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'What Was Gary Gensler Really Doing?': Rep. Tom Emmer on FTX, the SEC and What's Next for Crypto in Congress

Just two letters. That was the tweet, gm, tweeted Representative Tom Emmer on Dec. 6, 2021, instantly endearing himself to Crypto Twitter. For those unaware, “gm,” short for “good morning,” was widely used as a cheery greeting during the bull run – morning or night – in something of an inside joke.

This interview is part of CoinDesk's Policy Week.

How did Emmer learn to speak crypto?

“I’m a white-haired, 61-year-old guy whose pop culture references end in 1988,” Emmer says. The “gm” idea came from a staffer.

But in a deeper sense, the tweet suggested that the Minnesota Republican – who is now the House Majority Whip – understands crypto and has emerged as one of the space’s most powerful advocates. The Blockchain Association’s Kristin Smith referred to him as a “steadfast crypto champion.” He held the first cryptocurrency town hall. He introduced the bipartisan Securities Clarity Act “to provide a path to regulatory certainty for digital assets”; he’s co-chair of the Congressional Blockchain Caucus; and the Minnesota Reformer dubbed him the “Crypto King of Congress.”

So why is he so bullish on crypto? “It’s not about crypto,” says Emmer, clarifying that it’s about what crypto is facilitating – the movement towards Web3, or what he prefers to call the “ownership economy.”

“That goes to everything I believe in,” he says, “which is restoring the individual’s right to make his or her decisions about what they want to do in the marketplace. Or who they want to do it with. Or how they want to get that done. And they don’t have to have a middleman.” Ultimately, this is about “restoring liberty and choice to individuals.”

These words are awfully abstract, so Emmer gives a quick hypothetical example. It’s worth printing in full: “You’ve got some aspiring entertainer who, right now, puts her content on a YouTube platform. And guess what? She derives no income from that whatsoever. No value. Unless she sells ads directly to that website.

“In the new world that we’re going to, she can put her content out there as a non-fungible token … that others will pay something to experience or use, and that will go directly to her. Maybe it’s pennies, but you might have the next Aretha Franklin, who all of the sudden has a seven-figure number of views at a penny or two each, and you see where this goes. I think that’s exciting. I think that’s fair. And you don’t need intermediaries for all these things.”

For those who follow the space closely, Emmer’s example is not particularly groundbreaking. It’s standard stuff. This is the now-familiar “directly empower creators” argument that Web3 enthusiasts have long championed. But in a way that’s exactly the point, and it’s astonishing: Emmer is not some hoodie-wearing founder on a crypto panel; he’s the Majority Whip and one of the most influential power brokers in the United States.

And he speaks crypto.

For this we can partially blame CoinDesk Chief Content Officer Michael Casey. When Emmer first joined Congress in 2015, a staffer gave him the book “The Age of Cryptocurrency,” co-written by Casey and Paul Vigna (both then of the Wall Street Journal). Emmer devoured the book and asked for more. He says that even though he’s a “61-year-old fart who likes to read books the old-fashioned way,” he has seven kids (ages 33 to 21) so he’s always “watching the new stuff they’re dealing with.”

Now Emmer wants to ensure that this “new stuff” of crypto is not smothered by regulation. What happens next with congressional legislation is perhaps crypto’s most burning question of 2023 and Emmer is at the tip of the policy spear. But he demurred from sharing his strategy because “I’m not going to step on [incoming chair of the Financial Services Committee] Patrick McHenry’s toes.”

But he did give us a few nuggets. “I think you’re going to see a lot of bipartisan work to get to the bottom of why the [Securities and Exchange Commission] wasn’t doing his job,” he says, referring to the FTX meltdown. “What was [Chair] Gary Gensler and company really doing?” He describes Gensler as “very arrogant” and speaking “from the mountaintop,” and then “we find out that they’re working with a fraudster that bilked the people out of billions of dollars … Republicans and Democrats are going to be involved with that.”

As for legislation? “We’re going to focus obviously on legislation, and I think it’s going to be to place key guardrails around the industry,” says Emmer. “Market structure guardrails. Stablecoin guardrails. Things like that.”

