Elizabeth Warren takes crypto fight to Biden

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Oct 18, 2023 View in browser   By Zachary Warmbrodt Presented by U.S. Bank Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. QUICK FIX Sen. Elizabeth Warren is escalating her crypto crime campaign in a big new way. The Massachusetts Democrat is out this morning with a bipartisan letter to the White House and Treasury that urges the Biden administration to crack down following reports that Hamas raised funds via digital currency. Warren isn’t alone. The big story is that she has 28 other senators and 76 House lawmakers on the letter, which is also led by Sen. Roger Marshall (R-Kan.) and Rep. Sean Casten (D-Ill.). About half of the Senate Democratic caucus is on the request, plus House Democrats who have previously taken crypto-friendly stances. It comes as the Senate Banking Committee is planning hearings and gaming out crypto legislation (more on that below). “Congress and this administration must take strong action to thoroughly address crypto illicit finance risks before it can be used to finance another tragedy,” Warren and the other lawmakers told White House national security adviser Jake Sullivan and Treasury under secretary Brian Nelson. It’s the latest sign that Warren is slowly but surely gaining traction in her push to curb crypto’s use in terrorist financing and drug trafficking. Crypto firms are trying to brush it off as misinformed opportunism but there’s no doubt it’s a growing political problem. The Biden administration is now under pressure to show that it’s on the case. “While we do not preview potential sanctions actions, the Treasury Department is committed to continuing to impose costs on Hamas and their funders,” a Treasury spokesperson told MM. Warren has an important backer in her latest oversight push: Senate Banking Chair Sherrod Brown. The Ohio Democrat initially downplayed the need for Warren’s crypto anti-money laundering legislation. But now he’s giving it an indirect lift by signing her letter and vowing to use his committee to investigate Hamas’s use of crypto. Warren and her allies are pointing to Wall Street Journal reporting that found digital wallets linked to Hamas and Palestinian Islamic Jihad received up to $134 million since 2021. Warren has been circulating the story among senators to build support for her anti-money laundering bill. The lawmakers told the White House and Treasury that they’re considering legislation and want to know what additional tools the administration may need. Sen. Jack Reed told our Eleanor Mueller that Brown is looking at combining Warren’s bill with a separate crypto anti-money laundering proposal from Reed, Sen. Mark Warner and Sen. Mike Rounds. Senate Banking is also eyeing a pair of Israel-related hearings. "We're just looking at a lot of crypto ideas," Brown told Eleanor. House Republicans, who have been pushing crypto bills blessed by the industry, are absent from the Warren letter. Rep. French Hill of Arkansas, one of the lead House Republicans on the issue, told MM Tuesday that the Financial Services Committee is “very interested in hearing the facts” on the Hamas-crypto connection. He plans to ask for a briefing with the intelligence committee. It’s Wednesday — Thanks to the MM readers who sent notes on a potential Speaker Jim Jordan. Let’s keep it going. Send your thoughts on what's at stake in the speaker race to zwarmbrodt@politico.com. A message from U.S. Bank: At U.S. Bank, we believe young people deserve access to financial education. That’s why we partner with Junior Achievement chapters around the country to teach young people the skills they need to take charge of their economic and academic success. By supporting the next generation, we are investing in communities across the country not just today, but for decades to come. Because U.S. Bank is small enough to care, and big enough to make a difference. Learn more.   Driving the day The House plans to vote on Jordan’s speakership again …The SEC votes on stock exchange rules at 10 a.m. … Fed Governor Christopher Waller discusses the economic outlook in London at noon … Fed Governor Michelle Bowman gives opening remarks at a Fed Listens event in Richmond at 1 p.m. … The FDIC’s Advisory Committee of State Regulators meets at 1 p.m. … The Fed Beige Book is out at 2 p.m. … Fed Governor Lisa Cook talks about the Fed’s employment mandate at the Future of Black Communities Summit in Washington at 6:55 p.m. Is it finally McHenry time? — Jordan’s speaker bid is on the verge of collapse. Centrist Republicans and Democrats are plotting a possible vote to empower Acting Speaker Pro Tempore Patrick McHenry. Former Speakers John Boehner and Newt Gingrich endorsed the idea. The Fed will try to curb swipe fees — The WSJ reports that the Fed will vote next week to lower the fees that merchants pay to banks when consumers shop with debit cards. The proposal is likely to trigger intense lobbying from banks and retailers, which are in the midst of a holy war over the issue. Retailers applauded the news Tuesday.   A NEW POLITICO PODCAST: POLITICO Tech is an authoritative insider briefing on the politics and policy of technology. From crypto and the metaverse to cybersecurity and AI, we explore the who, what and how of policy shaping future industries. We’re kicking off with a series exploring darknet marketplaces, the virtual platforms that enable actors from all corners of the online world to traffic illicit goods. As malware and cybercrime attacks become increasingly frequent, regulators and law enforcement agencies work different angles to shut these platforms down, but new, often more unassailable marketplaces pop up. SUBSCRIBE AND START LISTENING TODAY.     