The Revolving Door Between Crypto and Washington
Neither this post nor any other on cryptofal.com should be taken as financial advice. It is not.
This is an excerpt from our March Newsletter which will be released on March 1st.
A report released Wednesday from the Tech Transparency Project (TTP), run by the watchdog group Campaign for Accountability, has revealed that some 235 officials from government and national political campaigns have either left public service and joined the cryptocurrency industry or the reverse.
On the same day, information on this “revolving door” has been referenced in articles from both Bloomberg and the Washington Post. The aim of the TTP report is to shed light on a burgeoning industry and its connections, however, the report and subsequent articles are misleading in their assessment and overstate the significance of the data.
The report relies on information compiled from a number of public employee records. The list gives the name of the employee, employer (government and private), tenure, title, and source. Had the entire sample size of 235 officials swapped sectors over the past year, it may have been significant in showing how quickly crypto was moving to influence policy, but this is not the case.
Under closer inspection, many changed professions during the last decade, with some showing multiple-year gaps between jobs. Among the 235 listed, only 7 had returned to their sector of origin. Labeling this a “hiring binge,” when presented with this information, changes the overall narrative. The change in profession for this group was neither sudden nor in patterns. Despite their hard work and the services done in the past to highlight unethical practices, the TTP managed only to fuel a fire being stoked by misconstrued notions.
It’s not unwise to monitor the crypto industry, which has grown in both popularity and controversy over the past few years. An influx of novice investors has highlighted the need to provide some oversight and legal definition of the space. Those alarmed at the TTP report most likely have a limited understanding of the crypto industry overall. While their agenda was to highlight the hand crypto lobbyists might have in shaping future laws and regulations, it’s difficult to imagine why TTP wouldn't cover the growing and established revolving door between Washington and finance.
It stands to reason that Wall Street’s dominance of the finance world has been challenged by the crypto industry, thus few would benefit more from stricter regulatory measures to stunt its growth. It’s no secret that the finance world benefits from the considerable influence cultivated in and among Washington’s institutions. The fact that a mere 35 bankers and one Wall Street executive went to prison for their part in the subprime loan crisis since 2008 is as clear an indicator as any that the reach of the Justice Department in high profile white-collar crimes has severely weakened over the past few decades.
Moreover, the true revolving door that exists between finance and Washington is a much stronger and more obvious relationship than that with crypto. Even now, an investigation into the Treasury Department's key policy positions exemplifies how ties between government and finance remain formidable.
Reports like those from the TTP that misconstrued and take an ill-informed stance on crypto indicate how many parties across a plethora of ideologies view the industry and its products as a threat. The key difference is who each party is aiming to protect. There is no wrong in creating a transparent environment for individuals to invest, but there are other parties with power and influence invested in seeing crypto remain the niche community it once was.