Of all the U.S. senators, Nevada's should know better than to coddle crypto

Yahoo

22-05-2025

Website screenshot of World Liberty Financial, the Trump family cryptocurrency company. This month an investment firm connected to the Abu Dhabi royal family announced it was using the WLF's USD1 stablecoin to make a $2 billion investment in a crypto exchange.
Neither Catherine Cortez Masto nor Jacky Rosen were in the U.S. Senate when the Commodity Futures Modernization Act was passed a quarter century ago.
But both were in Nevada when Las Vegas was an epicenter for the wildly irresponsible mortgage backed derivatives market that did so much to cause the Great Recession that hit Nevada harder and longer than any other state.
The Commodity Futures Modernization Act is what deregulated and hence led to the explosion — and then implosion — of the derivatives market.
Which is to say of all the U.S. senators, the two from Nevada should be especially wary of approving weak federal regulations that promote the growth of exotic financial instruments because an industry told them to.
And yet here we go again.
Early this week, Cortez Masto and Rosen were among 16 Senate Democrats voting with all the Republicans to advance the GENIUS Act, a Trump-endorsed gift to the cryptocurrency industry. Crypto-folk are eager to see the bill enacted in the current Congress because they fear Democrats will regain control of the U.S. House in next year's midterm elections, the industry's window of opportunity will close, and the legislation will never make it to Trump's desk.
(The industry may be underestimating congressional Democratic inclination to curry favor with, or at least try not to upset, extremely deep-pocketed industry political action committees, but I digress).
The legislation will promote the growth of a particular strain of cryptocurrency, stablecoin, by accelerating its integration with the U.S. financial system, while exempting it from regulatory requirements and consumer protections administered by (what's left of) the Securities and Exchange Commission.
Earlier this month, all the Senate Democrats, joined by two Republicans, temporarily blocked the legislation. At the time, Democrats cited the bill's failure to rein in the ongoing and unprecedented level of White House corruption made possible by Donald Trump and his family's entry into the cryptocurrency industry, including stablecoin, enabling billionaires, dictators, and unsavory characters worldwide to enrich Trump in exchange for favors right there on their phones.
Yet the slightly revised version of the legislation Cortez Masto, Rosen and 14 other Senate Democrats accepted Monday 'does nothing—nothing—to rein in the President's crypto corruption,' said Massachusetts Democratic Sen. Elizabeth Warren in a floor speech rallying a majority of her fellow Democrats to vote against the legislation.
'This is not the first time Congress listened to the financial industry and created a weak regulatory regime for a new, innovative financial product,' Warren warned her colleagues. 'We've seen this story before, and we know how it ends.'
Warren, whose sharp critique of policies that led to the Great Recession heightened her national profile in the late aughts, reminded the senators of the Commodities Futures Modernization Act which passed during the last year of the Clinton Administration.
At that time people said 'surely some kind of regulatory framework was better than nothing,' Warren noted, 'so Congress created a weak set of rules that was loaded with loopholes – just as the industry wanted. The result was a disaster: derivatives moved from the edge of the financial system to the center of it.'
'Now we are back, doing the same thing yet again,' Warren said.
As if underscoring Warren's point — that people are yet again saying something's better than nothing — Cortez Masto said in a statement provided by her office Wednesday that Congress needs 'to do more to regulate cryptocurrencies' and the GENIUS Act is 'the first step to ensure stablecoins issued in the United States are not used to scam or defraud people or facilitate illicit finance, while also providing regulatory clarity our domestic industry needs to innovate here at home.'
Similarly, Rosen's office provided a statement Wednesday saying cryptocurrency 'is an emerging industry that is in urgent need of regulation' and Rosen 'voted to advance bipartisan legislation to open the door for regulating cryptocurrency. This bill is not the only action Congress should take on crypto regulation, but it is an important step to protect consumers and support America's innovation.'
Both statements from Nevada's senators echo the industry narrative, also fully embraced by Trump, that stablecoin and other variations of crypto are a vital innovation that must be promoted in the name of the national interest.
And both statements, again echoing the industry narrative, fail to clearly explain why that is.
Cryptocurrency is undoubtedly a growth industry. But as it increasingly integrates into the financial system, one signature characteristic it brings along is extreme volatility. (Related note: Coinbase, the leading crypto exchange, became the first exchange to be added to the S&P 500 this week, so there's a good chance crypto is now in your retirement fund.)
In addition to volatility — and of course crypto bros, who will be convening in Las Vegas next week for the Super Bowl of crypto — cryptocurrency is also famous for money laundering and fraud schemes. (On comparably rare occasions it also serves its long ago originally advertised use, as a legitimate alternative form of payment for a product or a service.)
But far and away its largest use is as just another speculative investment, like, oh, orange juice futures, except with no correlation to anything that exists in the material world; for breakfast, nobody orders a glass of fresh squeezed hype.
When members of Congress talk about innovation and, as Rosen put it, 'an emerging industry,' they are implying there is some magical but practical and immensely useful economic function only crypto can do.
Meanwhile, the wider world awaits clearly articulated instruction on what indispensable (yet legal) thing crypto can do that oldy timey money can't, and why it isn't doing it already.
To be fair, there is one function that, while not new or unique — every industry does it — is something the crypto industry has proven it can do uniquely well: Raise money to spend against candidates that don't support the industry's agenda.
As many of you will recall, the cryptocurrency industry's PAC raised more money during the 2024 election cycle than any other industry in the U.S.
A common critique is that congressional Democratic support for the cryptocurrency industry's political and regulatory agenda, which is also Trump's agenda, is driven not by a vision of crypto playing a beneficial role in the economy and making the world a better place, but fear of the industry's campaign spending.
Cortez Masto and Rosen were asked to respond to that critique. In their statements provided by their offices, the request was ignored.
The GENIUS Act still needs to survive another Senate vote. Cortez Masto and Rosen are obviously voting for it. Maybe they think there's no way playing laissez faire footsy with investment erotica could upend the entire financial system and crash the economy yet again, let alone so soon. What are the odds?
Maybe they're right.
But that still leaves another disturbing matter, a broader concern that isn't crypto-specific.
People who didn't vote for Trump (a majority of voters and a supermajority of the population) have been wondering if and when Democrats might start standing up to him in an effective way. Democrats have sworn repeatedly they will do that, but have also lamented that they have been presented precious few opportunities to actually thwart Trump because Republicans control all the things.
The GENIUS Act needs to pass the Senate with 60 votes. It's an outstanding chance for Democrats to block a Trump/Republican agenda item that most Senate Democrats think is not in the nation's best interest.
But some Senate Democrats are going to vote for it and give Trump the win anyway. That includes both senators from Nevada, who more than any other U.S. senators should know better.