On the Hill Sinema leaves Banking, Butler joins — Sen. Kyrsten Sinema is off Senate Banking after filling an Appropriations vacancy left by the late Sen. Dianne Feinstein. Sen. Laphonza Butler will take Sinema’s spot on Banking. Sinema has been a key moderate on banking and finance issues for years, going back to her time on House Financial Services. French unchained — MM was in attendance Tuesday for Rep. French Hill’s speech at the Exchequer Club luncheon, where the Financial Services vice chair — and potential chair in waiting — gave a loose update on what’s happening at the committee amid the speakership turmoil. He didn’t shy from ribbing fellow lawmakers for the House chaos. He had words for top Fed officials, too. A few highlights: — “I feel a lot safer here in the Mayflower [Hotel] than down on the House floor.” — McHenry, who chairs Financial Services, "can't wait to get back" to committee work. (The panel plans to hold three hearings next week on the SEC, insurance and international regulations.) — If Jordan doesn’t have the votes to be speaker, “then I personally am for extending the authority of the speaker pro tem. It doesn’t have to be Mr. McHenry, it can be person X, and give them that authority as the speaker of the House until Jan. 5 or something like that.” — In response to a question about potential deposit reforms: “Anyone who would keep $500 million or $1 billion in a checking account at Silicon Valley Bank is a moron.” — Hill spent a chunk of his speech criticizing Basel capital rules spearheaded by Fed Vice Chair for Supervision Michael Barr. “This is a preview of my talking points for my meeting at 3:15 this afternoon with Vice Chairman Barr,” he said to laughs, applause and some woo’s. “This has saved me a therapy appointment, too.” — Fed Chair Jerome Powell wasn’t spared. Hill, a former banker, questioned why Powell agreed to propose the new bank capital rules even if he had reservations. “Why would you advance a bad idea? Let’s fix it on the front end.” First in MM: Luetkemeyer plans Iran bill — Eleanor scoops that Rep. Blaine Luetkemeyer — another likely contender for Financial Services chair, some day — is working on an Iran sanctions bill that his spokesperson says "builds on efforts from Senate Republicans" like Tim Scott. Luetkemeyer is calling for a hearing on his proposal.   A message from U.S. Bank:   Regulatory Corner Ken Griffin takes Gary Gensler to court — Citadel Securities and the American Securities Association sued the SEC over the agency’s plan to force brokers to help foot the bill for a real-time trading database used by U.S. regulators, Declan Harty reports.   PLAYBOOK IS GOING GLOBAL! We’re excited to introduce Global Playbook, POLITICO’s premier newsletter that brings you inside the most important conversations at the most influential events in the world. From the buzzy echoes emanating from the snowy peaks at the WEF in Davos to the discussions and personalities at Milken Global in Beverly Hills, to the heart of diplomacy at UNGA in New York City – author Suzanne Lynch brings it all to your fingertips. Experience the elite. Witness the influential. And never miss a global beat. BE PART OF THE CONVERSATION. SUBSCRIBE NOW.     Crypto Basel wants crypto disclosure — The Basel Committee on Tuesday proposed requiring banks to report on their crypto exposures in 2025, per CoinDesk. Basel sets standards that bank regulators around the world implement domestically. CBDC skepticism spreads to Europe — Bjarke Smith-Meyer reports that eurozone central bank governors are set to announce the final phase of a “digital euro” Wednesday but are facing growing skepticism, including small demonstrations in some EU countries. China U.S. to tighten China chip restrictions in AI clash — The Biden administration plans to tighten export limits on advanced microchips to China, Gavin Bade reports. The rule the Commerce Department announced Tuesday, a follow-up from regulations issued last October, will tighten export controls on semiconductors used in artificial intelligence and advanced computing. A message from U.S. Bank: At U.S. Bank, community is everything. That’s why we’re investing in communities around the country by partnering with organizations like Junior Achievement. Together, we are teaching young people the skills they need to take charge of their economic and academic success. Students in these programs learn valuable financial education lessons, build professional skills and plan for the future. We are proud to offer our staff the opportunity to mentor young people in practical, meaningful ways that will impact their lives as they grow into adulthood. By supporting the next generation of Americans, we’re investing in the future of the country and its communities. U.S. Bank. Small enough to care, and big enough to make a difference. Learn more.     Follow us on Twitter Mark McQuillan @mcqdc Zachary Warmbrodt @Zachary Victoria Guida @vtg2 Declan Harty @ @declanharty Eleanor Mueller @eleanor_mueller Katy O'Donnell @katyodonnell_ Sam Sutton @samjsutton   Follow us

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