Gary Gensler vs. Cryptocurrencies

Democrats Are Underdogs to Keep the House

A CANDID ADMISSION: If the 2022 elections were held today, Democrats would lose control of the House, according to the party’s campaign chief, Rep. Sean Patrick Maloney. He offered that grim message at a private lunch last week, Politico reports this morning.

IT’S GENERALLY ACCEPTED ON CAPITOL HILL that Democrats are the underdogs next year; the GOP needs only a net pickup of four seats. The Senate, which is tied, is a much tougher call, largely because two potentially vulnerable GOP incumbents — Ron Johnson in Wisconsin and Charles Grassley in Iowa — have not announced their plans.

MALONEY TOLD COLLEAGUES that fresh polling shows incumbent House Democrats are falling behind Republicans on a generic ballot in swing districts. There are other ominous signs: a first term president almost always loses congressional seats in his first mid-term election; the 2020 census has created a handful of new House seats where the GOP can gain; and a few veteran Democrats have announced their retirements.

IT’S BEEN A DIFFICULT WEEK FOR THE PARTY: An uproar from progressives resulted in extending the rent moratorium, a bitter primary fight in Ohio — won last night by an establishment candidate — has left bruised feelings, there are deep divisions in the party over infrastructure legislation, and Democrats may face a nasty impeachment trial in New York if Andrew Cuomo doesn’t accept the inevitable.

IN OUR OPINION, TWO ISSUES HAVE HEIGHTENED the Democrats’ vulnerability — inflation and crime. It’s possible that a year from now inflation will be contained, but crime is an albatross for Democrats. Only a small percentage in the party supports de-funding the police, but that label has stuck.

THE DEMOCRATS HAVE TWO ADVANTAGES: Biden and his policies are generally popular — especially infrastructure spending and the child tax credit — despite a slight drop in his polling numbers in the past couple of weeks as confusion reigns on Covid.

SECOND, DONALD TRUMP — who showed again last night in Ohio that he has an iron grip on the GOP — remains toxic among moderates; in many House districts, Democrats will eagerly link GOP candidates to the former president.

GARY GENSLER TAKES AIM AT THE “WILD WEST” — The progressive head of the Securities and Exchange Commission didn’t mince his words yesterday on the cryptocurrency industry, Gensler wants Congress to grant the SEC oversight authority; without it, “a lot of people will be hurt,” he said.

GENSLER TOLD A CONFERENCE THAT “This asset class is rife with fraud, scams and abuse in certain applications.” He added that “we need additional congressional authorities to prevent transactions, products and platforms from falling between regulatory cracks,” which he said “leaves prices open to manipulation and millions of investors vulnerable to risks.”

HE ALSO called on lawmakers to give the SEC more power to oversee crypto lending, and platforms like peer-to-peer decentralized finance (DeFi) sites that allow lenders and borrowers to transact in cryptocurrencies without traditional banks.

BOTTOM LINE: Gensler, Elizabeth Warren and other progressives will make this a major cause. At the best, the industry will face headline risk; at the worst, legislation will get attached to one of the big spending bills this fall, giving SEC the authority Gensler is seeking.

Related: The Blockchain Revolution May Not Be Televised, But It's Happening

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