Financial Innovation and Technology for the 21st Century Act

Floor Speech

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Mr. CASTEN. Mr. Chairman, we have heard several times this legislation is better than the status quo. There are a whole lot of reasons that is not true, but I want to focus specifically on this bill's utter failure to address the use of cryptocurrency by terrorists, foreign adversaries, and criminals.

By the way, Treasury asked us specifically to address those issues with a whole bunch of reasonable changes. We introduced amendments. Every one of those amendments was rejected.

The anti-money laundering provisions that are in this bill simply duplicate existing requirements. Yet, the bill's supporters have actually argued, and Treasury has agreed, that the status quo is not sufficient to address the challenges created by cryptocurrencies.

How do we know that cryptocurrencies are a problem for money laundering? Because the bad guys love crypto. Let's give some examples.

North Korean hackers have stolen $3 billion in cryptocurrency since 2017. White House national security officials said last year that crypto theft and cybercrime have funded half of North Korea's nuclear program.

Russia and Venezuela are both using crypto to evade U.S. sanctions.

Venezuela recently said that because of the bite of sanctions, they are now moving to accept payments in crypto because that allows them to get money that we, in Washington, cannot track.

The Treasury Department is reviewing more than $20 billion of cryptocurrency that was laundered through a Russian-based cryptocurrency exchange.

The Treasury Department has noted that Hamas, the Palestinian Islamic Jihad, ISIS, and al-Qaida are all using crypto to finance terrorist attacks globally.

Crypto is the preferred means of payment for fentanyl trafficking. Chinese businesses that sell fentanyl chemical ingredients to Mexican cartels have accepted millions in crypto payments. They have sold enough ingredients to make more than $54 billion worth of fentanyl pills. That is enough to kill 8.6 billion people, if you are counting.

Blockchain analytics firm Chainalysis said in January that virtual currency is the dominant choice for buyers and sellers of child sexual abuse content.

FinCEN basically said the same thing. It said that perpetrators of online child sexual exploitation are increasingly using convertible virtual currency to avoid detection.

I could go on and on. These are not cherry-picked statistics. These are statistics from U.S. officials and from crypto firms, people who are entrusted with protecting our national security and who care about this stuff.

The Treasury Department asked for new rules to address this. Every single one of those proposals was objected to either in the Financial Services Committee, the Ag Committee, or in the Rules Committee.

If that was all this bill did, that would be one thing. In fact, this bill goes out of its way to make it weaker by basically saying that anybody who uses unhosted wallets, decentralized, or DeFi services is exempted from regulation, ignoring recommendations from both the Trump and Biden administrations.

My Republican colleagues will boast that in this rule there is specific language that says brokers and dealers are required to comply with anti-money laundering requirements. They are already required to do that. This bill does nothing to address that. It is exactly the same. They are going to brag about saying it is now illegal to speed.

What we should have done is we should have made provisions to ban anonymous actors, to prevent you from saying: I want to move crypto from my account to yours, and I am going to move it through an anonymous party so you can't tell what a bad guy I am. It should have banned people from using digital asset mixers that allow you to take a whole bunch of people, combine all their money together, and then give you something where you can't trace it through.

If you want to understand how crazy this is, I would encourage you to go to your bank and try to deposit $10,000 in cash at your bank. Your bank will say: You have to tell me where that money came from. I am going to take you behind the counter, and we are going to have to take your picture and get your fingerprints, because I do not like money laundering, and I am obliged to protect it.

By comparison, if you want to move a million dollars of crypto from one person's account to another, send it through these mixers or send it through these anonymizers, you can do it.

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Mr. CASTEN. Mr. Chair, we have got all of these mixers that are used. Why were they not included in there? I don't know.

I know why the crypto industry doesn't want them included in there, because they are profiting from people who are using these illicit services.

The largest cryptocurrency exchange that stands to benefit from this regime helped to finance a legal challenge to the Treasury Department's case against Tornado Cash, which was the largest asset mixer in the world.

This is a bad bill. It fails to address known problems. What it does do, however, is make the United States safer for drug traffickers, for terrorist funders, for child and drug traffickers, and for those who buy and sell child pornography. I did not know those groups had such advocates in Congress, but I am proud to oppose them and encourage all my colleagues to do the same.

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