Financial Innovation and Technology for the 21st Century Act
Floor Speech
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Mr. HILL. Mr. Chairman, I thank the gentleman for yielding time.
Mr. Chairman, for those watching at home, it is like the tale of two cities, where one side is offering a work of fiction and the other side a work of nonfiction.
I think, over here, those who support this bill are supporting exactly the opposite of what I have heard on the other side of the aisle.
Since last January, our two committees, Agriculture and Financial Services, have collaborated to make sure that we protect consumers and investors in the digital marketplace by preventing fraud, manipulation, front-running, and other abusive practices; applying Bank Secrecy Act/ AML requirements and know-your-customer rules; mitigating conflicts of interest; requiring firms to hold capital and segregate customer funds; have the right kind of custody policy; have registration for exchanges, dealers, and brokers that are working in digital assets; imposing reporting and bookkeeping requirements; and building on the existing exemption regime for the offer and sale of digital securities to include robust disclosures to anyone considering a purchase.
With that said, we hear a lot about the lack of legal clarity for the treatment of digital assets, which was the impetus for this legislation. What does that even mean?
Mr. Chairman, to this day, the SEC and the CFTC still contradict each other in court about whether a digital asset like Ethereum should be treated as a security or a commodity. Both cannot be true.
When two Federal agencies in the same administration cannot agree on the law, it should be up to Congress, and that is the regulatory clarity that this FIT21 bill will bring.
In fact, I would argue, Mr. Chairman, that FIT21 is responsive to President Biden's own executive order and the Financial Stability Oversight Council report calling on Congress to enact a framework for digital assets that are not securities. That is what we have done.
I am also proud that this measure is the product of committee work done through regular order and through good-faith bipartisan efforts.
Mr. Chairman, all Members should support this bill, and I encourage a full ``yes'' vote from both sides of the aisle.
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Mr. HILL. Mr. Chair, I thank Chairman McHenry for the time.
Mr. Chair, I congratulate the gentlewoman from Colorado on this very effective amendment because she shares that passion that we have all had through this entire process, which is to recognize that we need to have vigorous anti-money laundering/Bank Secrecy Act and Know Your Customer protections around digital finance just like we do in the analog financial services system. Her bill will strengthen that.
I was just reviewing the Treasury Department's 2024 national security for combating terrorists and other illicit financing, and it brings to mind what a better regime it is to have blockchain.
Because a blockchain, Mr. Chair, has the identity connected with the transaction. It leaves an indelible mark cryptographically of those transactions that makes illicit finance easier to identify, not less. The Treasury Department points out that the top abusers, the top concern about illicit finance, are misuse of cash, including bulk cash, misuse of financial products and services like money orders; easy formation and limited information required to create a legal entity. An example is the use of casinos.
That is what the Treasury Department says are the toughest, most- challenging aspects of terror finance, and that is why this study will help us make sure that using blockchain is a more effective way to counter illicit finance in the world.
Mr. Chair, I thank the gentlewoman from Colorado for her support and for being such a constructive source of dynamic support for crafting FIT21.
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Mr. HILL. Mr. Chair, I thank the gentleman from South Carolina for yielding to me to speak in support of this amendment. It allows me to illustrate two things.
First is that Prometheum, while it was approved as a special purpose broker-dealer for digital assets, has not accomplished anything. It has no business, yet it also has this partnership with the CCP, so there is an illustration that FIT21 would allow us to have the guidance on how to register a broker-dealer.
Secondly, I fully support Mr. Norman and his concerns about the influence of foreign adversaries on people registered in the United States. It is a clear issue, and we have an investigation going on, on why the SEC has not pursued this itself.
I rise in support of Mr. Norman's effort. It is a good amendment. Let's add it to the bill and pass FIT21.
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Mr. HILL. Madam Chair, I thank the gentleman from Pennsylvania for his constructive amendment. I think it is the absolute right approach. I want to associate myself with the comments from the chairman of the Commodity Markets, Digital Assets, and Rural Development Subcommittee from the House Ag Committee, Mr. Johnson, on that.
Madam Chair, FIT21 does exactly the opposite of what has been argued by the minority today. It gives a clear regulatory framework. It prevents fraud. It does require registration, custody, capital requirements. It gives clarity for the first time in American history to how we do securities and commodity oversight for digital assets.
The minority has also charged time and time again that somehow a great securities loophole is being opened in this bill.
It is just not true. It is not a factual statement. The term ``investment contract'' is a fungible, digital representation. It is not all these other items.
In fact, the bill specifically says the term ``digital asset'' does not include notes, stock, Treasury stock, securities, security-based swaps, and a whole list. It does not open the loophole that the ranking member of the Financial Services Committee charges.
I urge a ``yes'' vote on the bill and a ``yes'' vote for Mr. Perry's amendment. Let's have regulatory credibility and clarity for a competitive United States in the 21st century.
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