President Joe Biden’s pick to be the new comptroller of the currency at the U.S. Treasury Department, Michael S. Barr, used to be an advisor to the controversial cryptocurrency company Ripple, according to a new report from the Wall Street Journal.
The Securities and Exchange Commission filed a lawsuit against Ripple in federal court last month for promoting and selling XRP as a currency rather than as a security, a distinction that requires more disclosure to potential investors about the financial risks involved. Ripple created XRP in 2012, and while it eventually relinquished control of the cryptocurrency, it still owns roughly 60% of all available tokens, according to Forbes.
Barr became an advisor to Ripple in 2015, according to a press release still available on Ripple’s website, but it’s not clear when Barr left that role, nor is it publicly known what kind of work Barr performed. Barr previously worked in the Barack Obama administration as the Assistant Treasury Secretary for Financial Institution and is credited with helping pass the Dodd-Frank Act in 2010 following the financial crash.
As the Wall Street Journal explains, the comptroller of the currency at the Treasury Department oversees roughly two-thirds of the entire U.S. banking system, or about $14 trillion in assets, which would make Barr one of the most powerful people in the world of financial regulation. So we can probably expect some questions during Barr’s confirmation hearings about what he did for Ripple, a company now being investigated by the SEC.
Ripple is the third largest cryptocurrency in the world, following bitcoin and ether, but is somewhat controversial. There’s an air of mystery around bitcoin, the most popular cryptocurrency, because its inventor, known under the pseudonym Satoshi Nakamoto, has never been identified. But there’s no mystery about who created XRP. Ripple Labs made the cryptocurrency in 2012, which is a bit like passing out Monopoly money and hoping it catches on, as all cryptocurrencies are.
With bitcoin, you never get to peel back the curtain and see how rich the creator has gotten from his own funny money. But with XRP the creators have names and faces and it’s easy to draw a direct line in the public imagination between this digital currency backed by nothing and the people getting stinking rich from it.
Brad Garlinghouse, the CEO of Ripple and a defendant in the SEC suit, made some strange conspiracy-laced assertions on Twitter after the SEC’s action was revealed last month, including the allegation that rival cryptocurrency bitcoin is “Chinese-controlled.” Despite receiving word from two different PR agencies claiming to represent Ripple last month, neither PR rep would explain to Gizmodo what Garlinghouse meant when he said that bitcoin was “Chinese-controlled.”
Needless to say, bitcoin fans did not take kindly to the assertion that bitcoin was anything but the future of money. Cryptocurrencies will only become reliable currencies when people have faith that they’re a dependable way to pay for things. But it’s hard for Ripple to create that kind of faith with the SEC breathing down your neck.