The News
How did the crypto industry start to win again? One year ago, when North Carolina Rep. Wiley Nickel got to Congress, Sam Bankman-Fried had been arrested; the millions of dollars he’d spent to lobby for favorable regulatory reform had been wasted.
But this month, the freshman Democrat helped pass the Financial Innovation and Technology for the 21st Century Act, a bipartisan rejection of Joe Biden’s SEC. It empowered the Commodity Futures Trading Commission to regulate digital currency, defying crypto critics who supported the SEC guidelines that have discouraged banks from holding digital assets. Stand With Crypto, an advocacy group backed by industry players, supported the bill and gave the Congressman their highest rating.
Nickel, who’s retiring this year after Republicans gerrymandered his seat, was an unexpected warrior for reform. “Banking is a really big industry in our state,” he explained, and crypto reform was “one of the rare places where I think we can actually get something really important done in a bipartisan way.” The industry is spending tens of millions of dollars to elect pro-crypto candidates this cycle, but he won’t be on the ballot in November (future races are another story). So why did this happen? Nickel talked with Semafor about it, and this is an edited transcript of the conversation.
Q&A
Americana: What was the mood about crypto in January 2023, when you got here? Where was the momentum for this idea?
Wiley Nickel: This whole issue has been colored by FTX and what happened there. The question is: How do we prevent another FTX? Whether you love crypto or you hate crypto, you should want to have regulation. And this bill regulates the industry; it fixes these regulatory gaps between the SEC and the CFTC. We are operating this industry based on 100 year-old securities law, and this was a place where Congress needed to act.
Americana: So why should the regulatory authority be moved from the SEC to the CFTC? What’s the rationale?
Wiley Nickel: It’s really just clarifying the gaps that exist. The SEC still has a very important role to play. The CFTC plays an important role in how you differentiate securities and commodities. That’s the place where we’ve gotten a lot of uncertainty right now. So, you’re looking at not co-mingling funds. You’re looking at heavy regulators on the beat.
Americana: How is this legislation different from what FTX was lobbying for, back in 2022?
Wiley Nickel: I wasn’t in Congress, and I don’t know what they were asking for. They didn’t support me being in Congress; they supported my opponent. But there are good actors in the space, and that’s been one of my frustrations. You don’t hear enough about all the good actors, like you hear about FTX.
Americana: What are the good actors doing?
Wiley Nickel: They’re not stealing people’s money. They’re not commingling funds. They’re just trying to exist, and they don’t understand what the rules are. I’ve been frustrated by [SEC Chair] Gary Gensler and his approach of regulation by enforcement. You have all these companies who are leaving the US, because the rest of the world is putting in regulations for this industry, and they know what the rules are. When you get these lawsuits from the FEC, over and over, folks don’t understand what the rules are, and that’s where Congress comes in.
Americana: You got some credit, from Politico, for talking to the White House and seeing that there wasn’t a veto threat on this bill. What was the skepticism about there?
Wiley Nickel: There are a lot of people in the administration who have different opinions about Gary Gensler. For me, the overarching issue is: I don’t want to hand this issue to the Republicans. It should not be a partisan issue. If it becomes that way, it’s going to be a real problem for getting anything done.
Americana: How does Trump’s flip on crypto factor into that? When he was president, he didn’t like crypto; a week ago, I watched him speak to the Libertarian convention and praise it.
Wiley Nickel: He will say or do anything, and he will lie to the American people over and over. He’s obviously changed his position because he sees an opening, with what the SEC is doing. Certainly, I’m concerned that if that’s the only voice you’re hearing, a lot of pro-crypto voters are going to take a good look it and ask: Hey, where do Democrats stand?
Americana: The crypto industry has put millions of dollars into PACs, saying they’ll get into races against candidates who oppose crypto. If you run again, are you hopeful that the industry will notice what happened in Congress, that you were an ally?
Wiley Nickel: It’s very likely I’ll announce for the US Senate right after this election, in what I believe will be an open seat. So, North Carolina has a chance to send Democrats to the Senate so we can reform the filibuster. How will my constituents see the work I’ve done, in terms of protecting consumers? That’s our focus. Love or hate crypto, you should want to regulate the industry.