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Senate Banking holds hearing on crypto

Federal Issues Senate Banking Committee Digital Assets U.S. Senate Cryptocurrency Fintech

Federal Issues

On December 14, the Senate Banking Committee held a hearing to hear from witnesses about how customer and investor protections should apply to cryptocurrencies, among other topics. Committee Chairman Sherrod Brown (D-OH) opened the hearing by emphasizing that it is the committee’s job “to keep learning more about the collapses” of crypto firms, and that there should be collaboration with regulators to put consumers—not the crypto industry—first. Brown warned that crypto has “ushered in a whole new dimension of fraud and threats to national security.” Senator Elizabeth Warren (D-MA) expressed similar concerns, stating that the “dark underbelly of crypto is its critical link to financing terrorism and human trafficking and drug dealing and helping rogue nations like North Korea and Iran.” Warren went on to describe her bipartisan bill, the Digital Asset Anti-Money Laundering Act, noting that it “requires crypto to follow the same money laundering rules” that every bank and every broker are subjected to. Senator Cynthia Lummis (R-WY) also advocated for the regulation of digital asset trading, and providing consumers with adequate bankruptcy protection, disclosures, and stable coin regulation. Ranking Member Pat Toomey (R-PA) expressed openness to the possibility of regulations tailored to crypto, including more disclosure from issuers and oversight of secondary market trading. Toomey argued against pausing cryptocurrency before legislation. Additionally, some witnesses discussed drafting potential cryptocurrency legislation. One witness told the committee that when crypto assets are made from thin air, they can be “used to obscure financial realities.” Another witness said cryptocurrencies are “at best a vehicle for speculation, an exercise in a zero-sum game of chance, much like online poker,” but, “at worst, they are an instrument of crime.”