Florida Rep. Haridopolos prioritizes bipartisan regulatory framework on crypto

➤ Rep. Mike Haridopolos (R-Fla.) is a freshman who is serving as the committee whip of the US House Financial Services Committee.

➤ The lawmaker wants "to scrap things like Basel III" and take the uncertainty out of the regulatory landscape.

➤The former Florida Senate president advocated for a renewed push to establish a new regulatory framework around cryptocurrency.

Rep. Mike Haridopolos, a freshman Republican, represents Florida's 8th Congressional District and is the committee whip of the House Financial Services Committee under GOP Committee Chairman French Hill.

Haridopolos previously served in the Florida House of Representatives from 2000 to 2003 and the Florida Senate from 2003 to 2012, including two years as Florida Senate president beginning in 2010. Before that, he earned a master's in history from the University of Arkansas and taught US history and political science at Brevard Community College and the University of Florida.

Haridopolos spoke with S&P Global Market Intelligence about Republican priorities on the committee for the 119th Congress in a broad-ranging interview that touched on issues including debanking, environmental, social and governance policies, and cryptocurrency regulation through legislation such as the Financial Innovation and Technology for the 21st Century Act (FIT 21), which passed in the House of Representatives but did not pass in the Senate last year.

The following transcript of that conversation has been edited for length and clarity.

S&P Global Market Intelligence: As a freshman representative, what was your interest in the Financial Services Committee? Why are you a good fit for the committee and for being the committee whip?

Mike Haridopolos: When I was in the Florida Legislature, I literally wrote the Florida budget. I'm very conversant with all budget matters and [the] big picture. Of course, we're dealing with so many different financial instruments as well. Florida is a major financial institution, not just in the United States, but around the world, and we're increasingly becoming interested in issues like crypto and the need for common sense regulation. And so when asked where my interests lie, this is clearly, I think, my strong suit. I also wrote a lot of the tax policy in Florida.

We want to make sure our markets are not only open and free but also with common sense regulations so you don't have incidents like FTX. And so I believe that the chairman selected me to be a whip because of my experience in leadership in Florida, being the presiding officer or president of the Senate. And luckily, I've been able to hit the ground running thanks to this opportunity to meet more of the members and then get completely up to speed on issues like FIT 21, stablecoin, etc.

What do you see as the priorities for the 119th Congress on the Financial Services Committee? What are the issues you're really going to be focusing on?

We're going to continue our work with FIT 21. We're optimistic that the Senate will kind of make that law this year. Congress passed it out last year from the House. Of course, the Senate did not. The stablecoin issue, which did make it out of committee, was a positive sign but did not make it to the floor. I think that's another issue that's of paramount importance. We're also looking at debanking issues. Debanking is something we want to make sure does not happen, and that's why I think we've looked at so many different options there.

ESG is another issue where our goal is to decrease costs to Americans, especially as they've been hard hit by inflation. And when you have impractical and unnecessary ESG mandates, that too often allow firms to pick winners and losers, and we want the markets to pick winners and losers, not the manipulation with programs like ESG.

I've been watching a lot of the old committee hearings, when you have the real confrontation between [former SEC Chairman Gary] Gensler and so many of the committee members, where they are frustrated by this idea of regulation through enforcement, and we want to have clear policies because of the contradictory policies that went on between the [Federal Trade Commission] and SEC in the past.

What are some of the issues affecting your constituents as they relate to the Financial Services Committee, and how are you looking to build a regulatory framework around the needs of your constituents?

We want to scrap things like Basel III. They're unnecessary capital requirements that they're pushing out of Europe. We want to allow these community banks to be [in] the marketplace, more options for consumers. You probably heard our chairman, French Hill. "Make community banking great again." I think that's a common-sense measure. We want financial institutions that best serve their constituents by making sure that regulations ensure that not only customers are protected, but that the examinations by regulators are fair, and the appropriate regulations based on the financial institution.

You mentioned "common-sense" regulation around digital assets like crypto. You talked about FTX. What kind of regulations are you looking to put into effect, and how is the Republican approach going to be different than what Democrats have put forth?

Well, first, I would argue that the approach put together by FIT 21 was a bipartisan approach; 71 Democrats voted for it. So I would say this is a bipartisan way in which to look at that. The regulations were there. I don't care if it's crypto or other things. There's going to be illicit activities happening. We want to make sure that they put as many safeguards in place. As you know, with crypto, they're going to places like [the United Arab Emirates] and Singapore. Sadly, as you know, FTX went to the Bahamas.

When they're American or US-based, that's the best way to protect consumers. And by offering, with programs like FIT 21, clarity to companies, they know who is going to regulate them based on what that financial asset is, whether it be a typical financial instrument or a commodity. You know if you go to the FTC or SEC based on what your company is doing.

And so we want to be the world leader on these products. And that's why we need to offer clarity to these companies because if they don't, they'll go to these other countries and oversight operations where consumers, I don't think, are well protected. And we want to be the financial leaders in the world. And when you talk about crypto and blockchain technology, that is the future. That's why it's so imperative that we follow through this year, work with the Senate and get this bill passed so that companies that are in this space are not only regulated, but they have a clear understanding of how to best use their capital.

Martin Gruenberg, former chair of the Federal Deposit Insurance Corp., was at the Brookings Institution talking about potential systemic risk posed by nonbank financial institutions and financial technologies such as cryptocurrency. Could you just tell me broadly your philosophy around how those systemic risks, whether they come from private credit or cryptocurrency or what have you, how should the government go about addressing those risks, and how can the Financial Services Committee aid in doing that?

What is going to trouble the markets is when you offer uncertainty. Sadly, Gary Gensler offered uncertainty. If you were in this space, you didn't know if they were going to go after you or not. We're going to offer you certainty and stability, knowing how you'll be regulated.

I would equate it to this: When I don't know what the regulatory outlook is and I don't know what my taxes might be, I hold back capital. That creates, in my opinion, uncertainty in the marketplace. When I know what my tax rate is going to be and it's permanent — that's one of the reasons I support the Trump tax cuts becoming permanent — then I can plan ahead. It's like anything in life. If you're uncertain, people hesitate. It applies to you driving a car or investing your money. And so what I think our goal should be, is to offer the financial marketplace certainty.

We already have a strong dollar and we need to offer that certainty so that people say: "America is where I want to invest my resources. America is where I want my products regulated." Because right now, the uncertainty that Gary Gensler brought to the economy made people think maybe the UAE, maybe Singapore, is a better place to place my resources because at least there's a little bit more certainty in their marketplace. And you're seeing the EU doing much the same. Now, I don't necessarily like their regulations, but businesses are going to be attracted to a regulatory model when they know there is certainty.

With this Republican trifecta and bipartisan support with things like FIT 21, we need to offer this emerging technology not only certainty, but also when you have that certainty, you get more innovators in the field. And when you have more competitors in the field, you also lower costs to consumers. And so this uncertainty has not only caused a lot of money to be moved overseas, but it has also, I think, stifled innovation because people are not going to invest if they feel it's an uncertain marketplace where they could be at any point, literally taken out of business or made where they can't trade in the United States. And so we're excited about the opportunity. I think the chairman is going to move quickly whether it be on banking or on crypto. I think that the chairman, along with the vast majority of Republicans and Democrats in this committee, have a clear agenda, and it's my job as the whip to make sure that everyone understands each moving part within this bill and get it passed. And hopefully, the Senate will take it up with the same aggressiveness as we're looking to do in the House.