Rep. Tom Emmer is the crypto king of Congress

WASHINGTON – As major cryptocurrencies floundered over the summer and many Americans suffered big losses, federal lawmakers and regulators faced mounting pressure to rein in the growing digital currency market.

Since spring, the value of Bitcoin, Ethereum and other top cryptocurrencies have cratered in value from last year’s all-time highs, wiping out $2 trillion and sending several crypto firms into bankruptcy, with one facing allegations of widespread fraud.

But despite the unrest, Rep. Tom Emmer, a powerful House Republican from Minnesota, has been steadfast in his support for the industry. While some in Congress approach the volatile crypto market with caution and concern, Emmer has promoted it as an opportunity for Americans to achieve financial freedom.

“It is linked to capital formation. For me, what will make this country better than everywhere else is — I don’t need to know anyone to be someone,” Emmer told Axios in August.

“Are we going to create an environment where people are making their investments right here in the United States and they’re growing these opportunities here, or are we going to play the I’m-afraid-of-what-I-don’t-understand game,” he said.

Emmer, who serves as head of the House GOP’s campaign arm, is among the most powerful lawmakers in Washington to champion the digital currencies, as well as the blockchain technology that supports them. Fourth in line to the House Republican leadership and a top member of the panel that oversees the financial industry, his support is likely to be crucial for the crypto market as it receives both positive and negative attention.

Crypto evangelists say digital currencies promise a way to exchange money for goods and services without overwhelming intrusion from governments and central banks. Developers also say the underlying blockchain technology – a digital ledger that can store information – offers the possibility of a more decentralized internet, free from interference from tech titans like Facebook and Google.

Crypto skeptics say there is one old-fashioned pump-and-dump arrangement dressed up in techno-utopian language, luring everyday investors in with the promise of profits – with the recent collapse providing plenty of evidence that cryptocurrency is neither a stable investment nor a legitimate currency.

The politics of crypto

As virtual currencies have gained popularity in recent years — especially during the hot pandemic-era crypto bull run — lawmakers across the country have fought with how to approach the trillion-dollar market, which remains volatile and largely unregulated. For some, the crypto community offers not only an economic opportunity, but also a political one.

“Democrats are making a big mistake by casting crypto votes [the] GOP,” Jeff Roberts, crypto editor at Fortune, tweeted last year. “Crypto is a wealthy and rapidly growing constituency and will support anyone who supports them.”

It is unclear what initially drew Emmer to crypto. Neither he nor his office responded to multiple requests for comment. But he was an early adopter on Capitol Hill, first becoming interested in crypto about seven years ago, he said Axios.

“The future is here and crypto has the ability to decentralize control and empower each and every one of us,” he said during his 2020 campaign. That year, he became one of the first congressional candidates to accept donations in Bitcoin and held the “first cryptocurrency town hall”. Since then he has been doing it received the maximum allowed contribution amount from Bitpay, a Bitcoin payment service, whose CEO joined the event.

It is unclear whether Emmer owns any digital assets of his own. His latest financial disclosure reportfiled in 2021, shows none.

But Emmer, whose rural 6th District outside Minneapolis is far from the nation’s financial centers, has opposed stricter banking regulation earlier. Now he is part of a growing number of political leaders who have chosen to publicly embrace the new financial technology as its mainstream appeal has spread.

“Bitcoin is a great economic equalizer,” said Scott Conger, a Tennessee mayor who wants to add a Bitcoin mining network to City Hall, according to New York Times. “It is a hedge against inflation. It can bridge that wealth gap,” he said in January, even as the crypto market fell.

In El-Salvador, Bitcoin is now a national currency. But with the recent market downturn, the country has – at least on paper – lost more than half of the investment.

Dueling letter to Yellen

Proponents of cryptocurrencies cite their decentralized nature – meaning they are not controlled by large banks or governments – as their greatest strength. But critics say the lack of oversight makes the market ripe for criminals to exploit, and recently billions of dollars have been laundered matters has put the spotlight on the industry’s weaknesses.

“I am deeply concerned about the volatility of the cryptocurrency market and the inadequate regulatory environment where crypto scams, fraud, theft and evasion continue to run rampant and mom-and-pop investors’ life savings have disappeared,” said Democratic Senator Elizabeth Warren. an outspoken cryptoskeptic, wrote to Treasury Secretary Janet Yellen last week.

Warren says some of the anonymizing features of crypto could be exploited by illegal actors to avoid US sanctions. She called on Yellen to “protect the integrity of the U.S. sanctions regime” and address the climate implications of cryptocurrency mining, which uses massive amounts of computers and energy, “and protect consumers and investors.”

Emmer, for his part, recently sent a letter to Yellen as well – but recently scrutinized enforcement actions by the Treasury Department. In August, the Department’s Office of Foreign Assets Control sanctioned a piece of anonymizing crypto software known as Tornado Cash, which accuses it of having been “used to launder more than $7 billion in virtual currency since its creation in 2019.”

“This includes over $455 million stolen by the Lazarus Group, a Democratic People’s Republic of Korea (DPRK) state-sponsored hacking group that was sanctioned by the United States in 2019in largest known virtual currency heist to date“, OFAC said.

However, Emmer pointed out that Tornado Cash is a technological tool powered by code, and not controlled by a specific person or entity. “[T]the sanctioning of neutral, open-source, decentralized technology presents a host of new questions,” Emmer wrote, “affecting not only our national security, but the right to privacy of every American citizen.”

Emmer has made it clear that he is not against all public regulation; rather, in an effort to increase business, want it to be minimal. “As co-chair of the Congressional Blockchain Caucus, I constantly advocate for increased education and introduce legislation in Congress regarding new technological innovations and our need for light-touch regulations so that development and investment flourish in the United States,” Emmer’s website states.

In a interview with CoinDesk last month, Emmer said of the Treasury Department’s foreign asset regulators: “They have a job to do, there’s no question.”

But more generally, he believes that some federal regulators – they The Security and Exchange Commission in particular – has gone beyond its existing jurisdiction to try to crack down on the crypto market. “Congress deserves a ton of criticism for not doing anything to help these bureaucracies, these regulators, do their jobs,” he said. Lawmakers urgently need to pass legislation to provide guidelines, he said.

In 2021, Emmer introduced the bipartisan Securities Clarity Act to try to provide some definitions for both regulators and the crypto industry.

“There has been an unreasonable approach by regulators to how federal securities laws should be applied to transactions involving the sale of blockchain-based tokens, and this lack of clarity is hurting American innovation,” Emmer said in a statement at the time. “Between regulation by enforcement and the varying legal rulings regarding the classification of these assets, regulatory uncertainty has hindered the growth of blockchain technology, leaving many to take the technology overseas.”

The legislation has not yet passed, but Emmer hopes that Congress will take action in the new year, after the autumn mid-term elections.

“I think what you’re looking at in the community is that Congress needs to really step up next year to get a definition out there,” he told CoinDesk, “so that we can not only hold the bureaucracy, the regulators accountable, but they know what their path is.”

In any case, Emmer believes that crypto should not be a divisive political issue. “I feel this cannot be partisan,” he said Axios. “This is literally about looking at America and opportunities for Americans.”