‘Jumping around Congress’: Democrats brace for Wall Street regulators’ coming crypto plans

Wall Street's chief regulators are readying new cryptocurrency rules after lawmakers punted on a landmark digital assets bill before heading home for summer recess.

Democrats are gearing up to take them on.

The so-called Clarity Act's setback has put the Securities and Exchange Commission and Commodity Futures Trading Commission in position to drive crypto policymaking in Washington. SEC Chair Paul Atkins and CFTC Chair Michael Selig are ready to go with a slate of crypto-focused plans — the first of which could come Friday at an SEC meeting. But they risk a backlash from the left as lawmakers fear they're too cozy with the industry.

"Should the Trump Administration go down this path — putting the crypto industry before everyday investors and consumers — you can be sure we'll fight back," Sen. Chris Van Hollen, a Maryland Democrat who sits on the Senate Banking Committee that oversees the SEC, told POLITICO.

The coming clash will offer a glimpse of the challenge that Atkins and Selig could face if Republicans lose control of the House, Senate or both in November.

Sen. Elizabeth Warren of Massachusetts, who could be in line to lead the Banking Committee next year in a Democratic-controlled Senate, said in an interview that "of course" she's concerned about the agencies' forthcoming efforts. "Both the head of the CFTC and SEC have made clear that they're in crypto's pocket and want to do whatever they can to facilitate whatever it is that crypto wants to do," she said.

Others say Atkins and Selig are pursuing an end-run around Congress after lawmakers on both sides of the aisle spent months haggling with each other, the White House and the crypto industry over how to best regulate the $2 trillion market. The SEC and CFTC chairs, meanwhile, are set to launch their crypto efforts with no Democrats atop either agency. And their rules and guidance aren't expected to be just about crypto — but also U.S. stocks, futures products and much more.

"They're jumping around Congress with the biggest overhaul of our capital markets since the 1930s," said Tyler Gellasch, a former SEC official who now leads the institutional investor advocacy group Healthy Markets Association. "These are the really big policy decisions that people — including the Supreme Court — typically expect the 535 members of Congress to make."

Atkins and Selig, as President Donald Trump's top financial markets watchdogs, have already ushered in a sea change to the regulatory landscape for crypto firms — often drawing fire from congressional Democrats. And while both have backed the legislative efforts, their crypto sprints could prove central to making the U.S. the digital assets utopia that Trump has promised the industry if the bill doesn't come to fruition.