December 9, 2022
Crypto Exchange Failure Sends Policymakers Scurrying for Answers
By John McKechnie, Total Spectrum Senior Partner
A combination of the collapse of a major cryptocurrency exchange and a lackluster performance by Republicans in the midterm elections has silenced many digital currency advocates in Washington and raised significant questions about the legal and financial future of that industry.
First, the major development in the crypto sector: BTX, the multi-billion-dollar crypto exchange founded by entrepreneur (and political megadonor) Sam Bankman-Fried collapsed after it experienced severe liquidity problems and was unable to meet customer withdrawals. Rival platform Binance initially offered to purchase BTX, then abruptly backed out of the deal less than 24 hours later. BTX declared bankruptcy shortly after. This capped a week in which the expected Republican majority, stocked with pro-market, pro-innovation digital currency advocates failed to materialize.  
The crypto economy shed more than $230 billion in value during the week of November 6.
Prior to the crypto upheaval, Republican allies on Capitol Hill such as incoming House Financial Services Chairman Patrick McHenry (NC), and incoming Senators Katie Britt (AL), J.D. Vance (OH), and Ted Budd (NC) were prepared to advocate for looser federal oversight and broader product offerings by the nascent digital currency exchange industry. Budd, as a House Member in the 117thCongress, had even led an effort to stymie a Treasury attempt to gain new crypto oversight; he now is quoted as recommending a “go-slow, measured approach” to crypto currency in the near future.
Even though the industry’s most outspoken friends in Washington were Republicans, in the lead-up to the 2022 elections the crypto lobby appeared determined not to let the technology become a partisan issue. A group of Democratic House lawmakers, led by Josh Gottheimer (NJ) had tried to mute some liberal concerns about the potential volatility of digital assets, but he is now also signaling a need for stronger federal supervision and new limits on crypto offerings, according to several House Financial Services staffers. 
Additionally, Senate Agriculture Committee Chair Debbie Stabenow and a handful of Committee Republicans are working on legislation, most likely to be acted upon in the next Congress, to give the Commodity Futures Trading Commission oversight of crypto exchanges. At one time this was considered by digital asset advocates to be an approach that was preferable to having the Security and Exchange Commission involved; now both regulators are expected to ratchet up their regulatory involvement in digital currency transactions. 
And speaking of the SEC, another telling sign of concern was expressed by SEC Commissioner Hester Peirce, a strong free-market voice and outspoken ally of the crypto industry. In the aftermath of BTX’s failure, Peirce, who had resisted SEC Chairman Gary Gensler’s attempt to regulate cryptocurrency as a security under the Commission’s purview, is now saying that “given the upheaval in the crypto markets the better approach would be for Washington to come to a consensus on the agency's jurisdiction over digital assets. If you can't figure that part out, it's hard to figure out a lot of the rest.”
November 2022 may become known as the end of the emerging crypto financial infrastructure, or at least the first major stumble in the move to a digital future.  As one senior Senate Banking Committee staffer commented, “BTX was considered the gold standard in the industry. That went from being accepted wisdom to ridiculous in less than a week.” The speed and size of its failure gives everyone, friend and foe alike, pause as both Congress and federal regulators figure out next steps.
Defense Update
By Al Jackson, Total Spectrum Strategic Consultant
The Congress is in the final stages of passing their defense policy bill, the FY2023 National Defense Authorization Act (NDAA). The authorization bill will increase funding for the military by 8% over FY2022 levels. Several Republican lawmakers, led by Senator Rand Paul (R-KY), threatened to delay passage of the legislation unless the bill contained language to rescind the military’s COVID-19 vaccine mandate for service members. Thus far, more than 8,000 active-duty service members have been dismissed from the ranks for refusing the vaccine.
The $858 billion plan, which includes $817 billion in Department of Defense spending, also includes plans for a 4.6% pay raise for servicemen and women starting next month and nearly $19 billion in additional funding to offset increased inflation costs on construction, fuel prices, and other military purchases. The $817 billion authorized for military funding is $45 billion above the initial President’s request, and includes additional funding for both personnel and equipment priorities.
The $858 billion topline is higher than both the House version ($839 billion) and Senate version ($847 billion). The Department of Energy is authorized to receive from that topline number $30.3 billion for nuclear activities. The House of Representatives is expected to pass this legislation by the end of the week, which would allow the Senate to take up the bill next week. If the legislation passes both chambers, it could be signed into law before the end of the month, which would continue a six-decade (61 years) streak of passing NDAA.
For the second consecutive year, the Senate did not pass its own version of the bill, opting instead to make adjustments to the House-passed version from this summer rather than taking amendment votes on their own military policy priorities. 
The bill authorizes $32.6 billion to increase the U.S. Naval fleet, including 11 battle force ships. For the Army, it authorizes funding increases for the CH-47 heavy lift helicopter, the UH-60 Blackhawk medium lift helicopter and the MQ-1 Gray Eagle drone. The bill also authorizes funding for five additional F-35A aircraft above the President’s request, as well as F-22 modernization. It does allow the administration to proceed with plans to retire the A-10 aircraft, a move that Congress, namely the Arizona and Georgia delegations, have long opposed.
Even with apparent agreement on the authorization bill, the Congress still needs to pass an appropriations bill for FY2023 in order for the Defense Department to receive and allocate the money outlined in the $817 billion NDAA. Government agencies have been operating on a temporary budget since Oct. 1.

The House and Senate have until December 16 to pass a full-year FY2023 budget. If that cannot be accomplished, another continuing resolution would need to be passed to avoid a government shutdown. Both Houses of Congress are optimistic a compromise will be reached in the next few days. As it relates to defense spending, the difference between the House ($762 billion) and Senate ($850 billion) is significant.
Hearing Report
By Ramona Lessen, Executive Director, Total Spectrum
Senate Agriculture Committee Hearing on the 2023 Farm Bill Focusing on Research Programs
Tuesday, December 6, 2022; 10:00 a.m.
To view a livestream of the hearing please click here.
Senator Debbie Stabenow (D-MI), Chairman
Senator John Boozman (R-AR), Ranking Member
The Honorable Chavonda Jacobs-Young
Under Secretary for Research, Education, and Economics
United States Department of Agriculture
Washington, D.C.
Dr. Jason Rowntree
CS Mott Chair of Sustainable Agriculture; Director, MSU Center for Regenerative Agriculture; Professor
Michigan State University
East Lansing, MI’
Dr. Felecia Nave
Alcorn State University
Lorman, MS
Dr. Katy Rainey
Associate Professor; Director, Purdue Soybean Center
Purdue University
West Lafayette, IN
Mr. Steve Ela
Partner and Manager
Ela Family Farms
Hotchkiss, CO

Dr. Deacue Fields
Vice President for Agriculture
University of Arkansas System Division of Agriculture
Little Rock, AR
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