October 25, 2022

Warren, Ocasio-Cortez, Lawmakers Seek Answers From Financial Regulators About Revolving Door Between Regulatory Agencies and Crypto Industry

“Crypto firms have hired hundreds of ex-government officials, raising concerns that this revolving door will corrupt the policymaking process and undermine the public’s trust in the SEC and other financial regulators.”

Text of Letter (PDF)

Washington D.C. – U.S. Senators Elizabeth Warren (D-Mass.) and Sheldon Whitehouse (D-R.I.) and U.S. Representatives Alexandria Ocasio-Cortez (D-N.Y.), Jesús “Chuy” García (D-Ill.), and Rashida Tlaib (D-Mich.) sent a letter to the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the U.S. Department of Treasury (Treasury), the Federal Reserve (Fed), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Consumer Financial Protection Bureau (CFPB), seeking information about the steps each regulator is taking to stop the revolving door between financial regulatory agencies and the cryptocurrency industry. 

“Americans should be able to trust that financial rules are crafted to reduce risk, improve security, and ensure the fair and efficient functioning of the market,” wrote the lawmakers. “Americans should be confident that regulators are working on behalf of the public, rather than auditioning for a high-paid lobbying job upon leaving government service. The rapidly spinning revolving door out of government and into the crypto sector undermines both imperatives.”

Over 200 government officials have moved between public service and crypto firms in recent years. These individuals include former appointees and high-level staff of the SEC, CFTC, Treasury, and other financial regulatory agencies who now serve as advisers, board members, lobbyists, or in-house executives at crypto firms. The crypto sector has rapidly escalated its lobbying efforts in recent months, spending millions in an attempt to secure favorable regulatory outcomes as Congress and federal agencies work to craft and enforce rules to regulate this trillion-dollar industry. 

In addition to hiring from financial regulatory agencies, at least eight former members of Congress, 79 former congressional staffers, and 32 former White House officials have found jobs advising or lobbying for crypto interests. Amid this hiring spree, crypto firms more than quadrupled their lobbying spending over the last three years. Just as powerful Wall Street interests have long exercised their influence over financial regulation by hiring former officials with knowledge of the government’s inner workings, crypto firms appear to be pursuing the same strategy in order to secure “a regulatory system to the industry’s exact specifications.” 

The lawmakers are asking each federal regulator to answer a set of questions about their ethics guidelines and transparency rules to ensure the integrity of agency officials and the rulemaking process, and about any challenges they have faced in enforcing and strengthening ethics requirements around revolving door hires by November 7, 2022. 

Senator Warren has long pushed to end corrupt revolving door practices across the economy to protect consumers. 

  • In October 2022, Senator Warren and Representative Pramila Jayapal (D-Wash.) sent a letter to Commerce Secretary Gina Raimondo underscoring the dangers of Big Tech’s digital trade agenda, following up on their July 2022 letter. 
  • In July 2022, Senator Warren and Representative Jayapal sent a letter to Commerce Secretary Gina Raimondo raising questions about the revolving door between the Department of Commerce and Big Tech companies, and its potential impact on global digital trade rules.
  • In June 2022, Senator Warren and Representatives Katie Porter (D-Calif.) and Brad Sherman (D-Calif.), sent a letter to three government watchdogs regarding troubling reports of Intuit’s abuse of the revolving door and the company’s hiring of former federal regulators and influence-peddlers to defend its shady business practices.
  • In February 2022, Senator Warren and Representative Jayapal called on two inspectors general to open an investigation into the unethical revolving door between the world’s largest accounting firms and the Treasury Department and Internal Revenue Service.
  • In July 2019, Senator Warren wrote to Commerce’s Designated Agency Ethics Official regarding potentially serious conflicts of interest for the two most senior Commerce officials responsible for managing exemptions from President Trump’s steel and aluminum tariffs
  • Senator Warren and Representative Jayapal introduced the Anti-Corruption and Public Integrity Act, which, if passed into law, would firmly shut the revolving door.