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The implosion of FTX has become the financial scandal of the decade, and U.S. lawmakers are already demanding to know who’s to blame. On Tuesday, the Senate banking committee grilled members of the Fed and other financial agencies about how FTX could have torched billions of customer and investor funds without anybody noticing. The hearing produced some finger-pointing and calls for new laws to regulate crypto, but the real fireworks are likely to begin when Congress questions Securities and Exchange Commission Chair Gary Gensler—the country’s top financial cop—about the FTX debacle.

“He’s in a corner,” one Washington insider who is plugged into the crypto scene told me, saying Congress will be keen to grill Gensler over why his agency missed a massive fraud that took place right under its nose. Some lawmakers are also likely to ask the SEC chair why, only a month before FTX imploded, he was instead engaged in a highly theatrical enforcement action against Kim Kardashian over a minor token sale from 2021. The headaches will only mount after the Republicans take control of the House in January and with it subpoena power. Rep. Tom Emmer (R-Minn.), a member of GOP leadership, has already signaled he is prepared to investigate Gensler over an alleged plan to secure a regulatory monopoly in the U.S. for FTX after meeting with CEO Sam Bankman-Fried in March.

The optics are bad for Gensler, but that doesn’t necessarily mean he will lose his job. A source plugged into the Democratic party tells me Gensler’s strategy will be to style himself as a hero for keeping FTX and other big crypto exchanges offshore—and that influential progressives, who largely loathe crypto, will celebrate him for this. Meanwhile, Gensler will also reportedly blame the SEC’s smaller sister agency, the CFTC, since it is responsible for overseeing derivatives (FTX was a derivatives exchange)—a disingenuous tactic as Gensler has claimed a broad crypto jurisdiction for the SEC.

Meanwhile, the Washington insider told me that the GOP risks overplaying its hand by embracing conspiracy theories based on Gensler’s ties to top Democrats. He has a point. After I alluded to some of those ties in a post last week, my Twitter feed lit up with fringe right-wing elements declaring Gensler’s doings were part of a larger plot involving George Soros, Bill Clinton, pedos, and so on. If one of the grandstanding loons among the House Republicans begins raising such claims publicly, it will only increase loyalty to Gensler among Democrats and the White House.

All of this points to a growing concern among serious crypto policy people: The debate over how to regulate crypto is increasingly taking place along partisan lines, a bad development for anyone who cares about crypto and American innovation. Blockchain is first and foremost a technology that is indifferent to left vs. right politics and that needs the right legal framework to thrive. Let’s hope that, in the coming interrogation of Gensler, this critical point won’t be lost.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

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