# Carta Policy: Weekly Brief for September 16

**Author:** The Carta Policy Team  
**Read time:** 8 minutes  
**Published date:** 16 September 2022

## **The Topline**
- Gensler defends SEC climate disclosure proposal and crypto stance before Congress, and senators introduce legislation to push large private companies into the public reporting regime
- CFIUS EO sharpens foreign investment screening process into U.S. supply chain and key technologies
- CFTC, industry leaders support Senate Ag bill in hearing that gives CFTC authority to regulate digital commodities markets
- CFPB report focuses on risks from rapid growth of BNPL lending

## **Macro matters**

### _Congress faces a truncated calendar and copious to-dos_
Finally back in force from the August recess, the House and Senate have only two full weeks of legislating before they break for most of October in the lead-up to the midterm elections. We’re also rapidly closing in on the government funding deadline of Sept. 30. Lawmakers still need to pass a continuing resolution to push the funding cliff into November, and will also seek to pass the National Defense Authorization Act and retirement security package sometime before the end of the year.

### _Inflation report shakes markets ahead of Fed meeting_
The [consumer price index (CPI)](https://www.bls.gov/news.release/cpi.nr0.htm) increased 0.1% in August, marking an 8.3% increase year-over-year and upending predictions that inflation would fall slightly at the close of summer. The startling CPI report signals the Federal Reserve will likely approve a 75 bps interest rate hike when it meets next week; a smaller segment of analysts are [speculating](https://www.bloomberg.com/news/articles/2022-09-13/-they-should-do-100-traders-debate-the-fed-s-next-rate-move) that inflation’s continued growth could provoke a full 1% increase.

### _Biden signs CFIUS EO, holds off on outbound investment actions_
The Biden Administration issued an Executive Order (EO) related to the Committee on Foreign Investment in the United States (CFIUS), which is an interagency committee that reviews—and can nix—foreign investment in the U.S. The order does not change the existing process, but further directs the committee to assess five factors as part of its consideration, including the investment’s impact on the U.S. supply chain, U.S. persons’ sensitive data, as well as technology such as microelectronics, AI, biotech, and clean energy.

### **Capital markets**

### _Gensler testifies before Congress on SEC agenda_
The SEC’s increasingly divisive agenda was on display this week as Chair Gary Gensler [testified](https://www.sec.gov/news/testimony/gensler-testimony-housing-urban-affairs-091522) before the Senate Banking Committee, which largely focused on the SEC’s climate disclosure proposal and on digital assets. Democrats largely praised Gensler’s leadership on ESG and strong enforcement, while Republicans criticized Gensler for pursuing a political agenda that largely falls outside of the SEC’s expertise, authority, and mission.

## **Crypto & digital assets**

### _Senate Ag discusses framework for digital commodities market_
The Senate Agriculture Committee took a major step toward creating a regulatory framework for digital commodities this week by considering [S. 4760, the Digital Commodities Consumer Protection Act](https://www.agriculture.senate.gov/hearings/legislative-hearing-to-review-s4760-the-digital-commodities-consumer-protection-act), in a hearing featuring testimony from CFTC Chair Rostin Behnam and crypto industry leaders. This bipartisan legislation, introduced by the leaders of the Committee, would give the CFTC resources and authority to regulate the digital commodities markets— including bitcoin and ether— while preserving the SEC’s authority to regulate digital assets that are securities and related intermediaries.

### _Ethereum merge could draw SEC scrutiny_
This week, the long-awaited [Ethereum merge](https://www.nytimes.com/2022/09/15/technology/ethereum-merge-crypto.html) was completed, as the second-biggest blockchain moved from a proof-of-work to the more energy-efficient proof-of-stake model. This move is expected to reduce energy use by 99.95%. Previous SEC leadership has suggested ether was not a security, and bipartisan legislation would deem it a commodity subject to CFTC oversight. SEC Chair Gensler, who continues to assert most digital assets are securities, has suggested that the SEC will be taking a look at its new “staking” model.

### _SEC announces new crypto disclosure office_
The SEC announced plans to create a new office devoted to disclosure review for crypto businesses. Chair Gensler has pressed the industry to work with SEC staff to get their tokens registered and regulated, and the Office of Crypto Assets will help provide more specialized support for crypto assets.

### _Agencies weigh in on the crypto debate in series of reports_
Agencies are releasing their crypto findings and recommendations in reports mandated by President Biden’s Executive Order on Ensuring Responsible Development of Digital Assets. The Treasury Department published [three reports](https://home.treasury.gov/news/press-releases/jy0956) focusing on the future of money, consumer implications, and addressing illicit financing risks of digital assets.

## **Banking & financial products**

### _Banking Republicans foreshadow renewed scrutiny of CFPB_
The CFPB issued a [report](https://files.consumerfinance.gov/f/documents/cfpb_buy-now-pay-later-market-trends-consumer-impacts_report_2022-09.pdf) outlining the rapid growth and risks to consumers with Buy Now, Pay Later (BNPL) financing. Although the CFPB does not currently oversee BNPL companies, it is expected to issue guidance or regulation to align the industry with the credit card sector.

## **Taxation & accounting**

### _Economic blueprint doubles down on old priorities, including carried interest_
The White House released an [economic blueprint](https://www.whitehouse.gov/wp-content/uploads/2022/09/Biden-Economic-Blueprint-Report-720PM-MASTER-DOC.pdf) that expressed Biden’s support for a series of tax policy changes focused on taxing high-income earners and treating carried interest as ordinary income for tax purposes.

## **Antitrust, privacy, & technology**

### _DOJ strengthens antitrust bench ahead of enforcement actions_
The Department of Justice’s Antitrust Division is continuing to hire Big Law attorneys to compete with the extensive legal teams retained by companies facing legal challenges.

## **Upcoming events**
- SEC Chair Gensler: [Clinton Global Initiative September 2022 Meeting](https://www.sec.gov/news/upcoming-events/chair-gensler-clinton-global) – Sept. 19 at 11:30 a.m. (ET)  
- House Financial Services Committee hearing, “[Under the Radar: Alternative Payment Systems and the National Security Impacts of Their Growth](https://financialservices.house.gov/events/eventsingle.aspx?EventID=409762)” – Sept. 20 at 10:00 a.m. (ET)
- SEC [Diversity, Equity & Inclusion Leadership Summit](https://events.sifma.org/diversityequityinclusionleader) – Sept. 21 at 10:30 a.m. (ET)
- Senate Banking Committee hearing, “[Annual Oversight of the Nation’s Largest Banks](https://www.banking.senate.gov/hearings/annual-oversight-of-the-nations-largest-banks)” – Sept. 22 at 9:30 a.m. (ET)

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