tl;dr
A brief overview of what Senator Elizabeth Warren may get up to in the new year.
Market Snap
Market Wrap
October inflation data, in the form of CPI, will be released later today. A hot print would likely bake in markets’ expectations of a December rate rise, which could have a knock-on effect for risk assets.
Curious Cryptos’ Commentary – Senator Elizabeth Warren
Warren’s elevation to chair of the Senate Banking Committee beginning January 2027 means we are going to hear a lot more from her for at least the next two years, and possibly for longer. We may be unhappy about that at CC Towers, but it is what it is.
One of her minions has laid out her list of priorities:
“Warren is looking to focus on the issues that have been the focus of her career and drove the election outcomes across the country on Tuesday - making life more affordable for families across the country, reining in industries that are raising costs and undermining the financial security of Americans, and rooting out corruption”.
Not a mention of cryptos? Well, well, well, that is a good start.
One area you know she is going to focus on is Trump’s (alleged) grift regarding cryptos. The CCC has already laid out in detail the most worrisome elements here and here. Warren should concentrate on the relationship between World Liberty Financial and DT Marks DEFI LLC. Their agreement appears to be merely a means of quickly siphoning investors’ cash from the former into the latter. I think you can easily guess some of the common shareholders of those two companies.
Let’s be clear here. The CCC supports Warren in any investigation along those lines. Where we take issue is that her motivation for doing so is not to root out any wrongdoing. She wants to gain political advantage (a perfectly reasonable approach) and hurt cryptos, which is not reasonable. Investigating World Liberty Financial serves both purposes. She claims the moral high ground, but that is a mere smokescreen.
Warren has teased that the Senate Banking Committee might be minded to look again at the CLARITY Act, but I am not convinced she is being entirely truthful with us:
“I'd be happy to sit down with other Democrats, with the Republicans, and with the industry and hammer out a meaningful crypto bill that protects our national security, that protects our economy and that dials back the corruption. I think we could get that done, but it will require the Republicans' willingness to stand up to Donald Trump — and that's a pretty tall order.”
Senator Angela Alsobrooks, who was deeply involved in the negotiations for CLARITY, probably has a more accurate view on the prospects of providing greater regulatory clarity for the crypto industry over the next two years:
“I don't think that's realistic”.
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Warren also has the prediction markets in her sights. Kalshi and Polymarket have been wildly successful. The product is easy to understand, easy to use, and can be accessed using either a traditional email login or using a web-based crypto wallet, potentially masking a user’s identity. Note that in the US, full identity checks are required though using a VPN would negate that.
There have been some examples of insider trading. Not at all on the scale of TradFi, of course, and arguably less damaging, since we are mostly talking about entertainment dollars, not investment dollars, but facts are generally of little import to the naysayers.
If there really are problems surrounding prediction markets, then the CCC will always support improvements in governance and reporting. But again, it is hard to be convinced that Warren’s motivation is anything other than a chance to further her anti-crypto agenda.
Why does this matter?
It defies sense that any reasonable lawmaker would prefer regulatory obfuscation over regulatory clarity.
The SEC and the CFTC have shown their willingness to put into place enhanced regulations and will continue to do so. However, agency-driven regulations are far easier to walk back than actual legislation approved by both Houses of Congress with a Presidential signature.
But let’s not overstate the case. The crypto revolution has not been derailed, just delayed a little, to everyone’s detriment.