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**MARCH 20, 2024**
On the Prospect website
Justice Department Gag Order Blocks Union Leaders From Speaking Publicly
The National Association of Immigration Judges, whose union was
decertified under Trump, is now being silenced by 'overzealous'
officials in Biden's Justice Department. BY DAVID DAYEN
[link removed]
'Stay Strapped or Get Clapped'
How the media misses the story of companies seeking profit by
keeping traumatized veterans armed and enraged BY RICK PERLSTEIN
[link removed]
Schumer Spoke for Diaspora Jews
His break with Bibi made explicit, and official, the inherent rifts
between diaspora and Israeli Jews. BY HAROLD MEYERSON
Kuttner on TAP
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**** Crypto's New Pal, Gary Gensler
Why did the usually public-minded SEC chair breathe new life into
Bitcoins?
Thanks to SEC Chair Gary Gensler, Bitcoin, a speculative creation backed
by nothing at all, has been brought back from the near dead. In November
2021, at the height of crypto fever, Bitcoins reached a peak value of
$64,400. Then, after various crypto scandals, the value of a Bitcoin
plummeted to below $35,000 for most of 2023. Today, Bitcoin is back
trading at more than $63,000, near its all-time peak.
In January, in a 3-2 vote, Gensler sided with the SEC's two Republican
commissioners
to allow 11 large financial firms to offer "exchange-traded products"
(ETPs), which are tradable funds backed by Bitcoins. For a Democratic
chair to vote against his two Democratic colleagues and side with
Republican commissioners is almost unprecedented.
These new funds add nothing of value. Any investor who wants to buy a
Bitcoin can simply go out and buy one. But they do create the impression
that Bitcoins are a safe investment, because the funds are sponsored by
reputable firms like Fidelity, and tacitly blessed by the SEC.
Why did Gensler, a regulator who has spent much of his recent career as
an MIT professor and then as SEC chair warning about crypto abuses,
change course? The long and the short of it is that Gensler is overly
afraid of getting overruled in court.
Last August, the Court of Appeals for the D.C. Circuit sided with the
firm Grayscale, whose request to create a fund based on the spot value
of Bitcoins had been turned down by the SEC. The court pointed out that
the SEC has approved funds based on value of Bitcoins in futures
markets, so why not in spot markets? The Commission had argued that the
two markets were substantially different.
The court did not require the SEC to grant Grayscale's request; it
merely remanded the case to the SEC for further consideration. Gensler
feared being overruled again.
[link removed]
In a blistering dissent
from Gensler's ruling granting the requests, one of the other
Democratic commissioners, Caroline Crenshaw, reviewed all the ways that
Bitcoin trading is marked by fraud and manipulation, and concluded: "I
am concerned that these products will flood the markets and land
squarely in the retirement accounts of U.S. households who can least
afford to lose their savings to the fraud and manipulation ... I am
concerned that today's actions will create the imprimatur of
Commission approval and oversight of the underlying spot markets when
really no such oversight exists."
It would have been far better for the SEC to reject these applications,
make clearer the distinction between these proposed products and others
that it approved, and take its chances in court. At least, this would
have slowed down the latest Bitcoin gold rush.
The January ruling opens the floodgates for other exchange-traded
products proposed by several other investment companies, including ones
backed by Ethereum, a crypto product with an even flakier record than
Bitcoins. The SEC has until late May to rule on these applications.
Why did the biggest investment companies like BlackRock, which has been
skeptical of creations like Bitcoin, reverse course and become
supporters of Bitcoin-backed funds? The fees, of course. BlackRock's
fund has reached $10 billion in record time
.
On March 6, the SEC also watered down its proposed regulations requiring
publicly traded corporations to disclose material risks related to
climate change
.
Once again, the concern was being overruled in court.
There is charming symmetry between the SEC's cave-in on Bitcoin and on
climate, since Bitcoin and other crypto "mining" uses massive server
farms that consume energy for a totally spurious purpose. As for
appeasing the courts, yesterday the Fifth Circuit Court of Appeals ruled
that even the SEC's weakened climate rules were excessive
,
and ordered a temporary stay.
Better to stick to your principles, keep fighting, and let the chips
fall.
~ ROBERT KUTTNER
Follow Robert Kuttner on Twitter
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