Don’t villainize Maxine Waters just yet

When Maxine Waters sent a letter to the SEC and the Treasury Department requesting feedback on the leading crypto market structure bill, some assumed she was laying the groundwork to oppose the measure. 

As the ranking member of the House Financial Services Committee, it’s possible that her feedback request on this bill — which is slated for committee mark-up next month — could be an excuse to give the SEC a place to unleash its criticisms.

That may be so, but accepting that theory without consideration of an alternate possibility may miss the forest for the trees — and deprive market participants of fully seeing an end-game in which Chairs Patrick McHenry and Glenn Thompson’s crypto market legislation passes through the House with significant bipartisan support. 

To understand why there’s still hope for a bipartisan crypto market structure bill, one has to go back to the summer of 2022 when a comprehensive regulatory framework for crypto market structure and stablecoins was at hand, only to come short after paying the price of politics. 

As a then-senior spokesperson at the US Department of the Treasury, I saw that period of time in crypto policy personally. From a distance, I observed one of the most skillful legislators of her generation, then-chair of the House Financial Services Committee, Maxine Waters. 

Through a dozen years in Congress and nearly two more in the Biden Administration, I gained a unique perspective on an array of public officials: And it’s true, believing in politicians will break your heart more than not. 

Over those 14 years, I learned the opposite of the operating assumption when I walked into Congress as a 22-year-old staff member. 

The best politicians are not the ones that stay strident and steadfast in their views and never move. No, the most skillful and impactful legislators are willing to absorb new information and look at issues in a different context over time. It’s what has made the back half of Congresswoman Waters’ storied congressional career her most consequential. 

Waters was initially a no-compromise opponent of the financial services community, opposing the Gramm-Leach-Bliley Act that ended Great Depression-era restrictions on the banking industry — but she kept an open mind. She ascended to the top of the House Financial Services Committee more as a compromiser and conciliator than a partisan warrior. 

Fast forward to 2021 and 2022, and Waters was the driving force behind the effort to create a comprehensive regulatory framework for crypto assets (including stablecoins) out of deep concern over certain crypto asset risks and an abiding belief that the next generation of financial innovation should occur here in America, not overseas. At times, it felt like she may drag the effort across the finish line through force of will alone. 

Ultimately, FTX’s collapse and an oncoming election scuttled any chance of a crypto regulatory framework agreement. However, something that happened along the way should cause observers to see Congresswoman Waters’ more strident anti-crypto rhetoric of late and her recent letter to the SEC and Treasury in a new light. 

During that two-year sprint in which she sought to put a comprehensive crypto-regulatory framework in place, Waters was burned badly by the progressive left, which sought to crush crypto instead of containing its risks and fostering its initiative potential through a regulatory framework.

The array of forces was led in part by Senator Elizabeth Warren. It is represented best at the executive level by the current actions of the SEC Chair Gary Gensler. These political actors clearly communicated that they do not see the need for a crypto regulatory framework and that current rules will do just fine. 

Read more from our opinion section: Elizabeth Warren has a lot to say about crypto — try listening for once

Near the end of that two-year sprint for a crypto regulatory framework, Waters was left out on a ledge. She had an agreement within reach, but a left flank willing to go nuclear to kill any agreement. 

But Waters’ inability to incorporate the views of Warren, Gensler and those who agree with them into a bill was not for lack of trying. 

On the contrary, specific feedback is hard to solicit from a party that believes no action is necessary. Ever the savvy legislator, Waters, once a political tormentor of President George W. Bush, appears to be adopting his famous “you can’t fool me twice” approach. 

Instead of allowing Gensler and his allies to kill the bill by offering general concerns but not concrete feedback, Waters may have decided to draw them out and pin them down. 

It’s a good legislator’s classic move. 

“You don’t like the bill? Fine, tell me what you would change. We’ll work to accommodate your concerns and force you to engage with these ideas seriously.”

Waters is known as a direct communicator. When she’s going to be against something, it’s apparent. Take, for instance, the way she discussed the 2017 GOP tax law with how she has discussed work on a crypto regulatory framework. When she’s ready to torpedo a proposal, there’s no ambiguity. 

But even if all that may be true, my alternate view about the import of her recent letter to the SEC and Treasury may still be wrong. However, when I saw Waters’ latest missive on the crypto market structure bill, I couldn’t help but think of the force of nature I observed from afar driving to put a regulatory framework for crypto assets in place. 

That deep inside this legislative forest that is crypto policy, there stood Maxine Waters by the apple tree, five steps ahead and forcing the pack to come her way. 


John Rizzo is Senior Vice President for Public Affairs at Clyde Group where he provides strategic counsel and communications guidance to a broad range of financial services clients, including market participants in traditional finance along with emerging and innovative spaces such as digital assets and fintech. Rizzo most recently served as the Senior Spokesperson at the U.S. Department of the Treasury where he led public affairs strategy on digital assets, fintech, climate finance, financial stability, domestic finance, and economic policy. Prior to his service at the Treasury Department, Rizzo was a top communications adviser to Sen. Chuck Schumer (New York) and Sen. Bob Casey Jr. (Pennsylvania).


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Source: https://blockworks.co/news/maxine-waters-sec-regulation