Who writes the rules for the new money markets?

The CNBC report tells us that the Fairshake crypto PAC network is backing 32 House candidates in the midterm elections, and that its urgency is sharpened by the failure of the CLARITY Act in the Senate. The industry, in other words, is shopping for a friendlier legislature. I do not condemn the instinct — every merchant prefers a parliament that understands his trade. What I condemn is confusing that preference with the public interest.

I spent considerable effort in The Wealth of Nations tracing the manner in which merchants and manufacturers, whenever they gather to deliberate on public affairs, contrive regulations that serve themselves at the cost of the consumer and the broader public. The mechanism is always the same: the interest is concentrated and well-organized; the injury is diffuse and hardly perceived by any one person. A PAC spending lavishly on thirty-two carefully chosen seats is the concentrated interest at work. The millions of ordinary people who might one day hold digital assets, or lose savings to an unregulated exchange, are the diffuse public who send no one to the room where the bargain is struck.

Now, I do not say that digital assets are illegitimate, nor that those who trade in them are villains. Exchange is the great engine of prosperity, and any new medium that facilitates it deserves a legal home. What it requires — what every market requires — is an institutional framework that makes the exchange honest: clear rules of contract, disclosure of risk, and a sovereign power capable of enforcing both without being captured by either side of the transaction. The CLARITY Act, whatever its merits, is precisely the kind of legislation that ought to emerge from open deliberation among representatives who owe their seats to the general public, not to any single industry's treasury.

The danger the CNBC story implies — and I mark this as inference, not recollection of events I have witnessed — is that regulatory clarity, when purchased rather than argued for, tends to be written in the interest of the purchaser. We saw this pattern with the great chartered companies of my own era: the East India Company did not merely trade; it legislated, it taxed, it raised armies, and it drafted the very regulations that were supposed to restrain it. The modern equivalent need not carry a musket. It need only fund enough seats to shape the committee that writes the definitions, sets the thresholds, and names the regulator.

The honest remedy is not to forbid merchants from holding opinions about legislation — that would be absurd and unjust. It is to insist that the institutional framework be built by representatives who have a broader accountability than any single sector can provide. Disclosure requirements, conflict-of-interest rules, and genuinely open deliberation are the tools. They are unglamorous. They are also indispensable. A market without them is not free exchange; it is, at best, a private toll road dressed in the language of liberty.

I am, as ever, for free exchange. I am equally for the rule of law that makes free exchange possible rather than merely profitable for the powerful. The question worth asking of every candidate the Fairshake network has backed is simple: when the industry's interest and the consumer's interest diverge — as they sometimes must — whose side are you on? The answer to that question is the true measure of what kind of market the new Congress intends to build.