Recently, U.S. Congressman Brad Sherman (D-CA), who is one of the biggest crypto skeptics in Washington, D.C., pointed a finger at what he calls “billionaire crypto bros” for the delay in digital asset regulation.
Congressman Sherman, who was “born and raised in southern California” is “currently serving his thirteenth term in Congress and has served in the House of Representatives since 1997.” He is “a senior member of the House Foreign Affairs Committee, a senior member of the House Financial Services Committee, and a member of the House Science, Space and Technology Committee.”
In 2019, Sherman was “elected to serve as Chairman of the House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets.” He has a law degree from Harvard University, where he graduated Magna Cum Laude.
On 9 May 2019, Congressman Sherman called for a complete ban (in the U.S.) on cryptocurrency:
On 13 May 2019, during an interview with CoinDesk at Consensus 2019, former Congressman and presidential candidate Ron Paul called Sherman “just another thug in Washington” and went on to say:
“They happen to believe they know what is best and they will run the show. They want to be the boss, they’re dictators, and he’s not unusual… He’s very typical in all degrees in all issues, whether it’s a social issue, like a few years ago when they decided the worst thing in the world is smoking marijuana.“
On 19 July 2022, Sherman was hating on crypto again. At a hearing (titled “Oversight of the SEC’s Division of Enforcement”) before the U.S. House of Representatives Committee on Financial Services, he asked Gurbir S. Grewal, Director of the Division of Enforcement at the SEC:
“You’ve gone after XRP because XRP is a security, but you haven’t gone after all the major crypto exchanges that process tens of thousands if not far more transactions. If XRP is a security and you think it is and I think it is, why are these crypto exchanges not in violation of law?
“And is it enough that the crypto exchange have said, ‘well, having committed tens of thousands of violations in the past, we promise not to do any more in the future’. Is that enough to get you off the hook for enforcement?“
Sherman later went on to criticize the SEC for not going after the major exchanges (such as Coinbase) that allowed trading of XRP in the U.S. before 22 December 2020, which is when the SEC announced that it had “filed an action against Ripple Labs Inc. and two of its executives, who are also significant security holders, alleging that they raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.”
Sherman told Grewal:
“It is easier to go after the small fish than the big fish, but the big fish operating the major exchanges did many, many tens of thousands of transactions with XRP. You know it’s a security — that means they were illegally operating a securities exchange. They know it’s illegal because they stopped doing it, even though it was profitable… I hope you focus on that.“
According to a report published by Los Angeles Times on 4 September 2022, Sherman told The Times:
“I don’t think we’re going to get [to a ban] anytime soon… Money for lobbying and money for campaign contributions works, or people wouldn’t do it; and that’s why we haven’t banned crypto. We didn’t ban it at the beginning because we didn’t realize it was important, and we didn’t ban it now because there’s too much money and power behind it.”
He also called crypto a Ponzi scheme:
“It is hard to be running the subcommittee dedicated to investor protection in a country in which people want to wager on [meme coins]… Cryptocurrency is a meme you invest in, in the hopes that you can sell it to somebody else before it tanks. That’s the nice thing about a Ponzi scheme.”
On September 9, Sherman appeared on a CNBC Special (“Crypto Night in America”) to “discuss his belief that cryptocurrencies should be banned and the need to regulate them in the interim.”
“Crypto is not a new asset class. Charles Ponzi developed this asset class well over a century ago. I think that if crypto loses some of the money and power that’s behind it that we will have an opportunity to regain that control...
“Once those laws are clear, crypto loses the one thing it aspires to be and that it successfully competes with the dollar by having an advantage over the dollar, and it has only one advantage. It is well suited for the tax evaders, the bankruptcy fraud [and] the family court fraud that can best be done if you avoid your know-your-customer laws.
“If we can impose those laws on crypto, then people who are investing because they think it is going to be a successful new currency will realize it has no currency advantage over the dollar... At that point, it just becomes another non-fungible token. It becomes the Pet Rock of the 21st century.”
Well, on 13 November 2022, Sherman released a statement in response to the collapse of cryptocurrency exchange FTX. Sherman called the high-profile bankruptcy a “dramatic demonstration” of the risks involved in digital assets and the weaknesses of the industry.
The sudden collapse this week of one of the largest cryptocurrency firms in the world has been a dramatic demonstration of both the inherent risks of digital assets and the critical weaknesses in the industry that has grown up around them. While it is now evident that the failure of FTX represents tens of billions of dollars in losses, we do not yet know the scope of financial harm caused to consumers and investors in the U.S. and around the world.
Sherman said it was “crucial” for lawmakers to develop a clear understanding of the chain of events that led to FTX’s failure and said he would work to make sure those responsible are “held accountable.” Sherman claimed to have advocated for years for Congress and federal regulators to take an “aggressive approach” in confronting the threats posed by cryptocurrency.
The Congressman called upon the SEC to take decisive action to to end the the regulatory murkiness surrounding the crypto industry and digital assets. He also pointed to the influence of “billionaire crypto bros” in deterring regulatory action to date:
To date, efforts by billionaire crypto bros to deter meaningful legislation by flooding Washington with millions of dollars in campaign contributions and lobbying spending have been effective.
Sherman says that he will be working with his colleagues in Congress over the next several weeks to weigh options available for federal legislation.
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