Senator Cynthia Lummis, a Republican from Wyoming, and Senator Kirsten Gillibrand, a Democrat from New York, during the DC Blockchain Summit in Washington, D.C., US, on Tuesday, May 24, 2022. The summit is gathering the most influential people focused on public policy for digital asset and blockchain innovations, according to the organizers. Photographer: Valerie Pleasch/Bloomberg via Getty Images
Photo: Valerie Pleasch/Bloomberg via Getty Images

‘Urgency’ takes hold in Washington as the crypto market wobbles

Protocol Fintech

Good morning, and welcome to Protocol Fintech. This Wednesday: the new “urgency” around crypto regulation, a Robinhood mystery solved and Rocket’s retro strategy.

Off the chain

Rocket’s announcement that its Truebill finance app, acquired in 2021, was becoming Rocket Money is more than just a rebrand. The news sent me down a long rabbit hole back to my earliest days covering financial technology. In the 1990s, Microsoft and Intuit had dueling personal finance apps: Microsoft Money and Quicken. In a move to bolster its business, Intuit bought a mortgage company called Rock Financial and renamed it Quicken Loans. Rock founder Dan Gilbert bought back the mortgage business in 2003. Quicken faded, and Quicken Loans — the name was under license — became Rocket Mortgage, and the parent business Rocket Companies. Intuit sold off Quicken in 2016, but the logic of having a personal finance app anchoring a range of finance businesses is still compelling. Hence Rocket Money.

— Owen Thomas (email | twitter)


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Urgency, Washington-style

The value of the crypto ecosystem has fallen nearly $2 trillion over the span of a few months, and there are two separate bankruptcy proceedings where customers are fighting to recover their assets. That's the type of thing that captures the attention of lawmakers.

Sen. Kirsten Gillibrand, co-sponsor of a major crypto regulation bill, said on Tuesday that "there's more urgency now" in moving legislation to protect consumers. Gillibrand's colleagues on Capitol Hill "have seen that this is something that's important to do, that consumers are not being protected today," the New York Democrat said in a video interview for Bloomberg's Crypto Summit.

Action may still have to wait until next year. That's according to Sen. Cynthia Lummis, the Republican co-sponsor with Gillibrand of the Responsible Financial Innovation Act.

  • "It's a big topic," Lummis said in the same interview. "It's comprehensive, and it's still new to many U.S. senators."
  • Parts of the bill could advance within key committees this year. Lummis said the bill's stablecoin provisions, which include rules on who can offer the coins and reserve requirements, could be reviewed by the Senate Banking Committee in the coming months.
  • Gillibrand said provisions governing the Commodity Futures Trading Commission's authority over coins deemed commodities, likely including bitcoin, could also go before the Senate Committee on Agriculture, Nutrition and Forestry this year.

The challenge is that urgency does not assure consensus. While industry groups have offered support for the Lummis-Gillibrand bill, consumer advocates say it would undermine existing investor protections by pulling too much authority from the Securities and Exchange Commission in favor of the CFTC.

  • There could be another path. In a letter to House and Senate committee chairs Wednesday, the Chamber of Progress tech industry trade group noted that there are at least 35 crypto-related bills in Congress.
  • "[W]e call on you as committee chairs to hold hearings examining the pros and cons of pending legislation before your committee and the best path forward on crypto regulation," the letter said.
  • Without action, the letter said, “the U.S. crypto industry is struggling to operate in an unclear regulatory environment. As the SEC attempts to regulate via lawsuit and other federal agencies slow walk new crypto rules, U.S. crypto jobs are at risk."

The SEC's role in governing crypto is already a point of contention. At a congressional subcommittee hearing Tuesday, SEC Enforcement Director Gurbir Grewal was told the agency is taking too heavy a hand against crypto in some respects and has been too timid in others.

  • Crypto companies have indeed accused SEC Chair Gary Gensler of “regulation through enforcement” rather than new rulemaking — including building a growing team of crypto cops. Rep. Tom Emmer, a Minnesota Republican, said the agency has "become a power-hungry regulator, politicizing enforcement, baiting companies to 'come in and talk' to the commission then hitting them with enforcement actions and discouraging good-faith cooperation."
  • Democratic California Rep. Brad Sherman, meanwhile, said the SEC should be going after crypto exchanges that offered XRP. He noted the SEC has already sued the company Ripple for offering XRP as what the agency called an unregistered security, so why not exchanges?
  • When Grewal said the SEC had taken action against exchanges, Sherman countered that "it's easier to go after the small fish than the big fish, but the big fish operating the major exchanges did many, many, tens of thousands of transactions with XRP." The SEC might have to "take on some cases you are not certain of winning," Sherman added.

Even that exchange showed how little agreement there is on the fundamentals. Ripple general counsel Stuart Alderoty fired back on Twitter that XRP being a security is far from established fact, with the court still yet to rule. "This is the pernicious effect of the SEC’s [regulation] by enforcement approach — harming people, markets and American innovation — with unproven allegations masquerading as regulation," he said.

Sherman, chair of the House subcommittee on investor protection, acknowledged at the hearing that more clarity on crypto and securities would be helpful. “Congress really hasn't acted,” he said. “Courts have acted with the Howey Test, which was not focused on digital assets, as it was written in the 1940s.” Alacrity, as always, has a different definition in Washington.

— Ryan Deffenbaugh (email | twitter)

On the money

Robinhood was behind a mysterious surge in Berkshire Hathaway trading volume last year. An academic paper released Wednesday said a change in how Robinhood reports fractional trades caused the illusion of surging trade volumes that in 2021 puzzled investors (and reportedly Warren Buffett himself).

Stocktwits is expanding. The online community for retail investors will allow users to buy and sell equities on its service, after rolling out crypto trading earlier this year.

On Protocol: The Federal Housing Finance Agency, which supervises and regulates many home loan providers, has launched an office focused on fintech.

Instagram payments have entered the chat. Parent company Meta has added an option for small businesses to take payments through the chat feature on Instagram. is going to Italy. The company said it has approval to operate from the country's financial regulator. Coinbase received the same approval a day earlier.

Bored Apes’ studio is giving customers a warning. Yuga Labs, the development studio behind Bored Ape Yacht Club, warned of a group of attackers targeting the NFT community in a tweet on Monday.

“Buy now, pay later” is getting its own brick-and-mortar. Klarna is opening a pop-up shop in Los Angeles this weekend, showcasing discounted items from a range of fashion and beauty brands. Klarna recently disclosed an 85% cut in its valuation.

GameStop’s NFT trading volume is surging past Coinbase’s. GameStop’s marketplace, launched July 11, has recorded more than $7 million in trading volume since July 11, according to data compiled by CoinDesk.


“It’s very illegal but also very crypto,” said an attendee at a rave in the Catacombs of Paris held in conjunction with the Ethereum Community Conference.

FTX CEO Sam Bankman-Fried made a bad bet in trying to rescue Voyager, but he’s unbothered, he said at the Bloomberg Crypto Summit on Tuesday: “It’s OK to do a deal that is moderately bad in bailing out a place.”

Just one question for
Aditi Maliwal, partner, Upfront Ventures

This former Googler backed Chime and Clair … and is also way into Harry Potter.

As the possibility of a recession looms, there’s a lot of buzz around fintechs that help people with poor credit gain access to financial services. What’s your perspective on credit-building fintechs and alternatives to credit scoring?

People are going to need access to capital, so credit scores are important. You may come up with an alternative to a credit score, but the entire financial system is dependent on credit scores. I’m more into building credit.


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