Financial Innovation and Technology for the 21st Century Act
Floor Speech
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Mr. SHERMAN. Mr. Chair, last week we had police week. This week, the Republicans show us that they support crime in the suites. The effect of this bill in the short term will be to disempower the most effective investor protection crime investigation organization in the world, the SEC.
The long-term objective of the crypto billionaire bros is to create a new currency, and they have named it well. Cryptocurrency literally means hidden money. If it ever becomes a currency, it means we will not be able to enforce our tax laws, except on wage earners, and we will not be able to enforce our laws against child traffickers, drug dealers, and those who violate our sanctions.
The crypto bros have a lot of money. They make money by literally making money. They spread it around all of Washington. They had Sam Bankman-Fried do it. Now he is in jail, and others have stepped forward.
They have a PR campaign. The Lakers don't play at ``enforce tax laws arena.'' They don't play at an arena dedicated to law enforcement. They play at Crypto.com Arena.
In spite of all that money and power, three-quarters of Democrats voted ``no'' on this bill when it was before our committee. There are those who say they want clarity. We have clarity. The SEC has jurisdiction. What they really want is a patina of regulation, as little regulation as possible to claim to be regulated.
Now, this bill would be bad enough if we were dealing with the original statute. I know a lot of my colleagues have had meetings in their offices, and they were told about this bill weeks ago or months ago. Some are leaning toward voting for it because they don't know that they dropped a new title in the bill just a few weeks ago.
What does that new title do? Does it prohibit secret wallets, self- custody wallets? No. Does it outlaw the mixers whose sole purpose is to mix up law enforcement? No. What does this new title do? It defines an investment contract in a new way, designed to make this bill not just applicable to crypto, but it says our regular stocks and bonds can be put on blockchain and have no regulation from the SEC. It is a dagger at the hundred-trillion-dollar capital markets we have that finance our whole economy. It doesn't just say you are moving from the SEC's tough regulation to the CFTC's weak regulation. It allows crypto to get no regulation by defining themselves as an investment contract.
This is a bill that will gut regulation of crypto and may gut regulation of all our capital markets, but it goes beyond that. Its ultimate purpose is to move forward with this cryptocurrency project.
Right now, crypto is not a currency. There are very few purchases of goods with crypto. You can't buy a sandwich, but the very few times, as Mr. Casten pointed out, that crypto is used as a means of exchange, it is used by the worst criminals in the world. If crypto does become a currency, then we will not be able to enforce our other laws.
Now, we have to understand every time a billionaire cheats on his taxes, a member of the Freedom Caucus earns his wings. The patriotic anarchists come forward and say we want a strong America and we want to destroy the power of the American Government. You can't have it both ways.
This is a bill that in the short term means no regulation of crypto; not just lighter regulation under the CFTC but no regulation under their new title. It is a bill that could gut all securities regulation for the stocks and bonds that power the American economy.
In the longer term, it creates a competitor to the U.S. dollar which has one advantage right in the name: hidden money. Hide your money from the IRS, from our sanctions enforcers, from everyone involved in the U.S. Government.
Finally, crypto declares that it wants to partially displace the U.S. dollar as a reserve currency.
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Mr. SHERMAN. Mr. Chair, you have to understand how important it is.
We, frankly, are not fiscally responsible in this House. We don't collect nearly as much in taxes as we spend in benefits. We are able to do that without too much harm because of the role of the U.S. dollar as a reserve currency. We have fiscal policies that would make Argentina blush, but we are able to do it. The crypto bros see the incredible amount of money and power the U.S. Government has by being the world's reserve currency and they say no. They want to appropriate that for themselves.
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Mr. SHERMAN. Mr. Chair, this amendment gives the illusion that it prevents the bill from being useful to our foreign adversaries when, in fact, we see Iran using crypto to avoid sanctions, North Korea profiting from crypto, and Hamas raising huge amounts of money and being able to sneak around our efforts by using crypto. Finally, we see the crypto advocates viewing this bill as their ticket to move crypto into a competitor with the U.S. dollar. With tomorrow's bill, they try to hobble the dollar by saying it can't be digital and we can't have a better payment system involving the dollar, and that is their system for having crypto outcompete the dollar.
The administration opposes this bill. Even if you looked at it a few weeks ago, it has gotten much, much worse. I want to reemphasize that they added a new title that allows crypto to be completely unregulated and would allow for nonregulation of our stocks and bonds, so even if you liked this bill when you saw it 3 weeks ago, vote ``no.''
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Mr. SHERMAN. Mr. Chairman, this amendment illustrates the problem. A commodity other than a digital commodity, but any commodity can become a digital commodity, or you can have a contract or a derivative tied to the physical commodity that now becomes a digital coin.
We are told that the bill does not allow stocks and bonds to be digital assets, but it does allow them to be defined as investment contracts. If you get defined as an investment contract, you are without regulation.
As to the underlying bill, keep in mind, the administration opposes it, and three-quarters of Democrats voted against it before it got much worse.
The bill got much worse a few weeks ago. If you studied it before then, and I know the bill has been out there since July of last year, your analysis won't show you how this bill now allows digital crypto to go without regulation and opens the door to taking our traditional stocks and bonds out from the SEC.
Vote ``no'' on the amendment, but especially vote ``no'' on the bill.
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