It is a special event to run into a U.S. Senator who understands cryptocurrency or blockchain. It was a once in a lifetime event to watch Kelly Loeffler, former CEO of a major cryptocurrency exchange that successfully navigated U.S. regulations, sworn in as a U.S. Senator from Georgia on January 6, 2020.
Loeffler, who served as the CEO of the Intercontinental Exchange (ICE)’s digital asset platform Bakkt, led her company to be the first to offer CFTC-approved ‘physical’ Bitcoin futures. Upon her appointment to the U.S. Senate, she was assigned to the U.S. Senate Committee on Agriculture that oversees the CFTC, which gives her an extremely high level of influence over future cryptocurrency laws.
Crypto industry leaders hoped that Senator Kelly Loeffler could lead Congress to provide clear regulations and accelerate the growth of their industry in the United States. This hope was well-founded until a news story broke that has created a huge image problem on multiple fronts for the freshman Senator.
According to the story, the Senator starting buying and selling stock on January 24, 2020, the same day she received a private Senate briefing that revealed COVID-19 was going to get a lot worse and probably cause an economic downturn. From a legal perspective, if she sold or bought stock on this information, she would be in violation with the STOCK Act, or Stop Trading On Congressional Knowledge Act. The Senator revealed independent advisors conducted the trades for her portfolio without any inputs from her and she received notification after the fact.
The story also revealed how Kelly Loeffler is also the richest Senator in the United States, with a net worth estimated at over $500 million. The perspective of her constituency in Georgia and all Americans, most waiting for a $1,200 stimulus check to be transmitted from the IRS, became less forgiving about a politician who was busy trading stocks to preserve her wealth rather than focused on the broader economy and COVID-19.
Adding fuel to the fire, it was also noted she is married to the Chairman of the New York Stock Exchange, Jeffrey Sprecher. Now she is not only someone who is rich and out of touch, she also looks to be the ultimate Wall Street insider. Many younger people have looked to crypto as an asset class after being turned off by stock investments, particularly in light of the 2008-2009 Financial Crisis and the bank bailouts that ensued. Suddenly, Senator Kelly Loeffler is painted by the media as worse than the bankers in 2008-2009 as she is accused of profiteering off of the COVID-19 pandemic.
Prior to this, the Senator did not even have a contender in the Republican primary in Georgia and was self-financing her campaign. After the story, she now has a competitor in her own party as Representative Doug Collins (R-GA), who is actively looking to unseat her and using this story as a way of portraying her as out of touch with Georgians.
Now that she fights for her political survival, the prospects for how Loeffler might have helped crypto policy in D.C. are greatly diminished. As the crypto industry has been painfully improving its credibility on Capitol Hill, Loeffler may end up being a major liability on its books instead.