He’s happy to share what legislation he does not want to see. “The bill … that they were trying to roll out last fall is not the answer,” says Emmer, referring to the Digital Commodity Consumer Protection Act. And as for Senator Maxine Waters’ (D-Calif.) stablecoin bill? “That’s a hard no,” says Emmer. “The United States government should not be in the digital dollar business. The U.S. Treasury or the Federal Reserve – neither one of them should be in the banking business for private citizens.”

Emmer can read the room. He knows the FTX meltdown has made crypto a tougher sell to his colleagues in Congress, and he’s not happy about it. “That crook, Sam Bankman-Fraud, has turned us back a couple of chapters,” says Emmer, who used the word “fraud” or “fraudster” nine times in our conversation, clearly trying to separate the sins of Sam Bankman-Fried from any inherent problems with crypto.

The critique of this approach, of course, is that the loosey-goosey world of crypto enables and emboldens bad actors like Bankman-Fried, and he is symptomatic of a much larger problem. And that consumers need more protection. And that FTX is less of an outlier and more of a systemic failure. Or as the Senate’s chief crypto cryptic, Elizabeth Warren (D-Mass.), tweeted on Nov. 9, “The collapse of one of the largest crypto platforms shows how much of the industry appears to be smoke and mirrors.”

Emmer directly responds to this line of thinking. “The senator from Massachusetts, who shall go unnamed, is arguing that this is a problem with crypto itself,” Emmer says. “No. Sam Bankman-Fraud and his colleagues are as old as finance. This is about centralization. They controlled everything.”

The roots of the problem, says Emmer, is that Bankman-Fried was incentivized to set up shop in the Bahamas, which let FTX’s execs hide their shenanigans. For this he partly blames, well, Sen. Warren. “They [FTX] manipulated this thing from offshore because of people like the senator from Massachusetts, who will not get anything of substance done so that we can have this investment, this innovation, right here in this country. It’s [a crypto legal framework] got to be in the Caribbean, for goodness sake, when stuff should have been here all along.”

In other words, the dithering of Congress meant that companies sought refuge in the Bahamas, and when that happens all bets are off. So the trick to preventing a future FTX, argues Emmer, is not smothering regulation, it’s an embrace of transparency and decentralization. “What we’re talking about is decentralization,” says Emmer. “That’s what blockchain and crypto rides on. That’s what it’s all about. Open, permissionless, transparent. Anyone can see what’s going on in the blockchain. It literally is the answer, the antidote, to Sam Bankman-Fraud and all of the scammers that have come before.”

Emmer then leans into his critique of Sen. Warren, who he still declines to refer to by name. “It’s all about power, I think, for the senator from Massachusetts,” says Emmer. “She likes the way things are. She’s afraid of people taking back control of their own situation. She wants government to be involved in all of it. Because guess what? That gives her power and authority over the very people she claims to want to champion.”

So because of this negativity and the FTX fiasco, says Emmer, he needs to “go back to with certain members of Congress … and re-educate them that Sam Bankman-Fraud is just your classic, manipulate … scam that existed with cash.” This should be addressed “within the regulatory mechanism of our government, and it needs more oversight. And by the way, you have the laws in place. If people like Gary Gensler would do his damn job, we might not have some of these issues.”

And in the meantime, Emmer remains optimistic about crypto or Web3 or “the owner economy” in general and private wallets in particular. “I love them. I love them. I don’t care if you’re a Republican or Democrat, you should never take those away. It’s about the privacy. It’s about the ability to self-direct. It’s about the ability to take the government out of my life when I want the government out of my damn life.”

For better or worse, Emmer does not personally own any private wallets that HODL crypto. He has accepted donations from crypto organizations and companies – including a U.S. unit of FTX, according to a CoinDesk report, making him among the one in three members of Congress who accepted FTX contributions. However, he says he has never purchased any cryptocurrency. “I made that decision a few years ago,” says Emmer, because it could be politically damaging. “This place [Congress] is such a hellhole … If I suddenly have crypto that I’m invested in, people will [say], “Oh, he’s not interested in the policy, he’s making something off this.”

This means that he, personally, has been bullish on crypto since 2015 but he missed the bull run.

As he says now, “My wife is still mad at me.”