Crypto Used By Criminals and Corrupt Politicians

Floor Speech

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Mr. CASTEN. Mr. Speaker, this week, we will vote on bills to defund the police, sow the seeds for our next financial crisis, and remove any remaining fig leaf that we might hide behind when we insist that Congress is a coequal branch of government.

I am, of course, referring to the highly misnamed GENIUS and CLARITY Acts. Let's dive in.

The way a tool is used is the purpose of the tool. If you watch a carpenter use a screwdriver, Mr. Speaker, you can ignore someone who says that those tools are for hammering nails.

Crypto has been around since 2009. Watch how people used crypto over the last 16 years, Mr. Speaker. You can ignore anyone who says that this is a tool for legitimate finance. That is because the tool is overwhelmingly used for crime.

The Russians use crypto to evade sanctions and fund their war in Ukraine. The North Koreans use it to fund their nuclear program. Hamas used it to fund their October 7 attack. Fentanyl traffickers use it to get paid. All, 100 percent, of ransomware attacks get paid in crypto.

That is a really good argument for legislation, and if the crypto industry did not want to hang out with criminals, then they would have welcomed good legislation. These bills are not that.

The CLARITY Act would exempt any platform that is the network for crypto transfers from any regulation at all. That might be attractive to my Republican colleagues because Donald Trump's World Liberty Financial is one of those platforms.

The CLARITY Act would defund white-collar police by shifting most of these coins from the well-staffed, well-funded SEC to the much smaller CFTC. It would exempt whole classes of crypto, the so-called memecoins, from any regulatory supervision.

Do you know the Trump coin, Mr. Speaker? That is a memecoin.

It would allow normal, healthy public companies to evade all SEC regulation by tokenizing their stock so they can raise more money from less informed, less sophisticated, and dumber investors.

Finally, it would allow anyone to create a self-hosted wallet, which is basically an online account where they can transfer assets between anonymous users with absolutely no regulation. If the goal is to make money laundering easier, then I have no idea how to make the CLARITY Act better.

Yet somehow, the GENIUS Act manages to be even worse because it connects the fraud of crypto to the real financial system. The GENIUS Act is for so-called stablecoins. I say so-called because they are neither stable nor are they coins. They are bits of computer code that can be bought and sold at any time, in theory, for one real U.S. dollar. As of May, there were $247 billion of stablecoins in circulation.

How is the tool used? Six percent of them are used to buy things. Nearly 90 percent are used to provide a liquidity bridge between much shadier cryptocurrencies, the ones contemplated by the CLARITY Act.

To state the obvious, Mr. Speaker, no one will sell you a gallon of milk for a Trump coin, but they will take dollars. Criminals need stablecoins so they can make crypto crime pay.

The blockchain, of course, doesn't fix this because smart criminals cover their tracks. They have created these digital mixers that comingle lots of crypto together and spit out a clean, or shall we say laundered, blockchain. This is why the United States Treasury Department has described offshore mixers as a primary money laundering concern.

Of course, you can't make a profit buying and selling something at the same price, so the stablecoin issuers, like banks, want to earn interest on the dollars they hold, except that those issuers are not regulated like banks. We saw this when Silicon Valley Bank collapsed and the price of the USDC stablecoin, which was supposedly worth a dollar, fell to 88 cents as the run on the bank exposed the company's failure to keep cash deposits in insured accounts. USDC only looks stable today because the taxpayers bailed them out with the FDIC.

The GENIUS Act makes this problem even worse by saying that, in the event of a future bank run, those uninsured crypto deposits, the irresponsible depositors, get a claim on money before your deposits, you as a good depositor, Mr. Speaker. That puts every American's deposit at risk.

Amendments were introduced to fix every one of these problems, and every one of them was rejected, which brings me to a final point: Do you know who really benefits from crypto? Corrupt politicians do.

Just last week, the United Arab Emirates sent $2 billion to convicted money launderer Changpeng Zhao, using coins issued by Donald Trump's family. That is $2 billion in their bank account. The Trump family will earn about $30 million off this transaction, and Mr. Zhao is now asking for a pardon.

These bills will make all of those crimes easier, and if we build it, crime will come.

When the crime happens, when the President gets richer, Mr. Speaker, when your bank fails, when your deposits are wiped out, and when the crypto bubble pops, just don't say that you weren't warned.

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