential SEC overhaul, crypto investors allied with Democrats need to be more careful about how they deal with those in power.
Gensler was one of Biden’s first nominees of 2021, and his handling of cryptocurrencies has helped set the tone for broader administration policy, despite the SEC’s independence from the White House.
Over the past three years, Gensler has not softened his criticism of digital currencies. If anything, it’s harder than ever.
“This is an area where the leaders of a few years ago are either in prison, about to be or awaiting extradition,” Gensler said of crypto in a recent Bloomberg interview.
The perception that Biden is anti-crypto and Trump is pro-crypto has some Biden allies so concerned that they are taking their case directly to senior White House officials, according to people familiar with the matter.
Venture capitalist John Doerr hosted a meeting for White House Chief of Staff Jeff Zients on June 14 at his home in Woodside, California.
According to a person with direct knowledge of the gathering, more than a dozen crypto enthusiasts were there to speak with Zients. Tech investor Ron Conway was invited to the meeting.
Some of the guests spoke with Zients about Trump’s growing appeal to crypto holders. This person explained that they blamed this surge in support in part on Gensler’s public statements and policies on cryptocurrencies.
The group argued to Zients that Gensler should not be the only public face of the Biden administration’s crypto policy as his comments could lead crypto holders to support Trump instead of Biden.
An SEC spokesperson did not respond to a request for comment from CNBC.
John Doerr, senior partner at Kleiner Perkins Caufield & Byers, speaks during the TechCrunch Disrupt SF 2015 conference in San Francisco, Calif., on Tuesday, September 22, 2015.
David Paul Morris | Bloomberg | Getty Images
Doerr and Conway have been supporters of Democrats, including Biden, for more than a decade. Doerr hosted a fundraiser for Biden in February. According to Federal Election Commission records, Conway donated $600,000 to the pro-Biden political action committee Future Forward.
Both Doerr and Conway also invest in crypto. Conway’s venture capital firm SV Angel lists Coinbase as part of its portfolio, while Doerr’s Kleiner Perkins firm has been investing in crypto companies for years and was recently part of a $2 million seed round to back cryptocurrency data analytics startup Skew.
A White House spokeswoman defended the president’s handling of crypto, saying government officials are meeting with a variety of stakeholders connected to the industry.
“President Biden has initiated the first comprehensive approach to supporting innovation in digital assets while protecting consumers and investors from the risks associated with new technologies,” said Robyn Patterson, a White House spokeswoman.
The White House did not address the warnings it had received about its dealings with the crypto industry, nor did it respond to follow-up requests for comment about Zients’ meeting at Doerr’s home.
Conway and Doerr did not respond to requests for comment.
Don’t miss these insights from CNBC PRO
Source link
2024-07-02 00:29:55
www.cnbc.com
